The Ashland Citizens' Budget Committee approved raising property taxes to pay for firefighting gear, but decided against raising taxes to their legal ceiling in order to build a reserve fund for looming public employee retirement costs.

The Ashland Citizens' Budget Committee approved raising property taxes to pay for firefighting gear, but decided against raising taxes to their legal ceiling in order to build a reserve fund for looming public employee retirement costs.

The decision on Thursday means the owner of a home at a median assessed value of $237,410 will pay an extra $3.80 in the coming year to help pay for fire hoses and protective jackets and pants for firefighters, or 1.6 cents per $1,000 in assessed value.

Assessed values are lower than market values because of property tax limitations approved by state voters.

City property taxes will rise to $4.21 per $1,000 of assessed value, or $999.50 for the owner of a home assessed at the median value. That doesn't include property taxes for the Jackson County government, the Ashland School District or other entities.

City Administrator Martha Bennett had recommended that the Budget Committee raise city property taxes to their legal ceiling in the coming fiscal year, which starts on July 1, to prepare for a Public Employee Retirement System bill increase of $200,000 to $700,000 in the following fiscal year.

That would have cost the owner of a home assessed at the median value another $17.38 per year, or 7.32 cents per $1,000 in assessed value.

The state board overseeing PERS is keeping rate increases down for the coming fiscal year, but city, county and state governments and school districts that pay into PERS expect a significant rate increase in the next fiscal year.

PERS hasn't fully recovered from investment losses that started with the fall 2008 stock market crash.

The PERS system has had some reforms for current government workers, but it promised retired workers an 8 percent return regardless of the stock market's performance.

Resident and Budget Committee member David Runkel, who voted against raising property taxes to build a PERS reserve fund, said cities and school districts should revolt against PERS system costs.

"The pressure has to be kept on the state to solve a problem the state created," he said.

The Budget Committee is made up of residents, the Ashland City Council and the mayor.

Resident and Budget Committee member Lynn Thompson said she is philosophically opposed to raising property taxes to their legal ceiling.

"It does exhaust our options as a Budget Committee if we're faced with an emergency — a real emergency, not an expected emergency," she said.

Rather than raising taxes for PERS expenses, Thompson said the city of Ashland needs to work harder to lower the cost of its generous benefit packages for employees.

The Budget Committee agreed to eat into reserve funds to pay for a 15 percent health insurance premium rate hike from Blue Cross, which provides insurance to the city of Ashland through a pool of cities and counties. That comes on top of a 13 percent increase for this fiscal year.

City of Ashland employees pay 5 percent of the cost of their health insurance premiums.

The city of Ashland has little opportunity to ask employees to take on a greater share of health insurance costs in the coming fiscal year because no union contracts are up for negotiations, City Administrator Martha Bennett said.

The city may examine whether it could save money by going to a self-insured model, she said.

City Councilor Russ Silbiger said court challenges of high PERS costs haven't proven successful, so the Budget Committee should prepare the city now for the coming PERS bill.

"To me, this is a train that's coming toward us and we can start moving away from it this year, or we can let it hit us next year," Silbiger said.

Silbiger, Councilor Kate Jackson and Councilor Eric Navickas, along with two resident members of the Budget Committee, were in the minority in voting to raise property taxes to their legal ceiling to save for higher PERS costs.

Councilors David Chapman, Greg Lemhouse and Carol Voisin joined Mayor John Stromberg and four resident members in voting down that property tax increase.

All but two of the elected members of the Budget Committee approved the property tax increase to pay for firefighting gear. Councilors Chapman and Voisin said the $30,000 for gear should have been built into the regular budget, not proposed as an add-on funded by a property tax increase.

The Budget Committee approved an overall city of Ashland budget of $89.3 million, up from the current fiscal year's budget of $83 million.

Most of the $6.3 million increase comes from additional spending on city infrastructure projects, including parks system projects funded by the city's restaurant and deli meals tax and infrastructure projects partially funded by $2 million in grants.

The budget and the property tax rate approved by the Budget Committee next goes to the City Council. The council will hold a public hearing and consider initial adoption on June 1. Final adoption is set for June 15.

The City Council can reduce spending by any amount, but can only increase spending by 10 percent per category. The council can only increase the property tax rate approved by the Budget Committee by going through an involved process.

The budget for the coming fiscal year includes a small property tax increase to pay for an uptick in funding from a voter-approved levy to supplement Ashland Public Library hours and services. That would cost the owner of a home with a median assessed value of $237,410 an extra 50 cents.

The library levy is not part of the city's property tax rate and doesn't contribute to pushing the city property tax rate toward its legal ceiling.

Public libraries in Jackson County are run by a library management company.

Staff writer Vickie Aldous can be reached at 541-479-8199 or vlaldous@yahoo.com.