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Home My WebLink AboutAgenda Item - 2010-11-30 - Number NA - Financial Cross Section Presentation Municipal Finance a perspective from one Lake Oswego household Dan Vizzini • Lake Oswego, Oregon • November 24, 2010 The following slides provide a context for considering upcoming City Council decisions regarding the LO-Tigard Water Partnership, LOIS sewer system improvements, proposed programs to restore and maintain publicly-owned sensitive lands and watersheds, and proposed construction of public safety, recreation and other public facilities at the West End Building. Most of the Information for this presentation came from my household property tax and utility bills, and annual financial statements and adopted budgets for the City of Lake Oswego . Additional City information was gleaned from recent City staff reports and studies regarding the LOIS project, LO-Tigard Water Partnership, stewardship of sensitive lands and City watersheds, and financing alternatives for the West End Building. Consumer price indices were found on the US Bureau of Labor Statistics web site. Editorial comments and opinions are mine alone. A Typical Lake Oswego Household • Rancher build in 1977 i • Living Space: 1,986 square feet k{MS • Lot Size: 10,295 square feet t s r 1 :I, Frs d , o • Occupants: 3 adults, one dog and one cat "°"` ," • Watershed: Tryon Creek (Willamette River) H k \ a , ^ T rn�civa Us,^ • Neighborhood: Forest Highlandsr • Real Market Value: • - - __ � •Land - $209,941 1 a I i •Building - $165,050CD I •Total Value - $374,991 • Assessed Value: $248,360 ,' ` � M c • r ee g pe— t- . ly. -:flr scnrn�' •-�` -- s t' Household Bill for City Property Taxes and Utility Fees $233 per month as of November 2010 Property Taxes - City Debt Service, $24.88 , Property Taxes- City 11% Operations, $100.06 , 42% Water User Fee, $24.81 11% Other Utility Fees, Wastewater User Fee, $14.07 6% $45.65 , 20% Garbage Collection Fee, $23.92 , 10% Sources: Property Tax Statements for November 1998 and November 2010 City utility and garbage collection billing statements Shifting Priorities: Shares of household property taxes and utility fees Tax limitation laws have held down property taxes, while long-deferred utility needs are driving up user fees. t00%- ■Other Utility Fees ❑Garbage Cnl[ertlon Fee 90% •Wastewater User Fee Water User Fee ❑Property Taxes-City Debt Service 8aa� •Property Taxes-City operations 70°4 60% 50a� 40°. 30ao cG4� 10% 04� • 1998 2010 Sources: Property Tax Statements for November 1998 and November 2010 City utility and garbage collection billing statements Keeping Pace with Inflation and Population Increases Property taxes for City operations haven't kept pace with increases in population and inflation from 1998 to 2010. Utility fees increased in excess of increases in population and inflation in order to provide financing for essential infrastructure improvements and to secure bond financing for upcoming water and wastewater investments. $zs0 Monthly property taxes and user fees S233 •Other Utility Fees ❑Garbage Collection Fee •Wastewater User Fee ❑Water User Fee $zoo 0 Property Taxes-City Debt Service •Property Taxes-City Operations $167 $150 S137 $100 $50 "Real" taxes and fees are adjusted to eliminate the impacts of population growth and inflation from 1998 to 2010. $0 1998 Actual 2010 Actual 2010 Real Sources: Property Tax Statements for November 1998 and November 2010. City utility and garbage collection billing statements Population estimates from City Audit Reports and PSU Population Research Center Consumer Price Indices from the US Bureau of Labor Statistics Portland continues to outpace Lake Oswego Property taxes and utility fees in Portland are growing faster than Lake Oswego... except for wastewater fees. Monthly property taxes and user fees $316 •Garbage Collection Fees ▪Street Maintenance Fees ❑Surface Water Fees ■Wastewater User Fees ❑Water User Fees $23 3 ■City Property Taxes $154 $137 Lc) Portland LO Portland 1998 2010 Portland general taxes, water, surface water and garbage collection fees continue to grow faster than in Lake Oswego. Lake Oswego's wastewater fee is growing faster than the fee in Portland. This is due in large part to the fact that Portland has all but completed their Big Pipe project, while LO is in the middle of the LOIS project. Sources: Property tax statements for November 1998 and November 2010 Portland property tax calculations from the Multnomah County Assessor's