Frequently Asked Questions

Expand/Contract Questions and Answers

Other Services - Is there a list of enhancements and FTE changes over the last several years updated for the current status of same?
A:
Answer: In Attachment 2 of the February 4, 2010 special Budget Commission meeting packet there is a list of enhancements added in the six years prior to that date and the status of each at that time. In Attachment 3 from that same packet is a table of FTE counts by Department dating back to 2000. This table summarizes the increases and decreases in staffing for each department over the last decade. The FY 16-17 Adopted Budget Document also shows trending information on City staffing beginning on page 35.
Please provide information on the amount spent on law enforcement in Corvallis and the % of those expenditures as part of both the property tax funded expenditures as well as of total Citywide ops?
A:
Answer: The best source of info for questions like these is the City's most recent Budget Document. Within the FY16-17 document, this particular information can be found on pages: pg. 22 (for total Police budget vs. total Citywide or for General Fund Police budget vs. total General Fund budget); or pg. 146 (Department summary for Police Dept - breaks down General Fund/9-1-1 Fund and Parking Fund portion of the total Police Budget). Although Parking Fund information was not specifically sought in the question above, the provision of same helps paint a more complete picture. Some data has been summarized in the table below:
 

 FY 16-17 Exp. Budget

 % General Fund Exp. Budget

 % Citywide Oper. Exp. Budget

Police - General Fund (1) 

 $12,549,750

28.8% 

12.9% 

Police - 911 Fund (2)

 2,388,730

 see footnote (2)

 2.4%

Police - Parking Fund (3) 

 291,420

 0%

 0.3%

Police - Vehicle/Equip Reserve Fund 

 88,920

 

 0.1%

Total Police Dept. Operating Bgt.

 15,318,820

 

 15.7%

Total Property Tax Funds - Oper. Exp. 

 43,554290

 100%

 44.6%

Total Citywide Operating Exp. 

 97,633,900

 

 100.0%

(1) Primarily property tax funded - included in General Fund.

(2) Approximately 50% funded by Property Taxes via Police & Fire in FY 16-17 (but in its own fund).

(3) Primarily funded by parking fine revenue in own fund (no property taxes). Additional interesting and helpful information regarding both the Police Department and the overall City budget is available on the City's website under the Finance Department “Financial Documents & Resources” location.

Other Services - If the City is in so much financial trouble, why doesn’t it just not do . . .
A:

Answer: There are a lot of suggestions made about ending programs. This FAQ is a gathering spot for some of the ideas suggested in public forums, editorials, or community gatherings. Some of the more common suggestions and the City’s response include:

  • Cut the Housing Assistance program – this program is not funded by any property taxes.
  • Cut the newsletter – the City is often cited as the best source of information for many in the community about what is going on in the City. The print version was cut in 2002, replaced as an on-line only publication, but it was quickly added back due to the complaints and the dramatic drop in survey respondents reporting they had enough information about the City. Nevertheless, when additional reductions were required in City services for the FY12-13 cycle, budget for the newsletter was cut again; as of July 1, 2012 the newsletter is available as an online-only publication.  Those interested in receiving the newsletter via e-mail may sign up for the e-notification system on the City’s website.
  • Cut maintenance workers or decrease maintenance of flower beds instead of Police or Firefighters – this can and is considered each budget cycle, as noted in previous discussions with the Budget Commission. However, only cuts in Parks and Recreation or certain General Fund Facilities Maintenance work would impact the property tax funds. Workers in utilities or street maintenance are not funded by property taxes.
  • The City’s web site fails to tell us how many are on the City’s payroll – the City’s entire FY16-17 Adopted Budget is on the web site. Page 35 shows how many positions the City has authorized for the year. All told, the City employs between 500 and 650 people annually when summertime seasonal and temporary employees are working.
  • Cut the most recent additions - more recently added programs are considered for elimination by all departments when cuts are needed. However, each Department Director, along with Advisory Boards and Commissions, need to prioritize the entire menu of services offered to determine what to put on a cut list; the newest programs may be the most cost/beneficial to citizens, and so are not always the most reasonable to eliminate in all circumstances. 
Compensation - How are City employees contributing to the City’s financial situation?
A:

