If Camas continues on its current financial path, city leaders are predicting a future structural budget deficit.
This was the message delivered by City Administrator Pete Capell and Finance Director Cathy Huber Nickerson, during a recent City Council workshop.
“In the near term we are fine, we don’t have any concerns about the budget,” Capell explained. “My concerns are longer term, in that we are using new monies that come from growth, to pay for status quo, so we are not able to set-aside money or invest in what we need to serve that future growth.”
The Camas population, currently estimated at 21,210, is expected to grow 37 percent during the next decade to reach 35,000 by 2035.
Some of the most significant development during the next two decades will come north of Lacamas Lake, and also in the Green Mountain area bordered by Northeast Ingle and Goodwin roads. Infrastructure investments will be necessary.
The city’s revenue, particularly in the new construction category, is growing. However, expenses are mounting even faster due to factors including higher pension and health care costs, and most significantly labor costs for the city’s 195 employees, which makes up 75 percent of the city’s operating budget.
Since 2011, (including projections for 2016) the city’s expenses for Kaiser and Regence health care plans have increased a total of 45.83 and 38 percent, respectively. Public Employee Retirement System costs have grown 5.87 percent during the past five years.
According to the city’s numbers, the bottom line is that overall revenues are increasing 2.9 percent annually, while expenses are increasing 5 percent per year.
“To continue to provide Camas residents the quality of service, the quality of life, the people in the field — police, fire, public works, people that are mowing the parks and so forth — we are going to need to grow almost commensurate with that population growth,” Capell said.
He told the City Council that during the next few years the city’s reserve fund would need to be tapped to a point that would likely push it below the accepted level set by policy.
“In the near term we are in pretty good shape. What the forecast looks like is we will probably go below the 17 percent reserve for a few years due to some of the additional employees and expenditures we are facing,” he said.
“What my longer-term concern is, is our ability to provide the level of services that our citizens have come to expect,” Capell continued. “I’m also concerned about the ability to provide parks, trails and sports fields to serve our growing community.”
According to Camas Mayor Scott Higgins, there are solutions. However, those kinds of decisions will not be easy to make.
“This is forward thinking and strategic planning,” he said. “It would be easy for all of us to say, ‘It’s OK for now, we don’t have to think about it that.'” But it wouldn’t be what our citizens expect of us. It’s not easy to talk about what the solutions could be, but it’s necessary conversation.”
Options could include reducing expenses, but also finding new revenue streams. Currently, property tax revenues make up 75 percent of the general fund taxes collected. By law, this can only increase 1 percent per year.
“It could be that the expectations need to change,” Higgins said. “It could be that maybe what we provide isn’t what we continue to provide. It’s a policy conversation.”
In December 2014, the City Council past a two-year $137.6 million budget for 2015-16.
City Councilman Tim Hazen, a member of the finance committee, agreed that now is the time to discuss the long-term financial outlook, and make any necessary changes and adjustments.
“We are a growing city, we have a lot going on,” he said. “It just feels like this is one of the most significant things going on that is going to impact what our city is going to be like for the next 10, 20, 30 years. It probably merits us staring at it and talking about it, and maybe even making some tough decisions as it relates to it.”
The finance committee, which meets regularly, will begin focusing on discussing the nuances of the long-term economic outlook to determine what topics need to be considered and what questions need to be answered.
The issue will then be discussed by City Council during its annual planning conference, which is typically held at the end of January.
“We will expect a really comprehensive discussion to take place at our planning conference,” Higgins said.