Coos Bay budget committee warns of ‘no contingency’ as PERS and insurance costs rise

Coos Bay budget committee members on Thursday were warned the proposed city budget for fiscal 2025–26 leaves little room for error: contingency is effectively zero and the unappropriated ending fund balance is projected to fall sharply compared with the current fiscal year.

City Manager and budget officer Nicole Rutherford and staff presented a citywide proposed budget of about $80 million that covers operating funds, the city’s water and wastewater capital program, and other funds. Rutherford told the committee the proposal was prepared conservatively; revenue estimates were conservative while expenditure estimates included incremental increases and necessary cost items.

Committee discussion repeatedly returned to two structural pressures: rising Public Employees Retirement System (PERS) costs and growing insurance expenditures. Mayor Benetti noted the city’s PERS obligation has grown markedly over recent years, calling out a jump from about $1.4 million in 2016 to $4.8 million in the current budget; together with employee insurance the combined cost exceeds property tax collections in the general fund in the city’s estimates.

Rutherford said personnel expenses make up about 45% of the operating budget, with benefits representing a significant portion of that total. City staff estimated PERS expense for the coming year at roughly $4.8 million and anticipated a roughly 10% increase in employee insurance to about $3.4 million.

The presentation showed contingency account GL 6001 at $0 for FY 2025–26 and an unappropriated ending fund balance of about $171,000 — a decline of roughly $600,000 from the current year. ‘‘This is not ideal. This does not leave any room for error,’’ the chair said while urging members to consider redlines and staffing revisions.

Committee members asked for options to trim costs and discussed redlining several line items for later consideration, including a $50,000 library planning line and other discretionary items. Staff recommended using a redline process (setting items aside for later discussion) so the committee can keep the review moving while preserving items for follow-up.

Members also discussed grant-writing capacity and noted a grant writer position had been formalized earlier in the year; staff said that employee started full-time in January and will help pursue outside funding but cannot by itself offset structural PERS and insurance pressures.

The committee did not adopt deep program cuts at the session; instead members identified candidate cuts to review and requested staff to present options for balancing the budget with a focus on preserving essential services and building carryover. The budget will return to the committee and goes to the City Council for final adoption in June.

For residents, the staff presentation highlighted the city’s limited ability to absorb financial shocks, and members emphasized the need to review personnel allocations, grant revenue opportunities and capital-timing decisions to protect the city’s short-term fiscal position.