2023-2025 Budget MessageMayor Buck, Chair, Members of the Budget Committee, and Citizens of Lake Oswego:
I am pleased to submit the 2023‐2025 Budget for Budget Committee consideration. This
budget positions the City well to deliver effective and efficient municipal services that cultivate
an exceptional quality of life for everyone in Lake Oswego. Budget Committee review and
deliberation is critical to ensuring that the City is a careful steward of the resources it manages
on behalf of the public.
As we have done in the past, we treat the operating departments in the General Fund as
enterprises, which is described in greater detail in the “Budget Process and Philosophy”
chapter. This biennium, departments received an increase of 4.67% in the first year and 3.54%
in the second year of the biennium over their operating revenues, with the exception of the
Planning Department (0%).
Nine major issues stand out in this budget:
•The City is financially well positioned to begin the next biennium. There are several
factors that contribute to the City’s strong financial position. The first is our reserves,
built over time through adherence to policy. The second is the stability of the City’s
revenue streams, particularly our property tax revenues in the general fund. The third is
careful management of the costs of personnel, even while significant inflationary
pressures ensued. The City’s constructive working relationships with its three public
employee unions is essential in ensuring that we provide fair and adequate
compensation that is affordable to the City.
•The City can manage high inflation for one biennium. The City has seen cost increases
for labor, goods and services, and capital projects because of inflationary pressures.
However, at present, those costs are manageable, largely due to strong fiscal practices in
past biennia. Managing inflation means that with the exception of the programs added
with the completion of the Lake Oswego Recreation and Aquatics Center and one
position added to address workload issues in the Building Division, the budget is largely
a status quo budget, with no major changes in program and no additional personnel in
the General Fund.
•Capital costs continue to be uncertain. In the 2021‐2023 biennium, several projects
faced costs that are significantly higher than originally estimated. This is due to
competition in the construction market, a labor shortage in some trades, supply chain
issues, and the overall effect of inflation. Because of the continued volatility in the
Fiscal Year 2023‐25
City Manager’s Budget Message
construction market, the budget takes a conservative (or cautious) approach to capital
projects.
•Funding is allocated to the specific capital projects identified in the City Council’s goals. In
particular, this budget includes:
o Over $4 million in additional capital funds allocated to the completion of the Lake
Oswego Recreation and Aquatic Center (LORAC) to close the funding gap for this
high priority project. The total cost of this project is now approximately $46
million, which includes a $16.25 million contribution from the Lake Oswego
School District.
o $3.5 million allocated to Phase I of the Rassekh Park project, which would enable
construction of the skatepark portion of this park. Phase II of this project, which
includes a ballfield, playground, and picnic shelter is not funded in the budget.
o A transfer of $2 million from the General Fund to the streets fund. This is lower
than the $3 million per year that was the amount of the transfer to streets in the
past two biennia.
o $5.7 million in pedestrian safety improvements in response to Council goals.
•This budget includes significant new staff in the Parks and Recreation Department, in
anticipation that the LORAC will be fully operational in the second year of the biennium.
The aquatics program requires adding 4.9 full time, and 9.7 part time FTE. The “dry‐
side” of the LORAC requires the addition of 1.6 full time and 4.3 part time FTE. Finally,
the Municipal Golf Course will re‐open in the summer of 2024, and the budget includes
restoration of these services, and an increase of 1.4 FTE is budgeted for the golf course
reopening.
•The addition of the LORAC will also substantially increase the budget of the Parks and
Recreation Department. The budget reflects $2.37 million in revenue from a variety of
passes, entrance fees, class and program revenue, and an operating contribution from
the Lake Oswego School District. This additional revenue covers approximately 85
percent of the estimated operating costs of the LORAC, and the balance is addressed by
an allocation of $430,000 in general fund operating revenues. The Budget Committee
will note that the 2021‐2023 budget included increased funding for Parks and Recreation
in anticipation of the opening of LORAC, so this general fund allocation does not
represent a true “increase” over the last biennium budget.
•The budget includes 1.1 additional FTE in the Building Division to address workload
issues. The Building Division is fully funded by building permit revenues, and the
additional staffing does not require a general fund subsidy.
•The Budget does not include a contribution to the capital reserve. In past biennium, the
City was able to direct “excess” ending fund balance to capital reserve. Instead of
directing ending fund balance to the reserve, the budget uses the projected ending fund
balance from the current biennium to fund the LORAC.
•The budget includes advancing the Wastewater Treatment Plant Project to construction
beginning in 2024.
In conclusion, the City is well positioned to address the needs of Lake Oswego, to implement
the Council's goals, and to continue the long tradition of thoughtful financial stewardship of the
Community's rate, tax, and fee dollars. I look forward to your deliberation.
Sincerel
Martha Bennett, City Manager
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