Answer: Exempt employees (primarily managers and supervisors) have foregone cost of living increases from FY 08-09 through FY 14-15, and together with the American Federation of State, County, and Municipal Employees (AFSCME), have moved to a single lower cost high deductible health care plan effective January 2015. The Corvallis Regional Communications Center Association (CRCCA) and the International Association of Fire Fighters (IAFF) both followed suit in January 2016. Via the bargaining process, members of the Corvallis Police Officers Association (CPOA) agreed to change from a 10-hour work shift to a more efficient 12-hour work shift. The 12-hour work schedule distributes existing staffing numbers across four shifts instead of six shifts under the 10-hour schedule. This provides more officers per each work shift, which enhances officer safety and prevents significant operational overtime expenditures. Additionally, CPOA has gone to the least expensive, composite rate health plan option available to that unit through the Teamsters Trust, which is considerably less costly than what is provided to other units, since they unfortunately cannot avail themselves of the same insurance option. Members of the International Association of Fire Fighters (IAFF) agreed to forego their contractually negotiated cost of living adjustment for the fiscal year beginning July 1, 2011. This action saved the City an estimated $46,590 assuming the members would have gotten a 2% COLA. Some employees took voluntary leave without pay to help reduce the City’s costs. A number of currently vacant positions continue to be held open, with other employees taking on more work to cover the vacancies. Per the FY14-15 Adopted Budget, the City had eliminated 2.6 full time equivalent (FTE) in order to meet a sustainable budget, after several years of other staffing reductions. Additionally, per the FY 15-16 Adopted Budget, the City reorganized Public Works FTE to decrease total FTE by 1.25 and per the FY 16-17 Adopted Budget, the City eliminated a total of 6.75 FTE due to departmental reorganizations and budget reductions. Below is a table that shows the history of COLAs, by bargaining unit, since FY10-11 as known/approved to date:

Cost-of-Living-Adjustment (COLA) %

 Bargaining Unit

 FY 16-17

 FY 15-16

FY14-15 

 FY13-14

 FY12-13

 FY11-12

 FY10-11

 AFSCME  1.50%  -  -  -      -  -  2.8%
 CPOA  2 x 2%  2.0%  -  2.5%  -  -  4.0%
 CRCCA  3.0%  -  1.0%  -  -  2.3%  2.8%
 IAFF  2.0%  -  1.1%  2.0%  -  -  2.8%
 Exempt  2.0%  2.0%  -  -  -  -  -

 

General - Please explain the "structural problems with how local government services are financed" in Oregon; what are these structural problems and what does this concept mean?
A:
Answer: Cities have fairly specific limits on how they can raise revenues, with property taxes as the primary revenue source for many services. Although Corvallis has been assertive in pursuing alternative revenues (i.e., fees for participation in Parks & Recreation classes, implementation of the Library Service District) there are not a lot of alternatives that produce significant revenues. Also, often times services which are funded with property taxes and other non-dedicated revenues (franchise fees, state revenue sharing, transient room taxes) cannot actually be funded by charges for service since a specific user cannot be identified.

Furthermore, property taxes were limited in 1996/97's statewide elections on Measure 47/50. Property tax growth is generally limited to 3% per year, and most people who live in Corvallis would agree that their assessed value (AV) (and the taxes paid to the City) have gone up close to 3% each year. This assumption is generally true for residential and commercial property, where real market value (RMV) continues to increase -- usually faster than 3% annually -- so that most residential and commercial property now has an AV rating that is about 60% of the RMV. However, industrial property has an AV that is generally equal to a declining RMV. In Corvallis, industrial property has decreased in value about 10% annually since 1997. In some years this decrease has been offset by added value from new development. However, there has been no real new taxable development in the past several years, so property tax revenue to the City is pretty flat.

Other non-dedicated revenues are also holding flat or growing very slowly -- franchise fees have been flat or in some cases declined as people quit using land lines, conserve energy and water, etc. Transient room taxes declined for several years as people travelled less for business and/or for pleasure. While the parts of State Revenue Sharing tied to alcohol taxes have continued to grow in general, they are not growing enough to offset property tax losses.

All this adds up to a total revenue stream that is, at best, growing 2.5% to 3% annually.

