"Your City" – Month 2002 DIMINISHING RETURNS The Challenge of Providing Basic Services In "Your City"

"Your City" – Month 2002"Your City" – Month 2002

DIMINISHING DIMINISHING RETURNSRETURNS

The Challenge of Providing The Challenge of Providing Basic Services Basic Services In "Your City"In "Your City"


OverviewOverview

Services ProvidedServices Provided– Cost of Basic ServicesCost of Basic Services– Funding SourcesFunding Sources

Financial OutlookFinancial Outlook– Community Distress SignalsCommunity Distress Signals– ChallengesChallenges– TrendsTrends


Overview ContinuedOverview Continued

We Are Not Alone – Statewide TrendsWe Are Not Alone – Statewide Trends Where are "Your City" Revenues and Where are "Your City" Revenues and

Expenses Headed?Expenses Headed? What Has "Your City" Done So Far?What Has "Your City" Done So Far? What Does the Future Hold for "Your City"?What Does the Future Hold for "Your City"?


Services Currently Services Currently Provided by "Your Provided by "Your

City"City"


"Your City" Services"Your City" Services

Property Tax Property Tax Supported ServicesSupported Services– PolicePolice– FireFire– ParksParks– LibraryLibrary– PlanningPlanning– CemeteriesCemeteries– AirportAirport

Services Not Services Not Receiving Property Receiving Property Tax SupportTax Support– Economic DevelopmentEconomic Development– StreetsStreets– Code EnforcementCode Enforcement– Municipal CourtMunicipal Court– WaterWater– SewerSewer


Cost of Basic City Services – Tax Cost of Basic City Services – Tax SupportedSupported

PolicePolice– Total Police BudgetTotal Police Budget $_______$_______

## Sworn Officers## Sworn Officers ## Clerks & Support Staff## Clerks & Support Staff ## Patrol Cars## Patrol Cars ## Dispatchers (or dispatch services)## Dispatchers (or dispatch services) FacilitiesFacilities Dare, Neighborhood Watch, Community PolicingDare, Neighborhood Watch, Community Policing Etc.Etc.



ParksParks– Total Parks BudgetTotal Parks Budget $_______$_______

## Personnel## Personnel ## Parks (# Acres)## Parks (# Acres) FacilitiesFacilities EquipmentEquipment UtilitiesUtilities Capital Improvements & MaintenanceCapital Improvements & Maintenance Etc.Etc.



List Other Funds/Examples HereList Other Funds/Examples Here


Funding SourcesFunding Sources

How Does "Your City" Pay for Services?How Does "Your City" Pay for Services?All Revenues - Any City

24%

31%8%

12%

7%

4%

8%6% Property Tax

Utility Fees

Franchise Fees

Charges for Services

Shared Revenues

Fines & Forfeitures

Grants

Reserves


Funding Sources ContinuedFunding Sources Continued

How Does "Your City" Pay for Basic Services?How Does "Your City" Pay for Basic Services?

Your City Revenues Supporting Basic Services

58%0%

11%

6%

14%4% 3% 4%

Property TaxUtility FeesFranchise FeesCharges for ServicesShared RevenuesFines & ForfieturesGrantsReserves

Funding for Basic Services does not include Utility Fees. Most utility funds are enterprise funds, meaning they operate like a business and must be self-supporting. Utility rates are not eligible to be used for purposes other than supporting the utility system.


What’s the Financial What’s the Financial Outlook?Outlook?


1.1. City heavily dependent on one economic City heavily dependent on one economic sector sector

2.2. City has experienced disruption of a major City has experienced disruption of a major employeremployer

3.3. ““Partner Organizations in community Partner Organizations in community having economic trouble (county, school having economic trouble (county, school districts, etc.) districts, etc.)

Community Distress SignalsCommunity Distress Signals

Check indicates "Your City" has experienced distress signal


Community Distress Signals Cont.Community Distress Signals Cont.

4.4. A number of City’s businesses and A number of City’s businesses and industries having economic difficultyindustries having economic difficulty

5.5. City has limited economic development City has limited economic development options options

6.6. City has a fast-growing population without City has a fast-growing population without off-setting revenue growthoff-setting revenue growth




7.7. City is heavily dependent on property City is heavily dependent on property taxes (more than 50%)taxes (more than 50%)

8.8. More than 1% of property taxes lost due to More than 1% of property taxes lost due to Measure 5 tax limits (compression)Measure 5 tax limits (compression)

9.9. Limited growth in assessed value (less Limited growth in assessed value (less than 3%)than 3%)




10.10. Expenses exceed current revenues in one Expenses exceed current revenues in one or more fundsor more funds

11.11. Declining unrestricted fund balanceDeclining unrestricted fund balance

12.12. City has developed alternative revenue City has developed alternative revenue sources (little or nothing left in the “bag of sources (little or nothing left in the “bag of tricks”)tricks”)




13.13. Discretionary revenues aren’t keeping Discretionary revenues aren’t keeping pace with general government expensespace with general government expenses

14.14. Limited capital investment in new City Limited capital investment in new City facilities, equipment & deferred maint.facilities, equipment & deferred maint.

