Camas mayor warns of ‘draconian’ budget cuts without new revenues

Camas Mayor Steve Hogan unveiled his biennial 2025-26 budget this week and gave Camas City Council members a warning: diversify and increase the City’s revenue sources or prepare to make substantial cuts to City-provided services. “There is a $1.5 million shortfall each year, so $3 million over (2025-26),” Hogan told Council members during their Monday evening workshop. “We have to figure out a way to either keep departments in the City functioning like they are by getting more money, or else we have to make draconian cuts.” Hogan’s recommended budget would — with the exceptions of adding two night-shift sergeants and one lieutenant to the Camas Police Department to “keep up with the growing needs of the community” and increasing funding for street pavement preservation projects — hold steady through 2025 and 2026. To do that, the City will need to increase its revenues to keep pace with inflation and increased costs for labor and benefits. Camas Finance Director Cathy Huber Nickerson said Monday that the City is facing a structural deficit, or persistent budget deficit, with revenues unable to keep pace with escalating costs. In 2024, for instance, the City’s salaries and benefits costs are $31.8 million, a 2.3% increase over 2023 — a year that saw salaries and benefits for City employees increase by 10% over 2022 — while the cost for supplies and services has increased over 27% from 2023 and now total just under $13 million. “Inflation is running around 3 percent but, on the flip side, (property tax) revenues can only increase by 1 percent, so we have this funding gap,” Huber Nickerson said. “And, in 2024, it’s the third year we’ve had this slowdown of commercial construction that’s adversely impacting property taxes.” Huber Nickerson said the City was in decent shape with its revenues until 2022. “From 2016 to 2022, things were going pretty well. We weathered COVID pretty well and also had (increased) sales taxes with ecommerce (with sales tax revenues coming to the City as more people ordered goods delivered to their Camas homes during the COVID-19 pandemic),” Huber Nickerson said. Then, in 2022, the Consumer Price Index (CPI), which shows inflation levels, “started taking off,” Huber Nickerson said, “and we had pressures with labor contracts, especially with uniformed (police) officers, who had almost double-digit market adjustments. Plus, benefits were growing at close to 10 percent.” Even holding off on hiring 28 staff members approved for the City’s 2023-24 budget meant the City would be facing a budget deficit in 2024 and through the 2025-26 budget timeframe, Huber Nickerson said. The City’s adjustments to bargaining contracts also have increased the gap between revenues and expenses, Huber Nickerson said, noting that the City had a 10% increase in salaries from 2022 to 2023, with another 2.3% increase from 2023 to 2024. The mayor’s recommended budget, which will be tweaked by city council members over the next two months, calls for holding cost increases to a minimum while diversifying and increasing revenues in a bid to maintain services while also maintaining the City’s AAA bond rating, which Hogan said saves taxpayers around $1 million for every $20 million in long-term bonds the City uses to fund long-term capital projects such as the recently voter-approved Camas-Washougal Fire Department fire station headquarters to be constructed in downtown Camas. “We have to come up with a new strategy,” Hogan told Council members Monday. “Wages, construction costs and material costs on all capital assets are not going up just 1 percent a year, so we have to figure out how we’re going to maintain our AAA rating while that’s happening.” The mayor said Monday night that his budget goal is to find “stewarship through active and prudent management” by prioritizing the following: “upholding the City’s strong credit rating; rebuilding long-term stability; improving revenue diversity; and addressing environmental needs.” The mayor said there is a way to keep the City stable through 2025 and 2026. “There is a mechanism where we can run the City essentially ‘as is’ and have no deficit,” Hogan said, explaining that this mechanism involves increasing the City’s utility tax, adding a transportation benefit district to pay for street maintenance and other street-related costs and increasing fees the City charges for a wide variety of services. “If we don’t do it right, then (there) could be massive cuts,” Hogan said. The mayor would like Council members to approve a plan that would pull the “sunset clause” on the City’s 2% utility tax, which is set to expire at the end of this year and go out to voters during the Feb. 21, 2025 election to approve a 6% utility tax. The money from this new utility tax would, Hogan said, “focus on police,” by adding supervisory positions Camas Police Chief Tina Jones has said are critical for overseeing more inexperienced police officers during night shifts and preparing for the next few years, when more than 40% of Camas police officers will be eligible for retirement.” “So, the utility tax is one way of picking up a portion of the deficit,” Hogan said. “ANd I’m seeing that roads are another (issue) that needs to be addressed.” Implementing a transportation benefit district, which allows the City Council to set a 0.1% sales tax or a vehicle tab fee that could increase from $20 to $50 over a five-year period. “That would be another way of pulling expenses out of the general fund and have that (transportation benefit district) tax money collected just for streets,” Hogan said, “which would fund the capital costs and labor costs of bringing those streets either up to the level they should be at.” Huber Nickerson said the City’s finance staff also are looking at the services the City provides and looking at ways to collect fees for many of those services. “We’re looking at all services the City provides,” Huber Nickerson said Monday. “We have the mechanism now to actually charge for those services.” For instance, she said, if a private party were renting the City’s Fallen Leaf Park for a special event, the City could charge for garbage collection, cleanup and needed security services. “Right now we just do it (for free),” Huber Nickerson said, adding that other jurisdictions do charge for these types of City-provided services. Several Council members said Monday evening that they would like to see historical data on the City’s revenues and how they line up with a growing population and increased expenses. “I think it would be good to show how revenues have changed over time,” Councilman John Nohr said. “I would find it really helpful if we could look back over 10 years and see the population of Camas … and look at the budget 10 years ago. Do these line up?” Councilman Tim Hein said. “Even the budget over 10 years — how has the mix changed? Have we had a mix of property and sales tax (revenues)? If our (revenue) mix is changing, and it’s going to change in the future, that’s something we need to consider.” Councilwoman Jennifer Senescu added that she also doesn’t want City officials to lose sight of City services that help draw people to Camas and give the town its “small-town feel” residents value. “I know we’re talking about police, fire, streets, water, sewer, garbage, but what happens to Hometown Holidays, Camtown, concerts in the parks? That’s the community-feel people love,” Senescu said. “I know we’re dealing with some pressing issues, but (the community events) really do bring the heart of Camas together, so I don’t want that to get lost, either.” City Council members are expected to review the mayor’s final proposed budget in early December, during the Council’s regular meeting, Monday, Dec. 2. Between then and now, the Council members will review revenue and funding options at their Oct. 22 workshop, review a capital budget presentation during their Nov. 4 workshop and hold public hearings on property taxes and other revenue options at their Nov. 18 regular meeting. Camas City Council workshops are held at 4:30 p.m. and regular meetings are held at 7 p.m. at Camas City Hall and online via Zoom. The City also is hosting two public open houses to discuss the proposed 2025-26 budget. The first open house took place Wednesday, Oct. 9. The second open house, to discuss the City’s revenue diversification and potential program cuts, is set for Nov. 13, at Lacamas Lake Lodge in Camas. For more information, visit cityofcamas.us.

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