City and Urban Renewal Agency Budgets

At the June 10, 2024 meeting, the City Council approved the City’s 2024-25 Fiscal Year budget.

2024-2025 Budget Message:

Dear Budget Committee and Citizens of Philomath:

I am pleased to present the proposed fiscal year 2024-2025 budget for the City of Philomath. The City has always managed the budget in a transparent, direct manner, providing conservative revenue forecasts and realistic expectations for expenditures for day-to-day operations and capital projects. This budget was prepared in accordance with State laws and City policies.

Construction, Construction, Everywhere

This year’s budget reflects the ongoing pressure that inflation and supply chain disruption are placing on materials and services. The City is in the middle of several large capital projects which continue to have a significant impact on the budget. Specifically, the Water Reservoir Project is underway, and construction of the new treatment plant will start and finish during this fiscal year. The Downtown Safety and Streetscapes Project began construction last year, and will be completed this fall. The S 16^th Street Extension Project will be under construction before the start of the fiscal year and substantially completed before the start of the school year as well. Last but not least, the 16^th, 17^th, and 18^th Street Sewer Line Replacement Project will also be completed this summer, with 19^th Street to follow in the spring of 2025. These illustrious and transformational projects are overseen in large part by the Public Works Department, led by Director Kevin Fear and Supervisor Garry Black. They do an outstanding job keeping costs down and their crew has done an excellent job of extending the life of their equipment and vehicles, saving the City money and providing great service to residents and businesses alike.

The Personnel Impact of Employment Conditions and Inflation

Last year’s pay equity and total compensation studies continue to impact the City’s personnel expenses. Management salaries that were significantly below market at the time of the study are being increased over multiple budget years to soften the impact, but the increases are still significant. This budget also reflects a 3.5% cost of living adjustment for all employees based on the Consumer Price Index over the past year (4.12%) and union contracts capping the cost of living adjustments to no more than 3.5% per year for the next three years. Our employees are our most valuable resource, and we are fortunate to have a relatively stable employment base.

Providing Public Safety – Our Greatest Responsibility

The most important service the City provides its residents is public safety. Last year we celebrated the retirement of Chief Ken Rueben, promoted David Gurski to serve as the new police chief, and promoted Brandon Thurman and Blake Bowers to serve as shift sergeants. The Department requested one additional full-time officer in lieu of rehiring a part-time code compliance officer. This additional hire will allow for better two-deep coverage during the night shift, as well as when other officers are out for training, sick leave, or vacation leave. The Department plans to prioritize code compliance and traffic enforcement with this new organizational format. Philomath residents feel safe in our community.

Tax Revenues and Fees

The City’s budgeted property tax revenue is expected to increase from $2.195 million in Fiscal Year 2023-24 to $2.371 million this year due to increased property values. The lack of new construction has made it difficult for tax revenue to keep pace with the increases the City is facing in personnel expenses and construction costs. The City raised rates for water, sewer, storm drain and streets to help offset the increased expenditures while maintaining transfers to the Land, Building and Equipment Fund for future equipment and building expenses. The increased rates will help, but the General Fund’s ending balance will still be reduced $423,000 this year to $1.336 million. I believe this is a temporary situation that can correct itself as additional development hits the tax rolls and inflation levels out over the next few years.

Looking Ahead

Although the annual budget stands on its own, each year’s budget reflects decisions made in prior years. In Philomath’s case, flattened development trends, increase personnel expenses, national inflation and supply chain disruption have all impacted the current budget. As a City, we have to prioritize spending on the things we need most, essential government services, look for ways to sustain revenue sources and continue to save for our future. The City Council, led by Mayor Chas Jones, has done a great job in maintaining a relevant Strategic Plan that outlines objectives and action items that will help the City achieve its goals. The Council’s input into the creation of the budget is greatly appreciated.

I am incredibly grateful for the experienced stewardship of Finance Director Mike Murzynsky and the guidance of Assistant City Manager Chelsea Starner. I also want to thank City Recorder Ruth Post, who will be retiring this year, for keeping us organized, on schedule and on point. Now in my 11^th year in Philomath, I can confidently say the City is in very capable hands and the City is in a strong financial position. Our proactive approach to planning and carrying out the Strategic Plan will continue to serve the City well.

Thank you for your willingness and efforts to review the FY 2024-25 Budget of the City of Philomath.

Respectfully submitted,

Chris Workman