At the same time, expenditure growth, which is predominantly in salaries and benefits, has been around five to six percent annually. Drivers of this growth include:

 

  • Wages/salaries - As with revenue limitations, many of the compensation issues are governed by Oregon law that sets requirements for labor negotiations and include comparing total compensation with like-sized cities. Furthermore, City Council compensation policy has been to attempt to be at or near the mean of compensation in like-sized Oregon cities (which includes total wages and benefits) as well as balancing external comparators with internal equity and avoiding salary compression between jobs.
  • Benefits -- in particular for medical and dental insurance, have been increasing in the range of 10% annually for many of the past years.
  • PERS payments -- Oregon Public Employee Retirement System (OPERS) employer rates are set for a biennial period to follow the State's budget. The City's employer rates have been increasing, especially for the older PERS Tier 1/2 employees. The Oregon Supreme Court's decision that a significant share of the legislative changes to the Tier 1/2 benefits were unconstitutional, combined with the PERS Board's reduction in the assumed rate of return from 8% to 7.75% for 2015 and 7.5% for 2016, and anemic earnings during the same period will lead to significant increases in PERS rates beginning July 1, 2017; however, a firm rate will be provided to the City in the late fall 2016. Additional rate increases of a similar level are expected beginning July 1, 2019 and July 1, 2021.
  • Binding arbitration drives wages for three of the City’s public-safety related bargaining units: CPOA, IAFF, and CRCCA, which in turn drive some of the internal comparators when Human Resources staff review positions. It also, to some extent, drives wages for exempt employees to be sure that a supervisor is compensated higher than the people supervised.

Combined, these factors drive the lion's share of the City's expenditures. Even some of the non-labor expenditures can see significant increases in costs (i.e., a proposed 20% increase in electricity, rising fuel costs, etc.) that all work together to cause expenditures to grow faster than revenues.
Over time, this structural issue – where revenue grows at two to three percent and expenditures grow at five to six percent – creates an untenable situation where the level of services provided cannot continue because they simply cost more than the City will raise. Other cities are experiencing very similar issues as outlined in the League of Oregon City's recent publication "State of the Cities."
General - Won’t this get better when the economy gets going again?
A:
Answer: Probably not. Significant new taxable development would have to occur to raise property tax revenue. For example, to increase revenue by about $1 million annually, about $195 million in assessed value, or 652 homes each with an assessed value of around $300,000 would have to be added. Franchise Fees, the second highest non-designated revenue, have been decreasing as more people are conserving energy and water, and as people drop land line telephones. Transient room taxes are picking back up as the economy has shown some improvement. However, at around $1.5 million, even 10% growth will not bring in enough revenue to solve the City’s funding challenges. The state taxes alcohol and cigarettes and shares the revenue with local governments, but with the state’s financial challenges there is discussion at the legislature about ending the revenue sharing arrangement.
Compensation - How come City employees get cost-of-living-adjustments (COLA) raises in a bad economy?
A:

Answer: Most City employees are members of a collective bargaining unit with an existing labor agreement in place. However, in recent years, some units have elected to forego a COLA in a particular year in order to help keep costs down. Below is a table that shows the history of COLAs, by bargaining unit, since FY10-11, as far as what is known/approved to date:

Cost-of-Living-Adjustment (COLA) %:

Bargaining Unit  FY16-17  FY15-16 FY14-15 FY13-14  FY12-13  FY11-12  FY10-11 
 AFSCME  1.50%  -  -  -  -  -  2.8%
 CPOA  2 x 2%  2.0%  -  2.5%  -  -  4.0%
 CRCCA  3.0%  -  1.0%  -  -  2.3%  2.8%
 IAFF  2.0%  -  1.1%  2.0%  -  -  2.8%
 Exempt  2.0%  2.0%  -  -  -  -  -
Compensation - What does the City pay on behalf of current employees (vs. retired employees) for medical/dental/vision/RX premiums as a % of both personnel service costs and total operating budget?
A:
Answer: Currently just over 7% of the City’s total operating budget is spent on active employees’ medical/dental benefits and roughly 14% of total personnel service costs (not including retiree benefits) is made up of these benefit expenditures. Medical/dental coverage for retired employees who were hired prior to August 1992 (employees hired after this date are no longer eligible for city paid coverage) represents almost 2% of total personnel service costs. 
Revenue - How can you say that property taxes are not growing – my taxes went up last year?
A:
Answer: Oregon constitutional tax limits allow each property’s assessed value to increase 3% every year unless the property’s real market value is reduced to below the assessed value. In Benton County, residential property is generally assessed at about 60% of the real market value, so even in the down economy, drops in real market value have not stopped the 3% increase in assessed value on many parcels of property. For example, if your home had a real market value of $300,000 and assessed value of around $180,000 (60% of real market value), your property’s real market value would have to drop to below $180,000 to see a reduction in property taxes.

