City coffers predicted to run low

Klamath Falls is facing a downward trend in fiscal security.

The trend, expected to last during the coming decade, was noted Wednesday, May 24 when the Klamath Falls Budget Committee met to discuss the 2023-25 biennial budget.

City Manager Johnathan Teichert along with Finance and Business Services Director Jessica Lindsay predicted city budgets dropping to the city’s minimum required 20% general fund balance reserve by 2028 during a presentation to the committee.

By 2030, Teichert said the city is likely to enter the negative percentiles range.

“I’ll tell you that many other communities in Oregon look similar to this,” Teichert said.

Predicted expenditure increases, Teichert said, are partially attributed to raising rates of retirement contributions under ORS 238 Public Employees Retirement System (PERS).

This year, Lindsay and Teichert predicted a 3% increase to the city’s required contribution. An annual 5% increase in health care provisions costs is also predicted to contribute.

As it stands, the total proposed 2023-25 budget accounts for $182,721,275, including a fiscal year starting balance of $44,448,400 — a sizable decrease from the $63,420,575 provided in the 2021-23 starting budget.

By the end of the new biennium, the city’s ending fund balance is expected to be $24,864,075.

Earnings from service charges such as power and water account for the largest portion of resources, expected to bring in $43,628,400.

General fund

General fund resources account for revenue gained through property taxes, permits, licenses and state- and county-shared resources.

The anticipated general fund total is $54,523,525 — a decrease of more than $9 million from the previous biennium.

The largest general fund allocation — about $16 million — will be appropriated to Klamath Falls Police Department (KFPD).

During the previous biennium, KFPD received $16.2 million, included provisions for the purchase of an armored vehicle and other equipment.

Though current funding presents a somewhat marginal decrease, KFPD Police Chief Rob Dentinger said the funds will be sufficient to include the purchase of an updated communications system.

Both city and county police forces, as well as county fire districts and emergency dispatch offices, will pool funds to purchase and implement a “fully integrated system” from Tyler Enterprise.

“We’ve been on the same report writing management system for 18 years, and we pay $18,000 a year for maintenance,” Dentinger said.

The new system, Dentinger said, increases KFPD’s annual maintenance fees to $138,000 per year.

Budget Committee Chair Mika Blain asked for the argument justifying this increase in funding.

“[With our current system], we should still be riding horses,” Dentinger said. “The service is so horrible.”

The new system, he explained, would allow for continuity in communications and documentation within all county agencies.

City employee salaries and benefits are also provided through the general fund.

With the exception of the city’s finance department, staff salaries will all increase. The inverse can be said for employee benefit provisions, all of which are decreased since the previous biennium.

According to city documents, personnel services account for 21.2% of the city’s overall fiscal requirements.

The budget lists employee benefits — including health insurance, PERS and other benefits — at 31% of the overall personnel budget of $38,771,200. Staff salaries total 69% of the total amount.

Major capital projects

City projects set to receive more than $500,000 are defined as major capital projects.

The 2023-25 budget lists 19 such projects in the coming biennium, including $20 million for the ongoing water treatment plant upgrades, $17 million for an airport runway and a taxiway and $6 million to replace 100-year-old center reservoirs.

Distribution of general funds are planned for major street repairs over the next two years as well, with $3 million set aside for Washburn and Shasta ways, $1.3 million for Main and East Main streets intersection and $375,000 for chip seal program.

The city's budget committee will hold additional budget hearings and is scheduled to adopt the 2023-25 biennium budget June 20. Time and place will be announced the week prior.