The Cannon Beach Budget Committee just approved the 2024-25 budget. It goes to city council to finalize next week. The city manager decided a 10% contingency isn’t big enough for 2024-25, it should be 15%. This means over $1M in ‘unidentified’ expenditures. The $40M in the school + city hall + police department projects each already contain their own large contingencies. Also, many things in the budget are relatively fixed and won’t flex much (headcount & salaries, small amount of capital for vehicles, etc.) So the $1M is needed in for only $3M in supplies & services? A 33% buffer for this is just excessive.
Looking back, we have had contingency dollars in each last six budgets. It has ranged from 3% to 7% -- last year was 10% and now a request for 15%. A few years the city spent no contingency dollars. This 2023-24 budget has $730K – not likely to be used. When a contingency was needed, only $150-200K was ever tapped. Even a COVID year draw was minor.
The city has surpluses of $12M – against debts of $6M. A larger level of padding seems unnecessary and was brought up to ouncil. One asked if there was a ‘best practices’ for reserves. Others waved off the topic – presumably because having extra $ in the budget is good? But knowing it has no idea on what contingency dollars might be spent on.
Maybe this is just a method to disguise another year of a growing surplus. Maybe the city manager hopes to bring to council more project features to approve (like the $200K he proposed for police covered parking in April or the $160K given to the food pantry for a canopy.) We will have to wait and see. At the moment, we have more contingency dollars than property tax receipts. Seems odd.
The town beats revenue budgets almost each year as tourism taxes creep with inflation and occupancy. The staff underspends each year as plans delay and hiring goes slow. Frustratingly, we hear about projects the city cannot afford.
The midtown restroom remodel will be done in the 2024-25 budget. The city council agreed to raid the TAC surplus for the full $450K. The City had it budgeted last year for $250K – but wouldn’t spend the extra $200K. But it left $550K of 2022-23 contingencies unused; and ~$730K will be unused in 2023-24. Why didn’t we use the contingency budget?
There are similar comments for a “Welcome to Cannon Beach” sign, beach wheelchair program, or putting plastic seats on metal tourist toilets. A summer shuttle used to be budgeted. We promote how environmentally aware we are, but provide no recycling in receptacles.
Aren’t reserve surpluses good? Yes, when well thought out. Do we have a plan for ours? Not really. Our debt will soon be $40M and about $30M of that (CBE + CH) will be heavily exposed to potential disasters.
So let’s be more focused on the right things. Drop the contingency to $400K. Determine appropriate reserve level. Check costs & timing on the water project and rates. Reign in costs on the two huge, construction exposures: CBE & City Hall.
Randy Neal
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