Officials say new revenue needed or quality of life in city will suffer

Gresham officials are banking on a positive outcome in their court appeal to increase utility licensing fees in the 2012-13 budget, hoping to add $2 million to the city's strained coffers - a drop in the $343 million budget, but the only new revenue officials found for this fiscal year.

Budget writers assumed an appeals judge will, in a decision expected in a couple months, permit a 2-percent increase in the fee the city charges for Portland General Electric, Northwest Natural and Rockwood Water People's Utility District to use city streets.

The utilities sued the city in July 2011, when the 2011-12 budget took effect, saying the city's 'licensing fee' is equivalent to a 'privilege tax,' which Oregon statute limits at a 5-percent charge on gross income. In January a Multnomah County Circuit Court judge agreed the increase was unlawful.

Until the ruling, ratepayers temporarily paid more: The average PGE customer paid an extra $1.80 monthly for electricity, and the average Northwest Natural customer paid $1.35 more for gas.

If an appeals judge supports the city, the $2 million in new revenue won't be enough to sustain services for the growing city whose staff continues to shrink, leaving officials searching for new revenue to avoid further cuts.

Last year the city shrank by 36 positions and $18 million. This year's budget is more stable, with one vacant position eliminated and about $2 million in overall budget reductions to $343 million.

That's a $10 million reduction from the city's 2009-10 budget.

'From 2008-09 to the current year, more than 70 positions have been eliminated,' said Sharron Monohon, budget and financial planning director. 'That's very significant for a workforce of this size (518 people).

'It definitely plays out in our ability to provide services. We try to provide the best service as efficiently as possible, but ...' she trailed off.

Shrinking services

As City Manager Erik Kvarsten said before the first of three budget committee meetings in April, the size of Gresham's staff, reduced by 12 percent over five years, is less than half what the city of Eugene's was when its population was the size of Gresham's, around 106,000.

'The scrappy frugality of this operation cannot be sustained indefinitely,' Kvarsten wrote in the 2012-13 proposed budget. 'As demands for services increase and costs continue to rise, our flattening, and in some cases backsliding, revenues will not continue to support police, fire, parks or other core services at this community's desired level, and Gresham's quality of life will noticeably erode.'

Mayor Shane Bemis, in his state of the city speech last month, addressed those concerns: Either the city finds new revenue to maintain services, or it starts cutting services.

Raising property taxes isn't an option with the state's flawed tax system, Monohon said, so officials are turning to options such as raising utility licensing fees to bolster the general fund, and are looking for other such options to raise new revenue in the future.

New revenue

Utility license fees go to the $47.5 million general fund, which pays for police and fire services, community development, economic development and environmental services.

Police Chief Craig Junginger and Fire Chief Scott Lewis, at the budget meeting Thursday, April 19, said their proposed service levels are remaining flat - an improvement from last year's double-digit personnel cuts.

The chiefs justified their expenses to the budget committee, saying their police officers and firefighters offered exceptional services despite budget cuts, and that administration has been wily in managing equipment, finding grants to pay for replacements and working to prolong equipment life.

Overall budget reductions show citywide long-term cost-saving measures are beginning to pay off, Monohon said.

'Health-care costs are one we put a lot of effort into, and we've seen significant cost savings in keeping that low,' she said, noting also energy efficiency changes as well as mid-year staff cuts.

After the 2012-13 budget is approved, city officials said repeatedly there needs to be frank conversation with Gresham citizens about either cutting services or paying more.

'One way or another, we're going to have to get to a place where we're comfortable with coming up with a few dollars more per month for the community we enjoy,' Bemis said in his state of the city address. 'It's not about achieving philosophical efficiencies. It's a math problem that eventually results in a place we would not want to live.'

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