June 18 – The City of Ashland has paid off a general fund budget shortfall of $3 million for this biennium with enough money to fund four new priorities and replenish the city’s emergency fund.
The city took advantage of budget cuts and double blows of unexpected prosperity to reduce the deficit.
In a memo sent in March this year, City Manager Joe Lessard and then Acting Chief Financial Officer Alison Chan announced budget cuts of 5% to 10% for all services dependent on the general fund.
The memo called on departments to reduce their workforces by maintaining a hiring freeze. All vacant positions then have the mandate to remain so, and to limit travel and training as much as possible. Additional cost reduction measures have been negotiated with each department.
The ministerial sacrifices saved $1.4 million, according to information released at the city council‘s special business meeting on Tuesday.
The budget created at the beginning of the previous fiscal year did not take into account and could not account for the end result of the transitional accommodation tax – also known as the hotel tax – and property taxes.
Property taxes are expected to fall due to the Almeda fire, and hotel taxes have shrunk under COVID-19 stay-at-home orders, provided those who write the budget in 2020 are expected to continue.
Windfall revenue from these two taxes amounted to $1.35 million. Combined with savings from budget cuts, this reduced the general fund deficit to $545,000.
Another unexpected windfall has taken us from filling a hole to building 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 dollars). We had $2.5 million more in opening balance than we had estimated,” the finance ministry said. Director Alison Chan, who retired this week.
Chan said some assumed the budget committee‘s inability to predict that number was a failure, but Chan said that’s normal for city budgeting. It is better to plan conservatively and end up with more than expected than to over-budget and end up with less.
“When we make a budget, we have to estimate the initial fund balance; it’s kind of like taking your checking account balance, adding what your salaries are, and subtracting your expenses,” Chan said.
The general fund deficit was $1 million when the budget was created, but has grown to $3 million over time. Parks and Recreation has the third-largest budget in the city, at $7 million for this year.
Parks and recreation have been funded by property taxes for nearly a century. The city then used food and beverage taxes, a fund of about $2 million a year, for parks instead of property tax money.
Lessard raised a problem with this arrangement earlier this year, arguing that the wording of the ballot given to voters when the tax ordinance was passed limits the food and drink tax to community improvement projects. capital assets for parks and recreation, so the tax is 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 are otherwise fully funded.
Contact Morgan Rothborne, Mail Tribune reporter, at [email protected] or 541-776-4487. Follow her on Twitter @MRothborne.