Most parts of the city budget are tracking well with expectations as the city nears the July 1 mid-way point in the current two-year budget cycle, city
Administrative Services Director Mark Welch told the City Council at its study session Monday. Exceptions have to do with the city’s self-insurance for health benefits for employees, which led to the city entering a larger group, and decisions to make land purchases, though much and perhaps all of that expense may be covered by selling other property.
Welch began with a review of purchases and changes by the city within the last year, including the unbudgeted purchase of three properties (Hardesty, Briscoe and Mace), and funding the hiring of more police officers, which will be covered in part by adding a $1.50 safety support fee on every electricity meter in the city. He also highlighted that approximately $100,000 from local marijuana tax revenue was added to the affordable housing trust fund.
“The Hardesty purchase is a purchase that is going to help our wastewater plant ensure proper temperature and treatment of wastewater,” Welch said. “But, it also has another advantage, the opportunity to relocate current city services at the B Street yard, which would then allow more options to repurpose that area.”
The most problematic topic on the agenda was the city’s health benefit plan changes to take effect in 2020.
“The city had a self-funded health insurance plan that was not sustainable long term just because of the cost of our claims,” Welch said. “The city conducted an analysis through our health benefit consultant to look at the foundation of our plans. ... What they found was that if we were to stay self-funded we were looking at a 38 percent premium increase effective July 1.” The budget planned only for a 10 percent projected increased.
“An attractive offer came in from CIS, city county insurances, which was at $5.2 million guaranteed at 18 months,” Welch said. Currently the city spends more than $6 million in claims alone.
As of now, CIS covers the city’s current benefits package, but starting Jan. 1, 2020, those benefits will change because they will be coming from CIS. Welch said because they do not know what that premium will look like, there has been a budget amendment request for a $1 million loan from the water fund to the health benefit fund.
“This is a one-day loan and what it does is it allows the water fund in our financial statements to cover its current liabilities,” Welch said. “The claims that we’ve already incurred, but haven’t received the bills for, is usually around $400,000, but we’re unsure of how PacificSource (the new network) will calculate that.”
The council was troubled by that proposition because there doesn’t appear to be a contingency plan for that loan in case the premium ends up much higher than expected, but Councilor Dennis Slattery asked Welch to dig down into the numbers to see if money can be allocated from elsewhere before the next meeting.
Welch said the city has made all debt payments and that revenue collection remains strong. However, there is an 11.4 percent increase in contractual services, although the council wanted to stress that a portion of that increase is due to grants received for the Ashland Forest Resiliency Project.
“We’re below what we budgeted, but we’re up from a year ago,” Welch said.
The city’s overall capital expenditures are down $600,000, which will be discussed in more detail in the next budget review meeting on Aug. 20.
A few councilors had questions about above-expected revenues from the Transient Occupancy Tax. There was a 2.39 percent increase through May, above the budget projection of 2 percent growth. This isn’t a substantial increase, but some councilors requested monthly and quarterly data be collected comparing smoky and non-smoky months, and information on whether new competing lodging options in Medford and surrounding cities have affected Ashland stays.
The next study session to continue the budget discussion is set for Monday, Aug. 20, at the council chambers, with more specific data collected from each city department.
Contact Ashland freelance writer Caitlin Fowlkes at Caitlin.email@example.com.