15.15. City is providing or considering provision of City is providing or considering provision of traditional City services via special traditional City services via special districtsdistricts



ChallengesChallenges

Measure 5 Tax LimitationsMeasure 5 Tax Limitations– "Your City" lost $_______ due to Measure 5 "Your City" lost $_______ due to Measure 5

compression during FY 2001-2002compression during FY 2001-2002 Measures 47/50 Tax LimitationsMeasures 47/50 Tax Limitations

– "Your City" has averaged a __% annual "Your City" has averaged a __% annual increase in assessed value during the last four increase in assessed value during the last four yearsyears

– Tax limitations compounded by lack ofTax limitations compounded by lack of Regulatory Compliance CostsRegulatory Compliance Costs


Challenges ContinuedChallenges Continued

Providing Services to Keep Up with Growth Providing Services to Keep Up with Growth (this bullet to be removed if no growth)(this bullet to be removed if no growth)

State Budget CutsState Budget Cuts Overall costs for "Your City" have increased Overall costs for "Your City" have increased

by over __% over the last four yearsby over __% over the last four years– Health, Property, Liability, Workers Comp. Health, Property, Liability, Workers Comp.

InsuranceInsurance– PERSPERS– Utility CostsUtility Costs


"Your City" Trends"Your City" Trends

Rising Costs and Unstable ResourcesRising Costs and Unstable Resources

0

0.5

1

1.5

2

2.5

3

Am

ou

nt

in T

ho

us

an

ds

1997 1998 1999 2000 2001 2002

Fiscal Year

Current resourcesCurrent expenses

Difference between current revenues and expenses balanced by using reserves.



"Your City" Providing Services Cut by "Your City" Providing Services Cut by OthersOthers– School Security School Security – Swim TeamSwim Team– Elementary and Middle School Sports ProgramsElementary and Middle School Sports Programs– Etc.Etc.



Health Insurance Increases Exceed InflationHealth Insurance Increases Exceed Inflation

0

10

20

30

40

50

60

1997-98

1998-99

1999-00

2000-01

2001-02

HealthInsuranceIncreases

ConsumerPrice Index

This is also a statewide and national trend.



"Your City"’s Retirement Costs Are ____% of "Your City"’s Retirement Costs Are ____% of Payroll – Exceeds Statewide AveragePayroll – Exceeds Statewide Average

0

5

10

15

20

25

% o

f P

ayro

ll

1999Valuation

Statewide Av. %

Any City %



Drawdown of Reserves – Nothing Left for a Rainy Drawdown of Reserves – Nothing Left for a Rainy DayDay

0

100

200

300

400

500

600

Th

ou

san

ds

UnrestrictedGen. FundBalance



"Your City" Has Reduced Capital Spending – "Your City" Has Reduced Capital Spending – Deferring Maintenance Leads to Higher Costs Deferring Maintenance Leads to Higher Costs Down the RoadDown the Road

0

20

40

60

80

100

120

1997-98

1998-99

1999-00

2000-01

2001-02

CapitalSpending



"Your City" Grew Much (Slower or Faster) in the "Your City" Grew Much (Slower or Faster) in the Late ’90’s than the Average Oregon CityLate ’90’s than the Average Oregon City

0

2

4

6

8

10

12

14

16

Perc

en

t C

han

ge

1997 1999 2001

Your CityPopulation

All OregonCities



Highway Fund Revenues are DecliningHighway Fund Revenues are Declining

$0.00$5.00

$10.00$15.00$20.00$25.00$30.00$35.00$40.00$45.00$50.00

1998 1999 2000 2001 2002 2003

Per Capita Distribution



Revenue Losses Due to Ballot Measure 5 Revenue Losses Due to Ballot Measure 5 CompressionCompression

02000400060008000

100001200014000160001800020000

CompressionLosses



"Your City" Revenue Growth Lags Behind "Your City" Revenue Growth Lags Behind the Statewide Averagethe Statewide Average

-25

-20

-15

-10

-5

0

5

10

15

20

Perc

en

t C

han

ge

All Cities

Your City


We Are Not Alone – We Are Not Alone – Statewide TrendsStatewide Trends

Based on information from the League of Oregon Based on information from the League of Oregon Cities report “Diminishing Returns: Oregon Cities’ Cities report “Diminishing Returns: Oregon Cities’

Struggle to Afford Basic Services (April, 2002). Struggle to Afford Basic Services (April, 2002). (All data was adjusted for inflation.)(All data was adjusted for inflation.)


We Are Not Alone –We Are Not Alone –Statewide TrendsStatewide Trends

Property tax revenues per capita have Property tax revenues per capita have remained flat or have decreased in most remained flat or have decreased in most communities during the past 5 years communities during the past 5 years (inflation adjusted)(inflation adjusted)

49 cities are in compression today (up from 49 cities are in compression today (up from 41 previously)41 previously)

Assessed value has not reached the 3% Assessed value has not reached the 3% ceiling allowed in 31 Oregon cities.ceiling allowed in 31 Oregon cities.


