Redmond city staff members are expecting a $1 million revenue deficit for the 2020-21 fiscal year, due to the economic effects of the COVID-19 pandemic.
The city will implement a few cost-saving measures to make up that shortfall, said Jason Neff, the city’s chief financial officer. Because of those moves, and the city’s fiscally conservative approach to finances, the city will likely not have to dip into its reserves to break even, he said.
‘It’s feasible ... that we’ll be able to make that up,” Neff said. “Historically, we haven’t spent 100% of our budget.”
The million-dollar shortfall was accounted for in Redmond’s 2020-21 city budget, which was passed by the City Council Tuesday.
For the past six fiscal years, the city has only spent about 97% of what it budgeted, according to city data. The $1 million shortfall only represents about 5% of about a $20 million general operating fund, which represents all discretionary spending such as police and transportation, Neff said.
“There’s a chance that we’ll only spend 95% of our budget, and we’ll be okay,” said Neff.
Because Redmond doesn’t rely as much on tourism as other parts of Central Oregon and the city is fiscally conservative, Mayor George Endicott said his city would likely survive the financial hit.
“I’ve always maintained that our job is to create jobs, and I appreciate Bend and their push for tourism ... but our focus has always been jobs,” he said. “In this case, it’s holding us in good (shape), because we’re not taking the big budget hits that other people are.”
There are three main reasons for the anticipated shortfall, Neff said.
• The biggest is an expected $400,000 dip in property tax collection, as that source of city income fell about 4% during the most recent recession.
• The city also expects to lose $300,000 from lodging tax revenue, as COVID-19 will likely slow down tourism.
• Redmond also expects to lose $200,000 from the state gas tax revenue, also because of the tourism slowdown.
The city is holding back on some spending to ensure the shortfall doesn’t impact city reserves, Neff said.
The city’s main cost-cutting move is hiring freezes. Seven full- or part-time open positions, including four Redmond police officers, won’t be filled through at least September, Neff said.
“Those (police) positions are worth about $40,000 a month every month they’re open,” he said. “A quarter of the year, that’s $120,000 right there.”
The city’s parks and transportation departments will also have to wait until at least early 2021 to make major equipment purchases, he said.
Throughout the year, city financial staff will also keep an eye on tax revenues, and adjust accordingly. If tax collection is higher than expected, the city might lift the hiring freeze, Neff said. If it’s worse than expected, the positions will stay vacant.
Despite the shortfall, some city employees will still receive cost of living increases. Unionized city staff, who mainly work at Redmond Airport and in the public works department, negotiated a 2% salary raise.
Negotiations with Redmond’s police union are still underway, but Neff expects there will be a 1% salary raise for unionized officers.
The overall city police fund will see a slight increase, from about $12.1 million to about $12.6 million. The extra funding will mainly go toward existing officers moving up the salary ladder, along with replacing outdated police equipment, including $175,000 for four new vehicles.
Buying new police vehicles is an annual ritual for the city, Neff said.
“We like to maintain our fleet in good condition,” Neff said. “If you don’t spend that year, we’ll have to spend more the next year.”
In the wake of worldwide protests over police killing Black men, some cities have trimmed police spending in response to community pressure, such as Portland, according to Oregon Public Broadcasting.
But Redmond’s community has not expressed any desire to cut police spending locally, said Keith Witcosky, Redmond city manager. Annual city-issued surveys from 2016 through 2019 showed about 80% of locals each year said their satisfaction with police was either “good” or “very good,” he said.
Capt. Devin Lewis from the Redmond Police Department agreed with Witcosky.
“These last couple weeks, we’ve seen an outpouring of community support,” Lewis said. “Every day, if not multiple times a day, we’ve had citizens dropping by with food, thank-you cards.”
Various city transportation projects, from building a roundabout on South Canal Boulevard to improving NW Hemlock Avenue, will also not be slowed down because of the shortfall, Neff said. The city expects to spend $14.4 million on transportation projects in the next fiscal year, compared to $14.5 million the year prior.
“We think it’s important to maintain the investments in that asset, so it doesn’t overly burden future budgets,” Neff said of transportation spending.