Other classes of property, like industrial property, have real market value close to the assessed value, and with declining real market value the assessed value, and the taxes that are paid, decline each year. Industrial property is such a large proportion of the City’s total assessed value that the overall reductions in their value, particularly with successful revaluations by tax payers such as Hewlett-Packard, bring the total growth in all assessed value down to less than 3%. For FY13-14, the City’s total assessed value, and property tax revenue, increased by only 1.49%; however, FY 14-15 saw a 4.28% increase, and FY 15-16 saw only a 2.49% increase, bringing the average over the prior ten years to 2.73%.
Revenue - Since there is a declining industrial property tax base, what contributions does OSU make for City services that are provided to campus (and other state/federal property in the city limits)?
A:
Answer: OSU, along with all other state property used for state purposes, is exempt from all property taxes. So when the Hilton was built, on OSU land, there was some talk about it being tax exempt -- not true since it does not provide a governmental (or educational) purpose. In Corvallis, OSU has a significant presence and also a substantial amount of land and value in buildings. In the late 90's OSU had insurance coverage for $800 to $900 million -- it is likely safe to assume the real market value for this land may well be in excess of $1 billion now. In addition to OSU, all City, County, School District, and federal government facilities are exempt from property taxes as long as the property is used for governmental purposes. While not discussed much in the popular press, this is a big issue for county governments where the county has a significant chunk of land tied up in federal or state forest land. For cities, Salem, Eugene, and Corvallis all have significant state/university presence that takes a fair amount of property off the tax rolls. In addition to government, taxes are not levied on churches or synagogues, or on non-profit facilities such as the Boys and Girls Club. In general, the City provides all services to all facilities inside the City limits. About the only exception is that the Police Department does not provide police service to the OSU campus, but they certainly have a fair share of work in the neighborhoods around the campus. The Transit System has built a number of routes designed to get people to and from the campus, and the Fire Department responds to all emergency calls there. The City does not maintain the roads on campus, but has all the responsibility for the roads (and bike paths) that get people to the campus. As for payment from these non-profits: OSU, other governments, and all non-profits pays for water/sewer/storm drain service monthly based on usage. By extension, they all also pay the Transportation Maintenance Fee on the City Services Bill. OSU makes an additional contribution each year to the Transit System for operations and the ASOSU assesses fees to OSU students which are passed on the City to help pay for the late night Beaver Bus program. OSU also provides funding for a portion of one Fire Prevention Officer's time onsite, which is FY16-17 amounts to a payment of $90,000. Beginning in FY 17-18, OSU will be providing $400,000 in funding toward 3.0 FTE Police Officer positions. By using departmental savings from FY 15-16, these three positions will be hired in FY 16-17 so that they can be fully trained in time to provide services in FY 17-18.
Public Safety - How come the "important" stuff, like police and fire, are always at the top of the chopping block?
A:
Answer: Police and Fire are not always on the top of the chopping block. However, combined, these two departments represent almost 56% of the total operating expenses in the General Fund, and nearly 68% of the draw on non-designated revenues. If cuts are not discussed or considered then there is no way to balance the impact of cuts on other services – Parks, Library, Land- Use Planning, Municipal Court, Economic Development – against alternatives.
Compensation - Why did the City add staff when they knew there was a long term funding City services issue?
A:
Answer: In FY 08-09 the City had an $8 million fund balance in the funds that receive property taxes and cautioned the community that harder times were coming. All staff additions are made after careful consideration by the Budget Commission and City Council, and staff additions may be made knowing there are future funding issues involved. But because the staff additions are deemed "critical" by elected and appointed officials the staff additions are authorized. City staffing has decreased overall in the last few years; however, the downward trend in FTE stopped in FY13-14 when net total staffing increased by 10.025 FTE (full time equivalents): 0.750 FTE increase due to reorganizations; 3.500 FTE added for enhancements; 4.375 FTE funded by the 2013 Operating Levy (although in total, the Levy will now fund 22.500 FTE, including previously authorized staffing for the Osborn Aquatic Center, Chintimini Senior Center and Library Monday hours, as well as 3.0 FTE Police Officers previously unfunded); 4.000 FTE added for the new Residential Parking District; and 2.600 FTE eliminated to meet a sustainable budget. However, this trend did not spill into FY 15-16 as the Residential Parking District positions did not come to fruition due to the unsuccessful outcome at the polls and overall authorized FTE decreased by a net 1.25 FTE due to reorganizations.
Revenue - How much franchise fee revenue has been lost from Qwest by the move from land lines to cell phones?
A:
Answer: FY 2015 revenue was $378,000 lower (80%) than the FY 2000 receipts which was the highest year of revenue.
What was the impact on the City of the Court decision to uphold Hewlett-Packard’s (HP) appeal of its assessed valuation (AV) for property taxes?
A:

