City approves 2011-12 budget

Editor's note:

The statement regarding a "$28-million reserve" in the story "City of Sisters faces budget crunch," (The Nugget, June 1, page 1) was not given proper context. The figure did not represent cash carry-forward or the city's "savings account" spent down.

The quoted figure was based on an understanding of the accumulated assets of the city during the period of high growth in Sisters, 2003-2009, less what is required to provide essential services. Further, the figure itself cannot be substantiated. Councilor David Asson noted in a post-story discussion with The Nugget, such an analysis is exceedingly complex and requires significant explanation, which would itself be open to challenge based on interpretation of numbers.

The reference to a "$28-million reserve" created an incorrect impression of the city's financial practices and condition.

The Nugget regrets the error.

Jim Cornelius, Editor

Concluding six weeks of deliberations and spirited discussion, a 10-member budget committee recommended a $9,251,045 budget for approval by the Sisters City Council, a budget that is very close to the original draft proposed by City Manager Eileen Stein.

There were serious debates around broad concepts like deficit spending and reserve funds, and around line items like a three percent merit pay fund to provide staff incentive, and $12,000 for a city codebook update.

Championed by Councilor Pat Thompson, the phrase "live within our means" came up many times, as did reference to the need for an austere budget raised by Mayor Lon Kellstrom and picked up in recommendations by committee member Shawna Bell.

Councilor David Asson had harsh words for The Nugget's June 1 story covering the May 26 budget committee meeting. At issue was The Nugget's reporting on the analysis of the Asson's summary spreadsheet passed out at the May 26 meeting. The $28 million figure was not part of the spreadsheet or Asson's analysis.

Asson pointed out that he had not authorized the distribution of the May 26 spreadsheet.

The May 26 spreadsheet, which was presented to the budget committee as the work of Asson and budget committee member Andrew Gorayeb, showed the 2011- 2012 budget to be spending $556,000 more than the city expected to receive in revenue. Asson explained that his corrected June 2 spreadsheet shows the same $556,000 deficit, but in fact $300,000 is an accounting anomaly relating to systems development charges, leaving "...what may be a $200,000 decrease in operations [deficit] this year," said Asson.

The bulk of that potential deficit comes from the city's sewer revenue fund. The budget committee recommended strongly that the city council commit to fixing the sewer fund by the end of this fiscal year, or least document a plan to fix the fund.

Councilor Pat Thompson and committee member Andrew Gorayeb pressed for commitment to reduce city expenses to close the $200,000 budget gap. Mayor Kellstrom pointed out "...when we were doing good, the council was prudent and put a lot of money aside as a reserve to buffer when we have a revenue problem." Kellstrom indicated that having such a buffer allowed the city to maintain a more even keel as the city's revenues cycled up and down relatively quickly.

City Manager Eileen Stein said, "Last year we put the operating contingency in the reserve fund at $500,000. This was at the recommendation of those that advise us on our budget. For a city of our size this is a good rainy day fund. It is raining and we haven't touched our rainy day fund."

She went on to point out that the city had at least another $1.5 million available in other contingency funds. Stein noted that, due to the recession, both Redmond and Bend are already into their rainy day funds.

The health of the city's financial position depends greatly on the state of the economy. Stein said, "I am getting mixed signals. I am being told from the national and state level that we have an economic recovery underway."

This view was met with vocal skepticism from Kellstrom, Gorayeb and Thompson.

Stein, however, believes the budget is a responsible position between pessimism and undue optimism.

"I think the 2011-2012 budget is a very responsible budget given what we know right now," she said.