Mayor Donna Bowen, Councilors and Budget Committee Members and Citizens:

We are approaching the end of the FY 2024-2025 budget year and are presenting the proposed budget for FY 2025-2026. Since this process begins early in the spring, the final results of FY 2024-2025 and their impact on FY 2025-2026 in terms of cash and working capital carryovers are more uncertain, particularly for those operations that are seasonal (Streets, Park, Water, etc.)

This budget has been prepared on a basis consistent with prior years on a modified cash basis of accounting and the legal requirements of Oregon Local Budget Law for all Funds. No new Funds have been created. There have been no fundamental changes in the city’s financial policies from last year.

FY 2024-2025 saw several challenges, which will continue into FY 2025-2026. Among them are: a. Providing essential public safety services, in the face of rising costs and insufficient revenues. With the increase of the Police Protection Surcharge, the Police Protection Fund is in a healthy position. We are at the point of needing to address funding for the Fire Protection Fund within the next year. b. Insurance, utilities and PERS rates continue to increase.

Overall, this budget reflects the same types of activities and programs as in prior years. First, here are some comments on some general trends in the finances of the City: Revenues. We do not anticipate any significant new types of revenue in FY 2025-2026. Revenues in the General Fund are expected to remain essentially flat in FY 2025-2026. We expect an increase of about 3% in property taxes based on anticipated increases in assessed value. State Shared Revenues, such as OLCC Tax and Highway Tax, are estimated to decrease slightly. In the Water fund, revenue will increase per the ordinance in 2017, which raises the base water rate by $1 each year, in July.

As staff has stated before, the General Fund is the only Fund within the City Budget that can support other Funds; and the main source of revenue for the General Fund is property taxes. Therefore, we are continuing the transfers to other funds to help supplement operations. Personnel Expenses. The City is entering union negotiations. While we do have an increase incorporated into the FY 2025-2026 budget, the % of the wage adjustment cannot be disclosed at this time. Of course, when wages rise, all costs based on wages increase (payroll taxes, PERS, etc.). Health insurance rates remained the same in this current fiscal year and we have budgeted for a potential 3% increase in January 2026. Workers compensation rates are expected to increase slightly. PERS rates will increase by about 6% on July 1, 2025, based on the PERS Actuarial.

Through a grant received, we have continued funds budgeted for temporary firefighters during the summer months, which is at the highest risk for wildfires. Overtime in both the Fire Department and Police Department have been increased, based on current YTD expenditures. Overtime in the Police Department is expected to level out some, now that we are fully staffed.

Materials & Services

Materials and services (M&S) budget amounts have increased slightly. Our department heads have done an excellent job controlling M&S expenses in many categories in FY 2024-2025. Their frugal habits will extend into FY 2025-2026, with their budgets reflecting this. Contract Services for the Planning Department remains the same as we continue to work through the revisions of the Land Use Codes through CCI. We have increased the budget item for Buildable Lands Analysis / UGB Analysis as we will be working with a consultant for the  Urban Growth Boundary amendment proceedings, based on the recommendations of the UGB TAC (technical advisory committee).

Debt Service. Debt service costs will remain similar to the prior year as no new debt was incurred. The Safe Drinking Water Revolving Loan repayment began in December 2021, which is approximately $61,000 per year. The GO Refunding Bond Series 2012 will be paid off in fiscal year 2025-2026.

Capital Outlays. Due to the status of Federal Grants, the City continues looking at other ways to do additional Water Master Plan capital projects and is continuing to build reserves for this purpose. Projects include replacing the water tank at Britt reservoir. We also need to GIS our water system utilities to have on a CAD program. An inventory of the need for upgrades on our streets will be started as well as the process of overlaying the streets requiring maintenance.

Tourism Activities. Tourism activities are a source of business for Jacksonville. We continue to work on ways to enhance our tourism and the historical element that Jacksonville provides, with the addition of a museum in the form of both a walking tour and brick & mortar museum. Transient Lodging Tax revenue increased slightly in this current fiscal year, therefore we continue to budget conservatively for revenue in this area.

Public Safety. The costs of providing public safety services continue to be the major financial issue for the City. This budget has been prepared based on operating as in past years, providing full time police and fire departments. Staff will be presenting funding scenarios to the Budget Committee. The Fire Protection Surcharge will increase an additional $1 per month in FY 2025-2026 per Ordinance No. O2022-002. We are at the point of needing to address funding within the next year. In addition, Fire Chief Painter has successfully obtained several grants, which will be utilized as of now to offset budget expenditures. The Police Protection Surcharge remains at $35.00 per month per unit, which was increased in 2023.

Summary

This budget has been prepared on the same basis as the prior year and assumes the same scope of operations in order to start the discussion, but it introduces the possible courses of action needed to approach a truly balanced budget. Staff began this budget process with a review of the financial analysis for all departments as well as a projection into the following two years.

Mayor Bowen and the Council continue to have Council Work Sessions at the second meeting of each month and have been working through various identified goals. We would like to thank the department heads for their excellent efforts to manage their prospective budgets. We also want to thank the many volunteers who selflessly commit their time as City Councilors, in citizen committees, and individuals that serve the city so well.

Finally, we want to thank each Budget Committee member for the time you will spend understanding, molding, and adopting this budget. Now we will present the FY 2025-2026 budget for your consideration.

Respectfully Submitted,

Jeff Alvis Stacey Bray

City Administrator Asst. City Administrator / Finance Director