Office Utility charges and garbage collection billings from Lake Oswego and City of Portland utility rate schedules City property taxes and fees account for 50% of total costs for public services $468 per month as of November 2010 Water User Fees, $25 , 5°'o Wastewater User Fees, `\ $46, 10°lo Property Taxes-City Services, $125 , 27% �• Surface Water Fees, $9 Street Maintenance Fees, $5, 1% Garbage Collection Fees, $24, 5% County Property Taxes, $66, 14% Property Taxes Property Taxes-Regional Education, $158 , 34°I❑ Svcs, $11 , 2% Tax payments support municipal services in LO, Lake Oswego public schools, regional education services and the Portland Community College, the county library system and county social and justice services, Metro's regional parks, the zoo, and regional transportation, solid waste management and growth management activities, and capital investments for regional transit services. Sources: Property Tax Statements for November 2010 City utility and garbage collection billing statements Runaway government spending? Perhaps not. LO taxes and fees grew faster in the 1990s than in the past decade, except for the recent increase in wastewater fees. Average annual rates of growth on a per-capita basis Property City6.7% P �y Taxes- ❑199u-2ixon Operations 4.0% ■2(x)ir-2ul+i Property Taxes-City Debt 10.4°I° Service 2.3% 3.0% Water User Fee 1.5°/o 3.6% Wastewater User Fee 8.5% 17.2°/o Surface Water Fee 4.1°I° 0°I° 29/0 4°/0 6% 8% 10% 12% 14% 16% 18% 20% Sources: City of Lake Oswego annual financial statements, adopted budgets and master schedules of fees and charges Population estimates from City annual financial statements Inflation Comparisons: City Finances versus Consumer Prices During the past decade, imports and price subsidies depressed growth in many consumer sectors. Prices for local services (dining out, household energy and medical care) and public services grew at comparable rates. Average annual rates of change from 2000 to 2010 Apparel -2.3% Durable Comodities -1.6% Home Fumishinps/Operations -0.5%■ Consumable Commodities 1.6% Average annual changes in Consumer Price indices Private Transportation 2.2% for All Urban Consumers for the Portland-Salem Food at Home 2.4% OR-WA statistical area Food away from Home 3.5% Household Energy 5.0% Medical Care 5.5% Property Taxes for City Operations 4,0% I I I Property Taxes for City debt Service 12.3% Average annual changes in per capita property City Utility Fees 5 7% taxes and utility fees for I the City of Lake Oswego Total City Taxes and Utility Fors 4,4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% Sources: City of Lake Oswego annual financial statements, adopted budgets and master schedules of fees and charges Consumer price indices from the US Bureau of Labor Statistics Growth trends suggest austerity and affluence The rate of growth in per capita City property taxes and expenditures for City operations have been declining, particularly since 2000. Growth in consumer prices have been declining at a more moderate rate while per capita personal income has followed national economic cycles. Average annual rates of change 18% . .Per Capita Personal Income 16% - -Consumer Prices - City Operating Costs Per Capita -City Property Taxes Per Capita 14% 12% 10% 8% ' 6% r /J 0% 1990-1995 1995-2000 2000-2005 2005-2009 Sources: City of Lake Oswego annual financial statements Consumer price indices from the US Bureau of Labor Statistics Looking Ahead: Prudent, Prioritized Investments in Livability and Sustainability My monthly household payments for City services and utilities may grow from $233 in 2010 to $321 in 2015 The increases anticipate City Council decisions to invest in a reliable and resilient water supply, complete the LOIS sanitary sewer interceptor project, and adopt a program to restore and maintain City-owned sensitive lands... as well as voter approval for public safety, recreation and other public facility improvements at the West End Building (Option 8). $500 $450 •All Other Utilities Fees ❑Wastewater User Fees •Water User Fees $400 ❑Proeprty Taxes for City Debt Service •Proeprty Taxes for City Opeartions $350 Current household costs per month for Comcast, Qwest, cell phones and $31am Internet services $2s0 $ls0 slim - $50 $0 2010 2011 2012 2013 2014 2015 Sources: Property tax statements for November 2010, and utility charges and garbage collection billings Staff reports on LOIS, LO-Tigard Water Partnership, City stewardship of sensitive lands and WEB financing options