West Linn emerges from poor management, adjusts its budgeting process and fee structure to match widely accepted practices
To get its financial house in order, the city of West Linn took four giant steps forward Monday night.
The city council not only used a streamlined process to approve the coming fiscal year's budget, but also reduced the number of funds, transferred or borrowed money from specific funds and raised fees for water services to cover deficits.
The overall purposes of the city's actions include simplifying the budgeting process and complying with Oregon statutes, according to financial consultant Andy Parks.
Parks has been working for the city for a number of months to help correct the city's financial practices, he said, that have contributed to inefficiencies and even theft.
'There was nothing illegal about these practices,' he told the Tidings outside of Monday's meeting. 'But as confusing as (the practices) were, it made it easier to do what they were doing (allegedly commit theft).'
The new-to-West-Linn practices, Parks said, will make it easier for local residents to keep track of what is happening.
But all is not right just yet. It will take time for West Linn to dig itself out of the hole into which it has fallen.
City Manager Chris Jordan says the city could soon default on the $1.8 million in water revenue bonds it sold in 2000 to make improvements to the city's water utility.
City officials were supposed to sell water bonds to make improvements to water infrastructure and make regular increases in water rates of up to 5 percent each year. But previous administrations did not sell all of the bonds voters authorized or approve each of the increases, according to Jordan and Mayor Norm King, leaving the water fund depleted of its reserves.
To begin to fix that problem, the city will raise rates for water services 5 percent July 1 and another 5 percent on Jan. 1, 2007.
But city officials will have to deal with another issue that Jordan says the city has no control over.
'When you don't meet the (bond) coverage requirements in the historic report,' Jordan said, 'the city will be required to hire a qualified consultant to make recommendations to the city as to how we will meet the coverage requirements in the future.'
The key word is 'required,' Jordan said, noting that the city will have to follow the views of a third party.
'We have put ourselves in a real bind at this point,' Jordan told the council Monday. 'This $250,000 loan (to the water fund from the environmental services fund) is just one of several steps that need to be taken in order … to put our financial house in order.'
Another action designed to put the city's financial house in order, according to Parks, is the closing of accounts and subsequent grouping of similar line items within the budget to achieve fewer funds.
'Creating a (separate) fund for a line item is just not the kind of accounting practice that we're recommending,' Parks told the council, referring to previous city practices.
During a meeting recess Monday night, Parks told the Tidings that the council's action to simplify city accounting would achieve what he called 'best practices.' As a consultant, Parks has assisted a half-dozen other cities to streamline their financial affairs.
Other measures to simplify city accounting, he said, would be needed in future budget cycles.
'More simplification needs to take place,' he said. 'This is about as much simplification as we can make in one year.'
Previous practices in the finance department, Parks said, weren't illegal, just improper.
The council approved the $32 million budget unanimously Monday, and praised the staff for a good job.
'We did say that we are keeping services at current levels,' said Council President Scott Burgess. 'And the budget did respond to council priorities.'
But King described the budget as 'transitional,' due to new managers and the changes that are taking place.
'I think it's transitional in that it is a transition away from some of the management fiascos that we've been trying to deal with,' he said. 'So, I see it in a very positive light, as the first step of many to get our house in order.'
Councilor Michele Eberle noted that of the 15 funds in the budget, public safety is the one with the largest number of dollars, while the parks fund is ranked fifth.
'Those are good testaments to what we value in our city,' she said, 'and the money that is supporting us.'