A Really Hard Problem

A while back I wrote about the limited scope of city government-- police and fire, water and sewer, zoning and planning, roads, etc. I went on to say you had to have a really big ego to try to do something at the national level. Today I saw a presentation which has caused me to question that thinking. Our last governor, John Kitzhaber, came to Hood River to promote the "Archimedes Movement," which is his attempt to deal with our health care problem. He gave a fascinating 30 minute talk on the nature of the problem and the possible form of a solution. He managed to explain the health care crisis in the same way I have tried to talk about local problems like our budget. He is trying to find a non-partisan solution to a non-partisan problem.

I could not do justice to his exposition, but fortunately there is a DVD available locally. Mosier's own Suzi Conklin, former owner of the Wildflower Restaurant, is our local Archimedes Movement coordinator. She will be arranging local viewings of the video. I will be hosting one soon, or you can contact her to get one in your neighborhood.

I don't know Dr. Kitzhaber, but I can say for sure that Suzi does not have a really big ego. Yet she is willing to tackle an important and complex national issue, starting locally. I think I need to eat my words. A little idealism can substitute for a lot of ego.

What does this have to do with city politics? Take a look at our general fund budget. 62% pays for city employees (police, fire, city staff). One-third of that amount, or more than 20% of our general fund goes to benefits-- mostly health insurance. As a city council member there is little I will be able do to change this equation, but I will sure be rooting for Suzi and Dr. Kitzhaber as they try to bring some rationality to this part of our city budget.

ADUs

There is a proposal to be discussed at today's council meeting to allow "accessory dwelling units" in the zoning code. These would be either attached apartments or small units on the lot of a single family residential unit (R1, R2, R3, C1, or C2). There are several good reasons to allow ADUs. ADUs allow families to take care of elderly relatives, or they allow people to take in a renter to help them stay in their house as property taxes climb. They could also create a stock of lower priced rentals which we clearly need-- people who work in the city frequently can't afford to live here.

The trick is to create these units without just creating more expensive vacation rentals. The city is considering a range of alternatives from requiring proof of full time residency and a long term lease for an ADU permit to requiring proof of local employment.

There are several side issues such as parking, building size, and compatibility. I'll be happy to fill you in on the details, but I'd like to talk about a different aspect of the discussion. A developer rose to speak on the issue at the last council meeting. He suggested that with too many restrictions there will be few if any ADUs, and that if the Council instead passed an unrestricted ADU ordinance the market would work it out.

He was probably stretching his point a bit, but you can argue that in a pure free market there should be no zoning. I like free markets, but this is one area where they can fail us. I'm a strong believer in zoning and land use planning rules. If done fairly, they can increase the value of all real estate in the city. You can compare neighborhoods in Hood River, with relatively strong zoning and land use rules, to neighborhoods in Bingen, with relatively weak rules. I know I prefer my neighborhood in Hood River.

I think most of us can agree on some of the broad goals we would like to achieve through zoning: safe neighborhoods with convenient shopping and a healthy commercial and industrial sector to provide employment. Without a set of reasonable rules about what can be built where you are likely to get a complete mess. But the more subtle questions are where there is some controversy.

How directly should the city legislate what it wants to achieve? Should it legislate exactly what it is trying to accomplish, and risk creating rules that will exclude many uses that are within the intent of the rule? Or should it create general rules to gently guide the market, but risk unintended consequences? Every zoning change is an experiment-- with major potential impact.

In this particular case, I think the consequences of under-regulation are worse than the consequences of over-regulation. A surge in the number of vacation rentals will clearly change the character of many of our neighborhoods.

If we over-specify the rules we may fail to see the ADUs we are hoping will add to the lower cost rental market. I'm not insensitive to the affordable housing problem in our town, but it will be far easier to open up the rules a little in the future than it will be to close them down.

I hate to say it, but ADUs are one of the easier zoning problems to deal with. Let me know what zoning related problems you are seeing in your neighborhoods, and what you think might be the solutions.

Business License-- Bunt or Foul Ball?

I just got back from a long City Council meeting this evening. For a second time the business license proposal was discussed, but no action was taken. It will be back for consideration in two weeks. I continue to be impressed at the quality of public comment at council meetings. More than a dozen people spoke-- mostly opposed, though two spoke in favor. All the statements were clear and well reasoned, people avoided repetition, and many good metaphors were recruited to "drive home" the points.

