Eastern Oregon towns spend more on public safety than collected in property tax

A new report from the League of Oregon Cities finds that Oregon’s cities have yet to bottom out from the recent economic recession, and that many cities are pessimistic about a rebound in the near future.

“State of the Cities” combines survey data from 178 cities with an in-depth analysis of five years of annual financial data from 50 cities throughout Oregon. According to the report: “Revenues are down and rainy day funds are drying up. Stimulus funds will soon be exhausted. Services have been cut and will likely be cut further — all at a time when citizen demand for services is increasing. For most cities, balancing their budgets will be an increasingly difficult task.”

The report found that many Oregon cities spend more on public safety alone than they collect in property taxes, the largest source of revenue for the vast majority of cities. Of the 40 cities analyzed that have police and/or fire departments, the average city spent exactly 100 percent of property tax collections on public safety, and some cities spent far more, including the cities of John Day, Union, Pendleton, Lakeview and Burns in Eastern Oregon.

The report also finds:
• Revenues of the 50 cities analyzed have declined over the last five fiscal years, with governmental fund revenues down nearly four percent;

• The “rainy day fund” (for most cities, the governmental balance fund), has plummeted 16 percent over the same time period;

• 42 percent of survey cities report being less able to address their financial needs this year than they were the year prior, and nearly half of survey respondents believe that they will be even less able to meet financial needs next year; and

• The cities analyzed reduced governmental fund expenditures by 3.9 percent since the start of the recession.
Smaller cities dipped into their savings accounts more frequently than others, with 56 percent of survey respondents with populations less than 5,000 reporting a decrease in their general fund balances in FY2010-11.

Cities making tough choices
In the face of falling revenues, cities have enacted a number of measures to limit or reduce expenses, including workforce reductions. According to the most recent data from the U.S. Census Bureau, local governments in Oregon cut 119 police officers and 100 additional police personnel between 2009 and 2010, an average reduction of 2.15 percent of officers, and a 2.78 percent reduction in total police staff. Local governments also eliminated 217 firefighting positions during that time, a 6.5 percent reduction in firefighters.

In addition to reducing their workforces, cities have taken other steps to align revenues and expenditures. For example:

• 38 percent of cities have reduced road maintenance;
• 37 percent have reduced staff and/or operations at city hall;
• 30 percent have cut total operating spending;
• 25 percent have cut infrastructure spending; and
• 24 percent have increased their employees’ contribution to health insurance.

Beyond cutting core services like public safety, important quality-of-life programs have also faced severe cutbacks. While not all cities have libraries, park programs, senior services, etc., those that do are scaling them back significantly. Thirty-three percent of cities surveyed that devote resources to parks and recreation activities and facilities report reducing that support over the past several years, and 28 percent report reducing support for local libraries and social services.

Service demands are rising all around
These cuts have been made at a time when citizen demand for services has increased and is expected to continue increasing. More than 48 percent of survey respondents reported seeing an increase in demand for services over the past several years, and almost half of responding cities believe that citizen demand for services will increase further in the future.

“The current challenges facing cities are not just the result of the economic downturn,” LOC Executive Director Mike McCauley warns. “These problems are the result of structural revenue limitations and rising expenditures over which cities have little control, such as health care and pension costs. With very limited options, many cities are left with no option but to reduce essential services and maintenance. This will further erode their ability to effectively provide the platform for Oregon’s future job growth and economic health.”

About the League of Oregon Cities
Founded in 1925, the League of Oregon Cities is a voluntary association representing all 242 of Oregon’s incorporated cities. The league helps cities serve their citizens by providing legislative services, policy setting, intergovernmental relations, conferences and training, technical assistance and publications.