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City may cut staff to fill $1.8 million shortfall

PERS spike, low property values contribute to budget gap


Though the city of West Linn is in better financial shape than it was five years ago after its former finance director embezzled $1.4 million, it still has a sizeable problem to address in the next biennium.

According to forecasting, the city is looking at a $1.8 million shortfall over the next two years thanks to a spike in Public Employees Retirement System costs and a steady fall in property values.

Already running on a lean budget and stripped-down services, the city is looking to cut more staff to close the gap.

Still in the first phase before budget approval in June, the city’s finance director, Richard Seals, is examining every nook and cranny where pennies can be saved. With the city bringing in less revenue and expenses continuing to climb, a reduction in personnel seems like the most likely answer.

The city currently employs the equivalent of 132 full-time employees, down seven from the last biennium. Milwaukie is similar with 138 FTEs, and Lake Oswego has 362 FTEs.

“Pretty much everybody is looking to reduce their FTEs,” Seals said.

The funds that are seeing red are the general fund (-$500,000), public safety fund (-$328,000), library fund (-$141,000), parks and recreation (-$236,000) and planning fund (-$667,000) for a total of $1,868,000.

Those funds are not meeting the city’s set policies for minimum fund balances or reserves.

According to Assistant City Manager Kirsten Wyatt, although the city is already “running lean,” more personnel cuts are in store. Seals estimates a cut of another six to eight FTEs.

“Really what closes that gap is a reduction in the FTE count,” Wyatt said.

To make those cuts, the city is looking at not filling positions when people retire or resign, along with asking if some employees are willing to go from full time to part time. Parks and Recreation Director Ken Worcester is an example of that. Earlier this year he offered to work only part time in an effort to preserve the parks and recreation department. Also, some vacant library manager positions have not been filled.

Wyatt said the city is also shuffling employees internally when possible and then not backfilling their previous roles.

“We’re going to feel the pinch, but we didn’t pinch a good employee,” she said.

Another way the city is trying to save money is through improved operations, such as more automated and online services like e-billing, which reduces staff time dealing with phone calls and in-person visits.

“I think we are asking (employees) to work smarter and use technology. We don’t have as much staff to do the handholding,” Wyatt said.

Revenues

The city of West Linn currently has one of the lowest utility bill rates of $71 a month, compared to the $150 of Wilsonville and the $122 of Lake Oswego. West Linn’s rates are locked in to only increasing 3 percent a year unless there is a public vote.

The city’s taxes are also one of the lowest at $2.12 per thousand, just below Tualatin’s $2.27. This rate was set in 1995 when state mandate made property tax rates permanent. Lake Oswego’s rate is $5.04 per thousand.

And as property values plummeted during the recent recession, the city collected less and less in property taxes.

“Property tax funds are where we are hurting,” Seals said.

Expenses

Last fall, the state Public Employees Retirement System board announced the new PERS rates, which public employers such as the city will need to pay for the next two years — these rate increases will cost the city an extra $430,000 per year.

PERS is the retirement system for public service workers in Oregon, including state, local government and school district employees. Although the rate jump doesn’t come as a complete surprise, the 4.5 percent increase did.

Seals is following the 17 PERS reform bills in the Legislature right now. “We hope at least two of them get passed,” he said.

Another increasing expense is health care costs. Last year, the management group at the city agreed to pay a larger chunk of health insurance premiums and prescription coverage. The police union also agreed to pay more for prescription coverage. The city is aiming to ask its largest union group this year to also take on more of the health insurance premiums.

Process

In April, the city manager will propose a balanced budget with a recommendation to the budget committee, which is composed of five citizens and the city council. Then, in May, the committee will review the budget and make a recommendation to the city council. The council will vote on adopting the budget by the end of June.

“Public safety has to continue. We just have to do it smarter and with less people,” Seals said. “We’ll figure it out. We’ll balance the budget again.”

To submit your input as to how the city should mend the budget gap, visit westlinnideas.com.



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