I am against this ordinance because I think it doesn't really accomplish anything, but I am starting to understand what its supporters are looking for. Unfortunately I think they are supporting an abstract concept rather than a specific ordinance.

Ordinance 1901, to greatly simplify, states that it provides for the collection of a business license fee from all city businesses to pay for generation of a database of businesses to help the city enforce a wide range of health and public safety rules.

Numerous reasons have been advanced for the ordinance, but in the comments and council deliberations two bells keep getting rung. The first seems trivial, but it has resonance. Many people would like to be sure the police and fire departments know how to contact them in an emergency. The second is much more difficult. Established businesses want to guarantee a "level playing field". They have to play by a complicated set of rule-- everything from health inspections to sign ordinances-- and they are not happy that there are less legit businesses "flying beneath the radar" (or "skating by") and unfairly taking some of their business.

As a business owner I can understand the frustration. I design and manufacture electronic instruments, so believe me when I say I understand unfair competition. The connection I haven't been able to make yet is how this license program helps solve this problem. In what way will this license program improve compliance with existing rules? I just don't get it. It explicitly does not raise revenue to pay for more code enforcement staff. It does not "add teeth" to existing code. It just makes a list, and charges businesses for that privilege.

The discussion has brought up several points which I would like to see the city work on independent of Ordinance 1901:

• We need to prepare an information packet to tell new businesses what rules they will have to deal with in our city
• We need to be sure we allocate the funds so the fire marshal can inspect structures on a regular basis
• We need to change Title 17 of the municipal code to prohibit hazardous materials in home occupation businesses (as defined by the State Fire Marshal in ORS 453)
• We need a streamlined process for people to report suspected code violations, since that's our best hope for improved enforcement.
• We need a voluntary program to allow businesses and individuals to register emergency contact info with the city.
  

Unfortunately discussion of this ordinance has been generating more anger and cynicism than real solutions. I frankly hate to see our City Manager spending so much of his time trying to craft a business ordinance when we have such a serious budget problem. Maybe this idea should be revisited in three years after our deficit is history, but for now I'd like to see him "keep his eye on the ball."

Budget 101: Part 2

If you've read Budget Part 1 you might have a few questions:

• How did we wind up with a budget deficit?
• Why does it matter?
• What are we doing to fix it?
• Why is this a campaign issue?

1) We wound up with a General Fund deficit by spending more than we took in for several years in a row. Oregon law requires each fund to be balanced in each budget, but somehow we went for year after year without either finding enough money to cover the shortfall or cutting expenses and services to match our income.

2) The deficit matters for three reasons:

• As long as we're spending a significant portion of our income just to fill the hole, we aren't spending it on all the things we need to keep our city great. We're not increasing police or fire budgets to match inflation or population growth. Any idea which requires funding, no matter how widely supported, must be put aside for another day.
• State law requires us to fix it. In the most extreme case, the state will make us fix it. They'll make the choices on how our taxes are spent, not us.
• If we don't fill the hole quickly it will be even harder. The City has very little control over its income-- property taxes are set by statute, many of the fees depend on the health of the economy. If building or tourism slow down or property values decline, revenues will be reduced. We won't be able to balance the budget without major cuts to services.

3) What are we doing to fix it? The City has fixed the systemic problems that lead to the deficit. Any of you who've run a business will be surprised at this list, but the City is now:

• Not spending grant money until the grant is received.
• Tracking expenses department by department against budget (budget vs. actuals) to catch overspending before the end of the year.
• Transferring money between funds to account for costs one fund incurs on behalf of another (example: all funds pay part of city manager's salary).
• Raising fees for city services (examples: planning review, licenses, etc.).
• Spending less money.

4) If we have a plan in place to fill the hole, why is this a campaign issue? A plan is just a blueprint. To successfully fill the hole we will need each budget and each financial decision over the next three years to match this plan-- and we need to be lucky.

• We need to be sure our City Councilors are not afraid to dive into the budget spreadsheet and ask lots of questions.
• We need to avoid " 'No' fatigue." It's hard to say "no" to spending money on every project you really want to make happen-- but we can't relax our fiscal discipline.
• We need to assume things will not go to plan. We need to constantly look for problems, and fix them aggressively.

