Budgeting Made Simple

Putting out the budget each year is a long process that takes the City anywhere from six to seven months. The end result is a 250-plus page document that indicates where every penny of a roughly $44.1 million budget will come from and how it will be used. When you add in fund contingencies and beginning fund balances, overall budget is closer to $75.7 million.

Throughout the budgeting process I often get questions about fund accounting principles and why the City cannot be more flexible with its various revenues streams and cost allocations. Sometimes, the temptation is to simply allocate the cost of popular programs to the various funds that have a little more money in them. But we just can’t do that. Most of the City’s budget, and revenues, are legally restricted in their uses. I like to say that the City has two kinds of money: 1) restricted revenues and 2) unrestricted revenues. Unrestricted revenues, accounted for in the City’s General Fund, is money the City Council and Budget Committee get to choose where and how to spend. Restricted revenues are monies dedicated to a specific project or service as directed by state/federal law or other rules. It all gets a little complicated.

Restricted revenues are still governed by the City Council, but within its respective restrictions. For example, state law prevents the City from using the Wastewater Fund’s dedicated money to hire more General Fund police officers.

Our General Fund accounts for a little over $14.3 million of the $44.1 million budgeted for expenditure. The City’s portion of your property taxes go into the General Fund, as do franchise fees, fines, etc. This money is used to fund our police department, parks and recreation, library services, aquatics and many other program areas. To many, the General Fund provides the types of services expected by a local government, but are completely discretionary under law.

Some people are surprised to learn that Woodburn’s share of property taxes total roughly $8.7 million annually. It costs $7.5 million to run our police department alone. So, about 85 percent of every property tax dollar collected by the City goes toward funding the police department. That leaves about $1.2 million of remaining property tax revenue to allocate to other services. We would not have our other quality of life services and programs (parks, library, aquatics, etc.) without additional revenue sources.

In Oregon, local government budgets are regulated via state budget law. We have to balance our budget the same way big cities like Portland or Eugene do, or smaller cities like Donald and St. Paul. I believe we have done a good job in Woodburn of using your tax dollars wisely. We have eliminated over 23 positions in past years. Because of our careful case-by-case approach to belt tightening, the public has not suffered visibly dramatic impacts to City programs. We expect to continue to be successful in managing our limited resources while preserving valuable public services the greatest extent possible.

There continues to be financial challenges ahead, however. Primary revenue sources continue to be vulnerable to economic conditions. We have learned that the increasing speed in which economic conditions can change — leaving the City challenged to maintain critical serves — is a possibility we must always be prepared for and requires careful management of our cash reserves and contingencies. We expect health care and PERS costs to continue outpacing revenue growth for the foreseeable future. Unfortunately, we have no control over PERS and as we have seen, benefit and insurance costs will continue to rise.

Your City Council and Citizen Budget Committee have done a great job of keeping the citizens of Woodburn at the forefront of their thoughts as they scour the numbers and do what they feel is best for Woodburn. Nobody likes cuts or layoffs. We have worked hard to set the stage for new growth that is intended to add value and improve the quality of life in our community. Those efforts are looking more and more like they will be successful.

And finally, you are invited to attend the City of Woodburn’s Budget Committee meeting scheduled for Saturday, May 13, beginning at 9 a.m. The meeting will be held at City Hall. As always, if you have any questions about the budget process, don’t understand the numbers or have a suggestion, don’t hesitate to give me a call at 503-982-5228.

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