You tell 'em, Marilyn! But, don't expect that they will listen or hear....

St. Helens faces budget crunch

City's finance director tells council 'act now' or risk running out of cash reserves
By Kelly Moyer

The South County Spotlight, Nov 26, 2008, Updated Nov 26, 2008

Faced with expenditures that outweigh revenues by roughly $1.2 million a year, the city of St. Helens is rapidly blowing through its cash reserves.
Now the City Council must decide whether they want to cut $500,000 from the budget today to avoid major cuts in the future.

“Every month that goes by is going to make it even worse,” says St. Helens Finance Director Marilyn Peterson of the city’s increasingly critical financial situation. “The city needs to act now or we will have spent through all our cash reserves by 2010.”

City councilors aren’t so convinced. Last month they asked the city’s department heads to put together a scenario of what cuts they would need to make to reduce the city’s expenditures by 10 percent.

Last week, those department heads presented some very bleak scenarios to the council.
If the total budgetary cuts were to equal 10 percent, nearly $500,000, the city would likely have to cut $268,506 from the police department; $94,220 from city administration; $73,046 from the library; and $60,000 from the park department.
That’s equivalent to four police positions, one administrative position and one part-time library position.

“If they wait until next year, they’re going to have to cut $1.2 million,” Peterson says. “And they would lose numerous positions. The cuts, if they wait, are going to be significant.”

In the 10 percent reduction scenarios presented to council on Wednesday, Nov. 19, the city’s department heads tried to eliminate as much as they could before chopping positions. For instance, the police chief proposed cutting nearly $20,000 in materials, including $3,409.11 in gasoline and $2330.90 in equipment expenses, but still put four positions on the chopping block and said he would reduce overtime by $7,000.

The city administrators proposed doing away with the councilors’ pay, which would save $35,000, cutting the public art expense for a savings of $12,000 and not pursuing an urban renewal district, which would save $15,000. Even with those cuts, they would still need to cut a position (in this scenario, the economic development director) to meet the 10 percent reduction.

“I think they’ll need to pick and choose,” says Peterson. “They have safety issues and central services to consider, so they may choose to look at nonessential services like the library and parks.”

Skip Baker, the city’s head of economic development, says he thinks councilors may not have understood the full extent of the problem until after they adopted this year’s budget.

“There are a lot of different ways to be told you need to make cuts,” Baker says. “The council didn’t really understand how much they needed to adjust the budget until after it passed. That’s not to say that (Peterson) isn’t doing her job, because she is doing a good job, it’s just that not everything comes across in layman’s language sometimes.”

After the city’s manager, Chad Olsen, grasped the full extent of St. Helen’s financial troubles, Baker says, he sat down with Peterson to create a more understandable picture for the council. Last month, the mayor asked department heads to put together the 10 percent reduction scenarios to see what type of impact that might have on people and materials.

Baker says the situation hasn’t necessarily reached critical status yet, but agrees with Peterson that the city may be in for rough times if the council doesn’t act now.
“Once you run out of reserves you don’t have the ability to handle emergencies,” Baker says. “So you either make cuts now or you wait two years and have to make bigger cuts.”

Councilors said last week that they need more time to analyze the department heads’ scenarios and to explore other options, including looking at ways to increase the city’s revenues to better balance the financial outlook.

However, most city administrators, including Baker and Peterson are optimistic that the situation will improve in the next year or two.

“Clearly the problem is due to the economy,” Baker says. “Two years ago we weren’t going through these types of negative (numbers). We began to lose money last year as the economy slowed down. When interest rates went down we made less money from our interest, and as energy use goes down we make less money from our franchise fees.”
Peterson agrees.

“I don’t see anything that points to this getting any better,” she says of the city’s financial future. “In fact, this may get even uglier. The council should have made these decisions back in May. It’s only getting worse, so the faster they make these cuts, the easier it will be.”

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