City budget smaller, stronger
City of Prineville adopted a $25 million budget, $7 million less than last fiscal yearThe 2012-2013 City of Prineville budget dropped 23 percent from last year, but City Manager Steve Forrester considers it the strongest of his three-year tenure.
“It is just a very healthy budget in terms of meeting reserves and contingencies,” he said.
The City budget decreased from $32,979,405 in fiscal year 2011-2012 to $25,353,223 for 2012-2013. The difference was prompted mostly in anticipation of a decline in tax income.
“Our property tax revenues are budgeted to be down about 4 percent,” Forrester said.
While that is the case, the City remains in good fiscal shape, primarily because of a substantial debt restructuring effort this past year. By consolidating their existing debt, they nearly saved enough money to backfill the expected tax shortfall.
Though the City produced a strong budget, they will continue to face challenges brought on by the struggling economy.
“We think we are right-sized today for the economy we are in,” Forrester said. “We do still struggle with the general fund. That is one of our biggest funds in terms of the total amount of dollars and it’s also the weakest fund in terms of meeting policy even though I would characterize it as healthy and stable.”
According to City Finance Director Liz Schuette, the general fund contingency remains about $272,000 shy of the established policy for its reserves. So far, the City has never met the approximately six-year-old policy, although they have come much closer in recent years.
Because of the general fund struggles, the City continues to face challenges paying for public safety.
“We know that (Prineville Police) Chief (Eric) Bush would like to have more resources, both for personnel and equipment,” Forrester said. “That’s an area that we are continuing to develop our strategy and how we meet future needs.”
The City remains concerned about the financial status of its enterprise funds as well. They operate the Meadow Lakes Golf Course and Restaurant, the Prineville Airport, and the City of Prineville Railway (COPR).
Since they took over management duties of the airport last fall, the facility has produced positive results for the City.
“They are holding their own,” Schuette said. “They are right about break-even right now.”
The COPR has shown improvement as well during the past fiscal year.
“We have a good, healthy amount of money in that fund and haven’t had to use any of it,” Forrester said.
While that is the case, the City hopes for more from the enterprise.
“The issue is simply from a purely operational standpoint,” Forrester explained. “In other words, the freight that’s transacted through the freight depot and the railroad operations is not enough revenue to sustain the cost of operation.”
He went on to say that the Railway ran 900 cars this past year, which is more than previous years. Nevertheless, they need to run at least 1,000 to reach a break-even point.
“We’re heading the right direction,” Forrester said. “We would like to head there faster.”
Meadow Lakes, on the other hand, continues to face shrinking golf revenues, although they have begun to stabilize.
“We don’t see too much of a drop this year over last year,” Forrester said.
Although revenues are down, the enterprise has made improvements due to more efficient operations management.
While the economy continues to create challenges, the City has begun to reap the benefits of Facebook’s presence in Prineville, and anticipates a similar boost from Apple.
Forrester estimates that the City received $300,000 to $400,000 of franchise fees from electricity consumption during the past fiscal year.
“I would characterize those as substantial, but not a game-changer — not something that takes us out of the woods,” he said.
The City did not budget for future franchise fees, even though they anticipate them increasing as the Facebook and Apple data centers grow. Instead, they intend to hang on to the money and contribute it to the general fund contingency.
Schuette added that the SDCs (system development charges) paid by Facebook have positively affected citizens’ water and sewer rates. The income has allowed the City to lower its sewer rates while holding a water rate increase to a smaller amount.
“The base rate has actually gone down 71 cents,” she said.
Overall, Forrester and Schuette are encouraged by the new budget and the City’s financial outlook moving ahead.
“The City continues to improve from a financial stability standpoint,” Forrester said. “We are stronger. I think that is a real testament to the staff managing efficiently.”