Citizen's View: City budget has long-term issues
Our city has just completed its budget for the coming fiscal year, and all sounds good. But what lurks on the horizon is not good.
In the past year, there have been a number of articles about various states (such as Illinois) and local governments (e.g., Stockton, Calif.) facing huge revenue and tax problems. These problems all revolve around one issue: liability for future payments to current and former employees.
On May 30, the Wall Street Journal included an article on what has happened in Sonoma County, Calif. The issue: how to maintain roads and pay for the pensions. The answer: raise taxes.
Think this cannot happen in Lake Oswego? Think again.
Exhibit one: The City Councils goals for this year clearly state that road maintenance should be undertaken if funds are available (italics added), and the Citizen Budget Committee was able to find the funds for this year. But will funds continue to be available, and are we are really maintaining our streets sufficiently?
Funds are an issue, believe me. About two-thirds of our city spending goes to pay salaries and benefits (current and future) for city employees. Every year, there are step increases (which reward longevity) and COLA increases (to compensate for increased cost of living). Then there is PERS (continually increasing) and retiree health benefits (constantly increasing).
What does this mean for the taxpayer?
It means a larger and larger portion of your taxes and those we get from the state go to pay for salaries and future benefits. Right now, the increase in property values that the city is allowed by law (your taxes do go up every year, dont they?) is basically going to pay these personnel costs. That means there is less and less for the other expenses, such as road maintenance.
Now, some of the politicians will tell you that this is not a problem weve handled it every year. Well, that is not a good answer. Ask them to show you the numbers that prove it will not be a problem.
I know it is a problem. I have run businesses that experienced the same problem. One of them eventually went out of business! Of course, our city cannot go out of business. What I had to do as the head of a business was find new ways to be more productive. That means doing more with fewer hours worked.
Our city has not tackled this issue straightforwardly. If it had, we would see declining numbers of city employees each year. In fact, in this years budget committee sessions, our city manager indicated he was satisfied with the current number of city employees.
We cannot be satisfied! The personnel costs will keep going up. As contracts get renegotiated, the costs will go up even more. Why has it taken over a year to get a contract with the firefighters union?
We must privatize our city spending and we should be doing it now, before it becomes a big problem. Even if an outside contractor costs the same as we are currently spending, it avoids the ever-increasing benefit costs.
There are areas where we can do this today, such as street sweeping and grass cutting. Why are we waiting? Every month we do not act adds more to the cost through future liability.
Gerry Good is a Lake Oswego resident and a member of the Lake Oswego Citizen Budget Committee.