I have been told I shouldn't talk about the budget too much in my campaign. It's not easy to explain, and since services aren't being cut yet most people don't see the problem. I guess I don't see the point to running for office without saying anything. And don't worry, I'm not quitting my day job.

On a Lighter Note

Since you've just plowed through some dense info on our city budget, here's some lighter fare. Hood River Municipal Code Title 9.20.040 prohibits frequenting a bar for the purpose of soliciting another person to purchase drinks. As I understand it, up until about WW2 taverns would employ women who would pretend to be patrons and ask men to buy them drinks. The bartender would give the woman a watered down drink, but she would get a cut for helping run up the tab.

Budget 101: Part 1

Our city General Fund has large negative balance. This is very bad-- though it's not an easy issue to get people excited about. In this article I'll explain in broad terms how the city budget works. In Part 2 I'll explain why our financial situation is so precarious.

Municipal budgets are made up of multiple funds, each of which is an independent account with income and expenses. For example, there is a road fund which gets income from the city's share of the gas tax, and is used to do things like fix potholes. Most of the funds have dedicated sources of income which are spent on a specific city service.

The "General Fund" is a catch all operating fund which includes many different functions. It includes the salaries and related expenses for the police and fire departments, as well as city employees such as the City Manager, planning department, finance department, and legal services.

Each fund should begin and end each year with roughly a zero balance. Income and expenses for a fund should net to zero each year. If a fund overspends for a year, it should be corrected in the following year by either increasing income (taxes, fees, grants), or decreasing spending (services, employees).

Our budget year starts on July 1, and we don't yet have ending numbers for last year (July 1 2005 to June 30 2006). But here's the trend in the General Fund leading up to this year (rounded to nearest $10,000):

2003-2004 -$400,000
2004-2005 -$580,000
2005-2006 -$1,180,000

Word has it we began 2006-2007 with a balance on the order of -$800,000. It's an encouraging improvement, but still a very big hole to fill-- especially when you see that income for the fund is only between $2,000,000 and $4,000,000 per year. And when you look at the details there are a few more scary surprises.

Here's where the General Fund revenue comes from. I'll use the budgeted numbers for 2006-2007. Remember we haven't actually seen this money yet. The city expects an income of just over $3,700,000 this year. Here's where it will come from (we hope):

34% from property taxes (limited by statute)
18% from franchise fees (from gas, power, cable, etc.)
15% from federal grants (for waterfront park)
12% from charges to other funds for services
9% from the city room tax
4% from licenses and fees (such as fees for reviewing plans)
3% from other state taxes (such as cigarettes and liquor)

Here's how we plan to spend the General Fund:

34% to the fire department
34% to the police department
16% to parks
7% to reduce the deficit
4% to planning department
4% to administration

Sliced a different way, 62% of the General Fund pays for salaries and benefits of city employees-- mostly police and fire.

Tomorrow I'll talk about why all these numbers represent a real problem for our city.

First Press

I received my first press coverage this weekend. Half the people I ran into at a fundraiser for the Waterfront Park had seen it-- though I suspect that crowd tracks the local news a little more closely than the average voter.

Cynics

When I started telling friends I was running for City Council more than half of them said things like, "No, for real?" I'm not above playing an elaborate gag, but I had to ask why it seemed so unlikely that someone who is always talking about local issues might actually seek office. In a word-- cynicism. People are so convinced that every level of government is broken that they can't imagine a serious person wanting to waste their time participating.

I think it takes an enormous ego to participate in national politics. You have to believe that you can by force of will or manipulation of power change the course of an entire nation. But is it really an act of egotism to believe that one person might make a difference in a city of 6000 people?

I'm not going to give a sermon on public service. Well, in a way I am. I vote and debate national issues with friends and try to convince them to participate, but I can at some level understand their sense of futility. But if you don't like what's going on locally can you really make the same arguments? Is it that hard to imagine convincing a bunch of your neighbors that you have a good idea? Yes, institutions have inertia, and there are plenty of people who will never change their minds-- but you don't have to win every time to make a difference.

Hey, blogs are supposed to have an occasional rant.