Spending Plan: City budget committee approves $92.5M budget

The budget process has been “exceptionally challenging,” according to the proposed budget document on the city’s website. High inflation, a competitive labor market, and increasing costs for materials and supplies are all cited as reasons for the challenges.

“These conditions have increased the city’s operating costs with limited ability to increase revenues. The federal ARPA stimulus funds that helped the city through the COVID pandemic were appreciated but will be depleted in the coming year, and the city will need to adjust accordingly. A strong note of caution is warranted in the coming year to ensure the long-term financial health of our community,” the document reads.

Budget under stress

Along with the exhaustion of federal COVID relief dollars, the city is experiencing higher costs to support cost of living adjustments (COLA) for unionized city employees, including an assumed 5% COLA for American Federation of State, County and Municipal Employees (AFSCME) and a 6% COLA for St. Helens Police Association (SHPA) employees, and other higher-than-anticipated inflationary increases in insurance, materials, and professional services.

“Expenses within the General Fund are budgeted at an overall increase of 10.5% over the previous year. Combining all this information essentially means that in the proposed budget for the next fiscal year, the city will operate at a 5% deficit. To alleviate that deficit, the city is using the available General Fund reserves to create a balanced budget,” the budget document states.

The city’s general fund’s ending balance is projected to be negative for the fiscal year 2025-2026. The city’s adopted financial policy strives to maintain a minimum reserve fund balance of 20% in the general fund. Based on the city’s model, and without adjustment, the city will eventually exhaust the reserve fund.

“It is imperative that the city make the necessary adjustments to align revenues with expenditures and maintain the long-term fiscal health of our community, the budget reads. “This year’s proposed budget would see the general fund’s reserve balance end at 15%, and in 2025-2026, this number is projected to be -6%.”

“Reserve funds are the savings accounts of the government world, and they are one tool that governments use during times of economic downturn when revenues are not matching expenses,” St. Helens Communications Officer Crystal King told The Chronicle. “The City of St. Helens will still have an estimated 15% reserve fund balance at the end of next fiscal year, and the city council tasked city staff with exploring additional cost-saving measures and revenue options in the coming year. The city will have to take the necessary steps to balance service levels with available resources. This can be done in two ways for the general fund: exploring additional revenues or reducing expenses.”

King said the city council has directed city staff to come back with options to explore over the next fiscal year that include working with each city department this year to develop a budget that reduced proposed expenses.

It is important to note that the General Fund does not account for other funds such as the Enterprise Funds (water, sewer, and storm), which is what the Public Works Department operates out of, the Special Revenue Funds (Tourism, Community Development, etc.), and System Development Charge Funds.

Cost-cutting options

One way the city is moving to cut expenses is leaving vacant positions unfilled, including one police officer, one library position, and unfilled parks and public works positions, King said.

Costs to support city priorities that will affect St. Helens and Columbia County residents will be higher fees to support public safety, water-sewer, and stormwater services.

“The budget committee was presented with multiple fee options to consider,” King said. “$3 is the current public safety fee. The budget committee recommended increasing the public safety fee to $10 in order to service the debt for the construction of the new police station. This still needs to be adopted by city council.

King said the budget committee also is recommending other options to fund the public safety facility and fill vacancies in the police department to maintain the city’s 24-hour law enforcement coverage.

Those options include a possible general obligation bond which would need to go out to the voters for approval that could be used to pay back the cost of the police station.

“A local option levy and gas tax to hire additional officers are other options brought up by the committee. These would also need to be approved by voters,” King said.

Sewer, water, stormwater fees

Additionally, to meet the needs of the city’s sanitary sewer program, the proposed budget includes a sewer rate adjustment of 8% for the fiscal year 2023/24. The city is working to prioritize the “greatest system deficiencies” while deferring lower-priority projects. This year, the city will continue to address the $10.4 million sewer main upsizing project located in a basin overcapacity and a second $4.9 million upsizing project in 2024/25, according to the spending plan.

The stormwater program will see a similar rate adjustment. The proposed budget includes a $2.40 rate adjustment for the coming year to address capital projects and maintenance needs necessary to adequately operate the system.

“The storm rate adjustment is $2.40 per Equivalent Dwelling Unit (EDU) per month and applies to all utility customers, not just residential customers,” King said. “If adopted by the city council, the new rates will be effective the first full billing cycle of the 2023/24 fiscal year. This means that the new rates take effect July 15, 2023, and the August 2023 billing will be the first full billing cycle to reflect the new rates.”

The city’s main redevelopment project along the Columbia River waterfront is still a key priority funded by grants, system development charges, private partnerships, and urban renewal funds.

Read the full proposed St. Helens budget attached.

Follow developments here online and in the Wednesday print editions of The Chronicle.