City of Camas faces unexpected revenue shortfall

The city of Camas is facing an unexpected revenue shortfall that could prevent the hiring of more than 20 positions in 2024, including eight firefighters, two police officers, two police sergeants, a parks project manager and three street maintenance positions.

“What we’re seeing in the economy is that housing is not what it was a couple years ago,” Camas Finance Director Cathy Huber Nickerson told Camas City Council members Monday, Oct. 2, during a Council workshop.

As the housing market and new home construction slowed, Huber Nickerson said, so have the City’s general fund revenues.

“The number we’ll have for next year’s property taxes, which capture August 2022 to August 2023 is much lower than it has been in many years,” Huber Nickerson said.

The city relies heavily on property taxes to fund its general fund, which pays for fire, emergency medical, police, parks, streets, library and other critical services. Huber Nickerson said this means that, when the housing market cools, the city’s general fund also suffers.

“The budget is tighter than we would have seen when we were starting to formulate (the 2023-24 biennial) budget,” Huber Nickerson said.

To account for the revenue shortfall — $1,436,788 less in taxes thanks to lower rates of new construction and lower sales taxes and $340,670 less in charges for services due to slower residential permitting and planning — Camas Mayor Steve Hogan has proposed a new 2024 budget for the Council’s consideration.

“We went back and worked with the mayor to come up with another option and tweak the budget,” Huber Nickerson said.

The mayor’s proposed 2024 budget would hold off on hiring more than 20 staff positions included in the 2023-24 budget the Council adopted in December 2022. Those positions include: two police officers, two police sergeants, eight firefighter/paramedics, an engineering manager, a parks and recreation project manager, a recreation specialist, a volunteer coordinator, an IT support specialist, a records specialist, a part-time library associate, and three street maintenance workers.

“These are not just light cuts,” Mayor Hogan said Monday. “These were pretty important adds we agreed on when we put together the budget.”

The mayor pointed specifically to the proposed holds in the city’s law enforcement department, saying: “The need for those (police) sergeants is pretty critical. When we need to move police officers around, we need a sergeant to move those officers around and we don’t have them for four hours on the night shift.”

Hogan added that the hiring holds could also impact planned capital improvement projects.

“As we get through the next few weeks, some of the major projects will come out too, if we don’t have the people,” Hogan said.

In the fall of 2022, when Hogan introduced his original 2023-24 budget plans, the mayor included a revenue package that included a 1% property tax levy increase — the maximum increase allowed under Washington state law — as well as the use of nearly $7 million in federal COVID-recovery funds from the American Rescue Plan Act of 2021, and a new 3% tax on the city’s water, garbage, sewer and stormwater utilities.

City staff, including Huber Nickerson, warned city officials in 2022, that, without increasing and diversifying its revenues, the city faces a structural deficit — when its baseline expenditures are greater than its revenues — within the next few years.

Huber Nickerson also warned officials that forgoing the annual 1% property tax levy increase allowed under state law meant the city would miss out on the “compounding” effect connected to the annual increase on the city’s tax levy amount.

“When you look at 10 years, that’s $700,000 to $800,000 that you’ve lost and can never recover,” Huber Nickerson told the Council in November 2022. “That’s one (full-time employee) or up to seven or eight (full-time employees) that you’ve lost, if you go out 10 years … I strongly encourage you to consider that lost opportunity.”

Despite those warnings, four Council members — Don Chaney, Tim Hein, Leslie Lewallen and John Nohr — voted against the 1% property tax levy increase, which would have collected an additional $143,097 in 2023 for the city’s general fund, and cost the owner of a $624,000 house an additional $1.17 a month.

Three Council members — Chaney, Hein and Lewallen — also voted against a new, 2% tax on the city’s water, stormwater, sewer and solid waste utilities.

That tax, which was expected to add around $1 million to the city’s general fund over the 2023-24 biennium and cost a typical Camas family with a bi-monthly utility bill of $356 an additional $3.56 a month, passed in a 4-3 vote, with “yes” votes from Nohr as well as Councilwoman Bonnie Carter and then-Councilman Greg Anderson.

The presentation delivered to Council members Monday was a “high-level look” at the expected revenue shortfalls and the mayor’s proposed adjustments to the approved 2024 budget.

“This is more sharing with you what we’ve done to (balance the budget),” Huber Nickerson told the Council Monday. “Over the next few weeks, we’ll have meetings and public engagement around (the proposed 2024 budget).”

The Council will discuss the 2024 operating and capital budgets, as well as the city’s revenue options over the next few weeks, Huber Nickerson said, and will hold a public hearing on the mayor’s proposed 2024 budget in December.

“You will have lots of chances to dive deeper into this and have some public engagement on options,” Huber Nickerson told the Council this week.

To learn more about the city of Camas’ budget process, visit budget.cityofcamas.us.