Answer: In the summer of 2013, after the City’s FY 13-14 Budget was adopted, the State Department of Revenue filed an appeal of the award made to HP by the Oregon Supreme Court, thereby deferring the requirement to refund about $385,000 (city’s share) in interest until this later appeal is resolved. This adjustment, as well as other refinements for reserves held by the County, reduced the City’s direct portion of monies owed to HP to $1.4 million. This amount was paid in July 2013; additional revenue impacts to the City were monies owed by the Corvallis Rural Fire District ($88,726) and the Corvallis-Benton County Library Service District ($149,421). This $238,000 in payouts has decreased FY 13-14 payments to the City by these entities. The County has indicated that additional holdbacks will be made in FY 14-15 for the interest that is still potentially owed to HP. This situation impacts all General Fund services (i.e. Police, Fire, CD-Planning, Parks & Recreation, Library, Economic Development and Municipal Court), but was somewhat alleviated for future years with the passage of the November 2013 Five-year Operating Levy which provides approximately $600,000 per year in non-designated revenues designed to replace the lost funding for the lower HP valuation. City Council was provided with the linked memos below, as staff continues to work on a resolution of this financial situation. Ultimately, as of August 6, 2015 the Oregon Supreme Court reaffirmed the Tax Court's decision. 

HP Property Tax Appeal Outcome                            HP Property Tax Appeal Outcome - Second Memo

Property Tax Assessed Value FY13-14 Update           Benton County Press Release August 2015

General - Why is the City in budget trouble?
A:
Answer: The City’s major revenue sources for certain functions, collectively called the property tax supported operations, have been growing more slowly than the costs to provide services.
General - I thought passage of Measures 66 and 67 would mean no cuts, so why is this happening?
A:
Answer: Measures 66 and 67 increase income taxes paid to the state and increase funding for state funded programs. They have no direct impact on the City’s funding.
General - Is there a way to get the 3% growth in revenue matched better to the 6% growth in expenditures?
A:
Answer: There is no easy answer on this one. Growing property taxes beyond current projections is limited by Oregon State law through state-wide voter approved ballot initiatives (Measures 5, 47 and 50 for property taxes). Although new development would allow more significant increases in property tax revenue, the City would need to add nearly $200 million in new development to raise $1 million in revenue. Some new revenue sources are subject to state preemptions (i.e., local real estate transfer tax). Others are subject to difficulties associated with collections or administration (i.e., states that have a local sales tax often use state collections processes for local revenues; states that have local income taxes use the state income tax as a base and the state collects). Oregon has a long history of voter dislike of new taxes (i.e., Oregon’s many failed attempts to put in place a statewide sales tax).

In the last several years Corvallis has attempted to improve local revenues through adoption of a local telecommunications tax that was referred to the voters and failed, and through discussions of a business license fee, local meal tax, and local entertainment tax. All of these had strong local opposition and never moved forward. Added to the challenges associated with adopting a local, significant new tax would be the market difficulties Corvallis’ businesses might face if there was a local income or sales tax that did not apply in Philomath, Albany, etc. Basically, to expand the local revenue stream in any significant way for tax-based services will require some movement on the State’s part.

