By QUINTON SMITH/YachatsNews.com
Yachats City Hall may be in turmoil, but the city’s finances are strong, propelled by surprisingly robust lodging taxes and reduced spending on major projects the past two years.
Acknowledging that, the 10-member Yachats budget committee last week unanimously approved a $1.66 million general fund spending plan for 2021-22. In all, the committee spent 11 hours over two meetings analyzing, tinkering, taking several specific votes and eventually agreeing to recommend the budget to the city council this month.
The budget allocates money for some water, sewer and public works equipment, maintenance on the Commons, and money to begin planning for water treatment plant upgrades, and on a proposed boardwalk on Ocean View Drive overlooking the Yachats River.
In their budget message, interim City Manager Lee Elliott and contract finance director Tom Lauritzen said the plan represented a year of “transitions.” These included coming out of the COVID-19 pandemic, completing new water and wastewater master plans, and major changes in city personnel and the City Council.
During the two meetings, neither councilors nor budget committee members offered any major changes, proposals or themes for spending, instead focusing on smaller line items and tweaks.
Earlier in May, Elliott and Lauritzen proposed — and the council approved — a supplemental budget making transfers from a large city operating fund and moving money back into reserve accounts for water and wastewater projects. The transfers were repayments for internal loans to help pay for the 2015 purchase of the 501 Building, and the city’s portion of the Highway 101 improvement project.
They also hope to negotiate an early $234,000 repayment of a state loan that helped pay for the construction of the wastewater plant – the only funds in the supplemental budget that involves money leaving the city.
With the transfers and loan repayment, the city’s reserves for capital projects is expected to be $3.3 million, significantly more than it would have been without the supplemental budget. The city’s total available funds is $6.5 million.
Lauritzen said the 2021-22 budget tried to keep spending on city projects to 25 percent of capital reserves, or about $600,000 this year. Most of that is for small water or sewer projects or equipment – in preparation for more major projects to come in the next 2-3 years.
MAJOR THEMES AND ISSUES
Lodging taxes
The city of Yachats runs mostly on the taxes visitors pay when they rent a motel room or vacation home. For every dollar paid in lodging taxes the city can use 61 cents on general operations and 39 cents going to tourism promotion and projects.
Lodging taxes totaled $506,000 in 2013-14, doubling to $1.05 million in 2018-19. The current budget conservatively forecast that number to drop by half to $493,000. Instead, total lodging taxes for the 2020-21 budget year are expected to be $1.03 million as the pandemic kept people closer to home – and sent many of them to the beach.
The city is forecasting total lodging taxes to be $1.15 million in 2021-22, with the city’s share of that $700,000 and $447,000 going into the visitor amenity fund. That, again, may be too low.
Councilor Anthony Muirhead, who is general manager of the Adobe, said this spring’s tourist traffic is already similar to most summers – which bodes well for lodging taxes this year.
That money not only leaves the city’s operating budget in strong shape, Lauritzen said, but has built up the fund that can only be spent on “visitor amenities” to $1.1 million.
City staffing & operations
Staffing in City Hall is in turmoil. The employee overseeing community services has resigned and the city ended a contract for an administrative assistant last week. Elliott’s last day is Friday and Katherine Guenther, who was the contract planner, will become interim city manager – and also do planning – until the city can hire a permanent one, usually a months-long process.
Lauritzen is working on an hourly contract to handle the city’s finances, while the city tries to find its own accountant – having severed its ties with Oregon Cascades West Council of Governments, which had been handling finances the past three years.
The proposed budget shows a dramatic drop – from $150,000 to $50,000 — in the amount spent on contracted personnel services.
It also proposes allocating $65,000 for temporary help to handle community services, office help and temporary accounting until the council can figure out staffing. But it allocated nothing for a community services employee.
Lauritzen encouraged the committee to not focus on individual line items for City Hall personnel until the City Council could figure out an organizational structure or hire the right employees. The money is there, he said, whether it is for permanent employees in the long run or temporary staff in the short term.
Still, that led Thursday to an extended discussion on City Hall staffing and an eventual 6-4 vote to move $25,000 from the temporary help category to help pay the salary for a community services employee.
Within the city’s operation budget, the committee also voted to specify spending up to $50,000 for preliminary design and engineering for the Ocean View boardwalk project, $100,000 to street projects, and $500,000 to water reserves to implement some suggestions from the water master plan.
Councilor Greg Scott’s motion to cut the water reserve allocation to $300,000 and leave $200,000 in the city’s general fund failed on a 5-5 vote.
Visitor amenity spending
The visitor amenity fund is for the lodging taxes that must be spent on tourism promotion and projects. For 2021-22 it expects a beginning balance of $568,000 and to get $447,000 from lodging taxes. During its first meeting, the budget committee moved $325,000 sitting in the streets capital reserve account back to the visitor amenity fund, boosting its bottom line to $1.34 million.
The budget anticipates spending just $231,000 on visitor amenities for 2021-22, leaving $1.11 million for the future.
In a series of line-item decisions, the budget committee voted 7-3 against a motion by Mayor Leslie Vaaler to cut a $3,000 contribution for July 4 fireworks, even though there are no fireworks this year. Committee members said it could be used as a deposit for next year’s fireworks – and indicated they should contribute more.
After a long discussion on the city’s contract for visitor center operations and marketing, the committee voted 6-4 to reduce the marketing budget by $8,000 to $22,000 and trimmed an allocation for additional personnel services by $3,000 to $17,000. The city has a two-year contract with James Kerti for visitor services, which remained at $65,000 for its second year.
Vaaler pressed for eliminating or a big reduction in the marketing budget, while Muirhead and budget committee member Brad Webb argued it wasn’t robust enough.
“We’re not willing to pay the hand that feeds us,” Webb said. “It’s even more important to keep the marketing going.”
Later when discussing funding for the library, Muirhead’s motion to use $10,000 in city operating funds instead of visitor amenity funds for library operations failed on a 5-5 vote. The motion would have sent the $10,000 in amenity funds to parks and trails, instead of it coming out of the city’s general fund.
Motel operators have long argued that using visitor amenity funds for library operations was against state law because tourists rarely use the facility. Muirhead’s motion would have taken away that issue while sending the same amount of money to trails, which are heavily used by visitors.
Other items of interest
- The council is expected to discuss and eventually approve a 20-year water master plan this year, focusing spending on projects to stabilize and secure the city’s water supply and treatment. With transfers in to the water capital reserves fund and not a lot of spending this year, the reserves are expected to reach $2.35 million by the end of fiscal 2021-22 for upcoming projects.
- The city will be getting $160,000 to $174,000 from the federal government in two payments — one this month and the second next June — as part of the Biden Administration’s American Rescue Plan. It has to be spent on infrastructure or COVID-19 related projects, but the budget committee made no suggestions on what to do with it.
- The budget allocated $60,000 for painting, gutters and work on the north entrance to the Commons, but allocated nothing this year for the reconstruction or remodeling of the Little Log Church.