We Are Not Alone –We Are Not Alone –Statewide Trends ContinuedStatewide Trends Continued

General Fund/Property Tax revenues are General Fund/Property Tax revenues are decreasing as a share of all city revenuesdecreasing as a share of all city revenues

Capital funding has generally decreased as Capital funding has generally decreased as a percent of total expendituresa percent of total expenditures

Ending General Fund balances declined in Ending General Fund balances declined in many cities during the 1990’smany cities during the 1990’s

Payroll costs for insurance and retirement Payroll costs for insurance and retirement have increased throughout the statehave increased throughout the state


We Are Not Alone –We Are Not Alone –Answers to Survey QuestionsAnswers to Survey Questions

77% of survey respondents said they have felt, or 77% of survey respondents said they have felt, or will soon feel, the effects of Measures 5 and 50will soon feel, the effects of Measures 5 and 50

61% of respondents said property tax limits have 61% of respondents said property tax limits have already affected city revenues and servicesalready affected city revenues and services

59% of respondents said they expect to 59% of respondents said they expect to experience deteriorating financial conditionsexperience deteriorating financial conditions

Only 22% of cities said they were better off Only 22% of cities said they were better off financially in 2001-02 than a year earlierfinancially in 2001-02 than a year earlier


Cities’ Ability to Meet Financial Cities’ Ability to Meet Financial Needs in 2000-2001Needs in 2000-2001

NANA19%19%Not sure/no changeNot sure/no change

54%54%59%59%Less ableLess able

46%46%22%22%Better ableBetter able

NationalNational**OregonOregon

* Compares Oregon with results of a survey conducted in March-April 2001 by the National League of Cities of 325 cities.


Assessed Value Changes – Assessed Value Changes – 1999-00 to 2000-011999-00 to 2000-01


Impact of Compression 2000-01Impact of Compression 2000-01


Where Are "Your Where Are "Your City"’s Revenues and City"’s Revenues and Expenses Headed?Expenses Headed?


Demands and Costs Will Demands and Costs Will Continue to IncreaseContinue to Increase

Public expectations for services continue to grow: faster, better, more

Pension/health care cost continue to increase

State/federal mandates: especially environmental will impact the cost of regulatory compliance


Demands and Costs Will Demands and Costs Will Continue to IncreaseContinue to Increase

Other uncontrollable costs will impact city finances: – Energy– Property/liability insurance– Litigation– Natural disasters– Binding arbitration for public safety and other

employee bargaining units


Existing Revenues for Basic Existing Revenues for Basic Services Will Continue to DecreaseServices Will Continue to Decrease

Impacts of Measures 5, 47 and 50 will Impacts of Measures 5, 47 and 50 will continue to limit property tax revenuescontinue to limit property tax revenues

Gas taxes will not keep up with inflation, Gas taxes will not keep up with inflation, population growthpopulation growth

Economic recovery will be slowEconomic recovery will be slow


Existing Revenues for Basic Existing Revenues for Basic Services Will Continue to DecreaseServices Will Continue to Decrease

Other revenue sources such as State Other revenue sources such as State Shared Revenues, Timber Receipts, Shared Revenues, Timber Receipts, Franchise Authority, Investment Income, Franchise Authority, Investment Income, etc. will decrease or remain stagnantetc. will decrease or remain stagnant

SDC’s will be inadequate to cover the cost SDC’s will be inadequate to cover the cost of growthof growth


What Has "Your City" What Has "Your City" Done So Far?Done So Far?


Strategies Already Implemented Strategies Already Implemented by "Your City"by "Your City"

Switched Health Insurance Providers– Annual Savings: $ ____

Energy Conservation Measures– Annual Savings: $ ____

Joined Local Purchasing Pool– Annual Savings: $ ____


Strategies Already Implemented by Strategies Already Implemented by "Your City" Continued."Your City" Continued.

Reduced frequency of parks maintenance– Annual Savings: $ ____

Contracted economic development activities out– Savings: $ ____


What Does the Future What Does the Future Hold for "Your City"?Hold for "Your City"?

It’s Up to You!It’s Up to You!


OptionsOptions

Service CutsService Cuts

- Closure of fire station - 5 fire fighters- Closure of fire station - 5 fire fighters

- Elimination of after school sports programs- Elimination of after school sports programs

- No improvements to Main St. intersection- No improvements to Main St. intersection

- Deferred maintenance to Community Center- Deferred maintenance to Community Center Local option levy for ______Local option levy for ______


Options ContinuedOptions Continued

Street Utility FeeStreet Utility Fee Business License TaxBusiness License Tax Special Service DistrictSpecial Service District Community prioritization of city services Community prioritization of city services

(Corvallis model)(Corvallis model)


We Want to We Want to Hear From You!Hear From You!


Contact InformationContact Information

Contact City HallContact City Hall

"Your City""Your City"

#1 Main Street#1 Main Street

"Your City", Oregon 97000"Your City", Oregon 97000

Telephone: (###)###-####Telephone: (###)###-####

Fax: (###)###-####Fax: (###)###-####

E-mail/Web: E-mail/Web: [email protected]@ci.anycity.or.us

mailto:[email protected]

Documents

"Your City" – Month 2002 DIMINISHING RETURNS The Challenge of Providing Basic Services In "Your City"