The city of Ashland is facing a $500,000 to $750,000 budget shortfall as revenues in a broad array of categories fall below projections, City Administrator Martha Bennett said.
The City of Ashland is facing a $500,000 to $750,000 budget shortfall as revenues in a broad array of categories fall below projections, City Administrator Martha Bennett said.
"Department heads and I are in the process of developing a spending reduction plan for this fiscal year," she said on Thursday afternoon.
The shortfall primarily affects the $15 million General Fund. Most of that fund — $10.7 million worth — pays for the Ashland Police Department and Ashland Fire & Rescue, Bennett said.
"It's hard to address the shortfall without touching police and fire," she said.
The city may deal with the shortfall through steps such as layoffs, but nothing is finalized yet, Bennett cautioned.
To put the size of the shortfall in perspective, the city pays about $65,000 in salary and benefits for an entry level police officer and about $83,000 in salary and benefits for an entry level firefighter/paramedic, according to figures provided by Ashland Human Resources Director Tina Gray.
The city needs to take action soon to start saving money because the fiscal year, which started on July 1, is almost half over, Bennett said.
City officials are just beginning to get their first accurate look at how this fiscal year is playing out.
Property tax payments began flowing into the city's coffers in mid-November. Those payments, along with Ashland Fiber Network revenues, are about the only sources of revenue on track, Bennett said.
Revenues from the city's hotel and restaurant meals taxes are down about 5 percent and electricity sales dipped 3 percent.
The construction slump that hit Ashland and the rest of the country two years ago is continuing to take its toll. Development fees were projected at $1.1 million but will likely only be about $800,000, leading to a $300,000 shortfall, Bennett said.
"The work is even lower this year than last year, and last year was half of the year before," she said.
The Community Development Department previously made cuts that included switching four full-time people to part-time, eliminating a vacant position and spending less on outside consultants.
About the only big projects working themselves through the construction pipeline are school construction and reconstruction projects from the Ashland School District, Bennett said.
While the Community Development Department's workload has fallen, the police and fire departments haven't seen any reduction in the need for their services, Bennett said.
In fact, if the state government — which is facing its own funding shortfall — goes through with cuts to its services such as mental health care, the Ashland Police Department could see its workload increase, Bennett said.
The city already cut its fire inspector and a school resource officer position in the police department was left vacant.
"This is probably the most severe budget situation I've seen in Ashland," said Fire Chief Keith Woodley, who has worked for the city for almost 18 years. "For several years, we've had budget cutbacks. We're pared down to the bone."
The fire department previously cut child safety seat inspections and public CPR classes, and has scaled back firefighter-led classes in public schools, he said.
At the beginning of the process to develop this fiscal year's budget, Bennett warned the Citizens' Budget Committee that it should raise the city's property taxes to their maximum in order to build up a reserve for next fiscal year, which starts on July 1, 2009. The budget committee is made up of residents, the Ashland City Council and the mayor.
Concerned about the financial impact on taxpayers, the Citizens' Budget Committee refused to raise property taxes to their ceiling.
"They made the judgment that it was not the right thing to do. We're going to respect that judgment," Bennett said.
The budget committee did approve a smaller property tax increase than Bennett recommended and a budget that ate into reserve funds.
The budget committee also approved $70,000 for a consultant's study about whether Ashland's pay and benefits for city employees match up against other communities, and $198,000 for community and economic planning.
The total budget authorized by the City Council was $95.2 million.
Bennett said city staff will seek the council's advice, but staff can cut spending without council authorization.
For several years, Ashland Finance Director Lee Tuneberg has been warning the Citizens' Budget Committee of looming financial problems from city spending growing faster than revenue increases. Those warnings came even before the national economic recession.
In a move that proved costly for the city, the City Council tried to intervene in a proposed Mt. Ashland Ski Area expansion in 2006. The Mt. Ashland Association sued the city and a judge ruled for the association in October of this year.
The city will pay $85,000 to the Mt. Ashland Association to cover part of the association's legal fees.
The city has spent $214,711 to date on its own legal bills for an outside firm to handle the case, Bennett said on Thursday.
The City Council authorized spending up to $225,000 for legal help.
The combined cost to the city from its own legal bills and the Mt. Ashland Association's legal bills is now at $299,711.
The ski area expansion is on hold because of other lawsuits filed by environmental groups against the U.S. Forest Service.
Staff writer Vickie Aldous can be reached at 479-8199 or firstname.lastname@example.org. To post a comment, visit www.dailytidings.com.