$2M of the purported ‘deficit’ occur because the city manager contends the current City Council acted improperly
By Rick Landt
The Ashland City Manager in his May 23-24 presentation to City Council stated that there is a $3 million dollar city budget deficit for the coming fiscal year. The actions proposed by the city manager to address this “deficit” would come in a number of ways. Of the $727,000 direct “reductions,” $350,000 are proposed to come from the APRC budget. It is interesting to note that the city manager also proposes $457,000 in new spending, mostly long-term staffing. If the proposed APRC cuts are approved by City Council, the result will likely mean the loss of one or more recreation programs, such as the Nature Center or Senior Services.
On closer examination, a different budget picture emerges. Two million dollars of the purported “deficit” occur because the city manager contends that the current City Council acted improperly when they allocated 100% of Food and Beverage tax revenue to the operating budget of APRC for the coming fiscal year. Attorneys who have looked at this matter have a different opinion.
The remaining $1 million of this “deficit” derives from a motion approved by the City Council during the last budget process in 2021 that directed staff to propose either expense reductions or additional revenue of $1 million to begin addressing what has been called the “structural budget deficit.” Although it was a fiscally prudent initiative, that million dollars is not needed to balance the coming fiscal year’s budget as the budget has already been balanced per state law. It is erroneous to designate that million dollars as part of a “deficit.”
The finance director recently announced that revenue projections provided by the previous finance director were overly conservative and, in fact, tax revenue has come in $1.4 million higher than budgeted. Bottom line, unless the city manager’s interpretation creating a $2 million dollar “deficit” prevails, there is no budget deficit for the coming fiscal year; rather, there would be a budget surplus. Even if his interpretation were to prevail, with the increased revenue, the “deficit” would be substantially less, requiring significantly fewer cuts.
Before cuts are made for the coming fiscal year (beginning July 1), to address what appears to be a manufactured budget crisis, the city administration should provide a clear picture of the future financial outlook for the city. That approach would ensure that a responsible and thoughtful response can be implemented to address the actual structural budget deficit (caused by the growth of health insurance costs, Public Employees Retirement System shortfalls and other costs rising faster than property tax revenues, which are limited to 3% annual growth).
Additional budget discussions are scheduled for the City Council meeting on Tuesday, June 14. Let’s hope that a fresh look occurs and that the city manager is directed by City Council to identify real future budget deficits and stop wasting time and raising havoc with 11th-hour budget cuts based on what appear to be made-up problems that are not backed by an attorney’s opinion.
Rick Landt is chair of the Ashland Parks & Recreation Commission Board of Commissioners and can be reached at email@example.com. Views expressed here are his own.