Some of the services which get discussed for possible cuts, most notably Parks & Recreation services, charge fees for most programs. Fees are set based on City Council financial cost recovery policies, market tolerance, including competitors and direct costs to deliver the program while balancing the mission of Public Recreation to be accessible to all community members. Fees are reviewed annually by the Parks, Natural Areas and Recreation Board and City Council. A simple analysis that assumes no change in participation (which, due to elasticity of demand, is unlikely to be true), but full cost recovery through fees at the Aquatic Center would increase charges 176%. Daily entry for one swim session is projected to increase from $4 to $11 – likely pricing most users out of the use of the pool. Parks & Recreation staff completes a fee comparison of local and state-wide aquatic centers as part of the annual fee review. Corvallis rates are generally at or above the median fees charged for almost all activities (child through senior) and for annual memberships. Review of fees of Parks and Recreation programs, including the Aquatic Center, occurs each spring through the Department's advisory board and City Council. Staff anticipates recommending some increase in fees each year, but not at a level that recovers all costs in order to remain competitive with other aquatic facilities and fulfill the mission of Public Recreation as outlined in its cost recovery model.
Like the revenue picture, the expenditure side of the equation is equally challenged by State laws. In particular, the State’s collective bargaining laws, that require comparisons with similar sized governments, in many cases means that labor negotiations are not completed solely within the discretion of the City Council. Arbitration requirements for Police, Fire, and 9-1-1 units do not necessarily allow the City Council to include “ability to pay” among the factors to be considered in labor negotiations as the primary factor. All of this means that as Corvallis’ comparators increase compensation, Corvallis must follow.
General - Did balancing the budget for FY 11-12 resolve the problem?
A:
Answer: It did not. $2.5 million in expenditure reductions, in FY 10-11, and another $1.8 million in reductions for FY 11-12 combined with a successful, voter approved 3-year operating levy in May 2011 improved the financial outlook for FY 12-13 but not enough. In staff’s future financial projections, revenues and expenditures remain unbalanced with expenditures exceeding revenues by several million dollars each year. The long-term structural imbalance still needs to be addressed. The efforts made during the previous budget planning periods have provided additional, but limited time to develop the community-wide process needed to discuss revenue alternatives as well as service reductions and how best to proceed to meet the community’s needs and priorities. In FY 12-13 Council bought off on a new Financial Planning model that looks at rebuilding reserves and enacting a more sustainable budget that balances recurring revenues and expenditures. In addition, during the FY14-15 budgeting cycle, the expenditure limit concept was implemented for each department, ensuring that revenues would equal expenditures within a five-year planning window.
General - What was the methodology used to develop the amounts to balance the FY10-11 and FY11-12 budgets?
A:
Answer: As with all things related to budgets, there are many ways to determine each department’s share of any budget reductions. Staff proposed one method as a starting point for discussion in the FY 10-11 budget process. This method took into account each department’s total expenditures, subtracted the portion of the expenditures that was supported by designated revenues (i.e., recreation fees for specific programs in Parks & Recreation) and then calculated the proportion of nondesignated revenues each department uses. The reductions amount was then based on the department’s proportionate share of the non-designated revenue. This served as a starting point for each department director (along with advisory boards and commissions) to identify what would need to be cut to achieve the targeted number. In the final analysis, the Budget Commission and Council approved this methodology for balancing the FY 10-11 budget. For FY 11-12 however, an order of magnitude approach representing significant service/cost reduction packages was used based on a combination of the size of the deficit and the lack of remaining cost-savings available from additional streamlining efforts. During the FY14-15 budgeting cycle, the expenditure limit concept was implemented for each department, ensuring that revenues would equal expenditures.
General - I thought that in FY 09-10 the City had plenty of money. What happened?
A:
Answer: While the budgeting process based on past historically normed averages appeared promising, revenues in the property tax funds in FY 08-09 ended up being about $1 million lower than expected, and expenditures were almost exactly as expected. As a result, some of the “usual” annual savings were not realized. That, combined with fairly flat revenue projections for FY 09-10 and future fiscal years, and increasing expenses, leads to a structural problem where annual revenue is lower than the annual operating expenses. This situation continued to worsen in all recent year actuals through to and including FY 12-13 actuals.
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