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What deficit? By Morgan Rothborne Updated: Jun 17, 2022 07:07 PM A A Ashland City Council passes budget that eliminates its general fund deficit — for this biennium The city of Ashland has paid down a $3 million general fund budget deficit for this biennium with enough money left over to fund four new priorities and refill the city’s emergency fund. The city leveraged budget cuts and dual strokes of unexpected prosperity to pay down the deficit. In a memo sent in March this year, City Manager Joe Lessard and then interim Finance Director Alison Chan announced budget cuts of 5% to 10% for all departments dependent on the general fund. The memo asked departments to trim down by maintaining a hiring freeze. All posts then vacant were mandated to remain so, and to limit travel and training as much as possible. Additional cost-cutting measures were negotiated with each department. Departmental sacrifices resulted in a savings of $1.4 million, according to information distributed during the City Council special business meeting Tuesday. The budget created at the beginning of last fiscal year did not and could not account for the final outcome of the transient lodging tax — also known as the hotel tax — and property taxes. Property taxes were expected to come in lower because of the Almeda fire, and hotel taxes had been shriveling under COVID-19 stay-at-home orders, conditions those writing the budget in 2020 expected to continue. Unexpected revenue from these two taxes was $1.35 million. Combined with the savings from budget cuts, this whittled the general fund deficit down to $545,000. One more unexpected windfall turned the tide from filling a hole to building up something new. “At the end when we closed the fiscal year, we came back and we didn’t have $1 million in our checking account, we had $3.6 (million). We had $2.5 million more in beginning fund balance than we estimated,” said Finance Director Alison Chan, who retired this week. Chan said some assume the Budget Committee’s inability to predict this number is a failure, but Chan said this is normal for city budgeting. It’s better to predict conservatively and end up with more than expected than to overbudget and end up with less. “When we’re building a budget, we have to estimate what that beginning fund balance is; it’s kind of like taking the balance in your checking account, adding what your wages are and subtracting your expenses,” Chan said. The general fund deficit was $1 million when the budget was created but rose to $3 million over time. Parks and Recreation have the third-largest budget in the city, coming in at $7 million for this year. Parks and recreation were funded through property taxes for nearly a century. The city later used food and beverage taxes, a fund of roughly $2 million per year, for parks in lieu of property tax money. Lessard raised issue with this arrangement earlier this year, making the case that the ballot language given to voters when the tax ordinance was passed restricts the food and beverage tax to capital improvement projects for parks and recreation, resulting in the tax being sequestered for that purpose, creating a $2 million hole in the parks budget. Parks and recreation must absorb a $350,000 budget cut this year but otherwise is fully funded. Reach Mail Tribune reporter Morgan Rothborne at [email protected] or 541-776-4487. Follow her on Twitter @MRothborne.