The city of Ashland will tap a variety of sources to make a $1.43 million AFN debt payment during the fiscal year that starts July 1.
Ashland Fire & Rescue, the Ashland Police Department and other city departments are continuing to pay a heavy price for helping to shoulder the Ashland Fiber Network's debt.
Built in the late 1990s to provide television and high-speed Internet service, AFN accrued $15.5 million in debt. The city privatized the money-losing television side of the enterprise in 2006, helping to stem the flow of red ink.
Although a business plan predicted AFN would be able to pay only $200,000 each year toward its debt beginning in 2007, AFN's finances have turned around enough that it has been paying $356,000 annually for almost two years, and will likely do so again for the coming fiscal year that starts on July 1.
AFN's total debt payment for the coming fiscal year is $1,431,378.
Other city departments are paying $700,000 in the coming year for AFN's debt.
Ashland Fire & Rescue is contributing $102,160, Ashland Finance Director Lee Tuneberg said.
Tuneberg said spreading the AFN debt across other departments has an impact on rates, fees and personnel. But he said some departments would face staff cuts because of a decline in activity anyway.
For example, Tuneberg said the Community Development Department has seen a decline in its work related to construction.
That department has sustained job cuts in prior years, including during a December 2008 round of cuts, with no new job cuts proposed for the coming fiscal year.
Tuneberg said it wouldn't make sense to keep the Community Development Department staffed at the level it was at during the construction boom of a few years ago.
“All things being equal, it would be easier to balance the budget without AFN debt,” Tuneberg said.
Other departments, such as Ashland Fire & Rescue and the Ashland Police Department, are not seeing a slump in activity.
Meanwhile, two firefighters and the coordinator of the popular Community Emergency Response Team are facing the elimination of their jobs. The combined cost of salaries and benefits for the two firefighters is $175,000, while salary and benefit costs for the CERT coordinator are $77,000.
Those jobs will be cut if the Ashland Citizens' Budget Committee and the Ashland City Council approve a city budget of $80.9 million as proposed by City Administrator Martha Bennett.
That budget includes no property tax increase.
Increasing property taxes to save Ashland Fire & Rescue jobs would cost the owner of a median-value home an extra $30.60 per year.
Meanwhile, the Ashland Police Department is contributing $111,896 for AFN's debt — even as it tries to save $32,300 by cutting a police records clerk to half-time.
A police officer position that cost $85,000 per year in salary and benefits was already cut in December 2008, along with several other jobs in various city departments.
The Electric Department will pay $252,300 toward the AFN debt, Municipal Court will contribute $8,300, Community Development will pay $44,444 and the Public Works Department will pay $180,900 under the proposed budget, according to Tuneberg.
The Public Works Department is facing the loss of a water distribution worker and a sewage collection worker. If the Citizens Budget Committee chooses to save those jobs, customers would see their water bills go up 1 percent and their sewer bills go up 1.6 percent.
All the job cuts in the proposed budget for the coming fiscal year total about $1 million.
The city is also using $375,378 from a court settlement with the Bonneville Power Administration to help make AFN's coming fiscal year debt payment of $1,431,378.
The court case had to do with BPA electricity overcharges and had nothing to do with AFN, but the City Council previously decided to use the payment on AFN debt.
Tuneberg warned that the BPA court settlement money will be used up and will not be available for the following fiscal year to help pay AFN debt.
That could put even more strain on city departments in the future.
The proposed budget projects that AFN will earn $1,861,500 in the coming fiscal year, but will spend $2,208,062, including the $346,562 it will pay toward its debt.
Rather than having to finance more debt, AFN will dip into its reserve funds by $346,562, leaving it with a projected $425,135 in leftover money.
City policy requires that AFN reserve at least $372,000 as a cushion against unforeseen expenses.
AFN Interim Director Michael Ainsworth hopes to win federal stimulus money to build a WiMax wireless Internet system to cover Ashland, and possibly to extend outside the city.
He estimated there are 4,500 potential customers outside the city. Ainsworth said AFN has 40 percent of the market share within the city, and could potentially win 30 percent of the market share outside Ashland.
The WiMax system would not extent to Talent, he told Citizen Budget Committee members on Tuesday.
Aisnworth previously estimated the cost to build a Wi Max system at $150,000 within Ashland, plus another $100,000 to extend service into rural areas.
In a business plan heard by the Ashland City Council in March, he predicted Wi Max annual revenues could grow to $344,000 in the fiscal year that will start on July 1, 2011.
For the schedule of upcoming Citizens Budget Committee and City Council meetings about the budget click here.
For more information, see the AFN business plan, including 5-year growth projections, attached to this story.
Staff writer Vickie Aldous can be reached at 479-8199 or firstname.lastname@example.org.