Sherwood presents first biennial budget, tightens reserves and trims staff amid revenue declines
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Summary
City manager and finance staff presented Sherwood’s proposed 2025–27 biennial budget to the budget committee, outlining a $263.7 million biennial total across funds, a 20% general fund reserve policy, projected rate increases, and staffing reductions to balance lower revenue from photo enforcement, shared state revenue and franchise fees.
Sherwood city officials on May 22 presented the city’s first biennial budget for fiscal years 2025–27, detailing a plan that staff said balances in accordance with Oregon law while cutting staffing and preserving a 20% general fund contingency.
City Manager Craig Sheldon told the budget committee, “We’re proud to present Sherwood’s first biennial budget 25 through ’27,” and laid out a budget that staff described as disciplined but responsive to slowing development, inflation and declining revenues in several categories.
The city manager and Finance Director David Broadway said the total biennial budget across all funds is $263,700,000; staff presented a general fund two‑year total of about $40,500,000 and enterprise funds (water, sanitary, storm, broadband) of about $51,600,000. Personnel services for the city were described at about $49,900,000 with the general fund share near $34,300,000; materials and services were shown as roughly $26,500,000, capital outlay $21,200,000 and debt service $7,100,000. Broadway said the budget and five‑year forecast meet the city financial policy to maintain a minimum 20% ending fund balance.
Why it matters: staff framed the policy as a cash‑flow and risk management tool. Broadway told the committee the city faces a cash‑flow gap between July and November — roughly $3.2 million in the current fiscal year — and that a 20% target provides money both for that timing gap and for asset replacement. He said about $1.7 million of the five‑year ending balance is identified for fleet, parts and facilities replacement.
Key revenue and spending drivers
• Photo enforcement and court revenue: officials said revenue from red‑light/photo enforcement has fallen since cameras were reactivated, in part because intersection design and traffic behavior changed; Broadway said resetting revenue assumptions reduced projections by $400,000–$500,000 per year.
• State shared revenue and franchise fees: staff described declines in state shared intergovernmental revenue and in franchise fees (PGE and gas) tied to weather and customer usage patterns; the forecast uses conservative growth assumptions for those sources.
• Development and URA activity: community development permit revenue has slowed compared with prior years when large industrial projects produced spikes in building permit fees. Staff cautioned that some large industrial activity in the urban renewal area accounted for recent growth that is not guaranteed to continue.
• Personnel and benefits: the budget incorporates anticipated compensation changes and higher benefit costs; staff highlighted medical premium increases (Regence and Kaiser) and higher PERS contribution rates, including tier adjustments released in the new state biennium.
Actions and staffing
Broadway and Sheldon described a net reduction of eight full‑time equivalent positions in the general fund; the city’s total authorized FTEs were stated as about 137 across funds, with general fund FTEs falling from 97.7 to 87.3 in the proposed budget. The city is adding one communications and engagement coordinator position that will be split across multiple funds (about 25% general‑funded) to centralize public outreach, including broadband marketing.
Service and rate changes
Staff proposed modest utility rate increases each year during the biennium: water residential 2% and commercial 3%; sanitary 2% residential and 5% commercial; storm 2% residential and commercial; and a 2% increase to street fees (street maintenance, streetlight, sidewalk, safe sidewalks). The budget also anticipates some business‑license and building permit fee increases.
Committee discussion and next steps
Committee members pressed staff on the composition of the 20% ending balance, asking which portions are truly reserves versus committed for asset replacements and cash‑flow. Broadway and Sheldon explained the city treats part of that balance as committed for scheduled asset replacements in years three through five of the forecast while retaining additional contingency liquidity for operating needs.
No final budget adoption vote was recorded at the meeting; staff presented the plan for committee review and said they will return with supplemental or clarifying materials as the process continues.
Ending
The presentation framed the biennial budget as a cautious, multi‑year plan that reduces staff levels to preserve long‑term financial stability while holding some resources for scheduled asset replacements and continuing city priorities. Staff said they will continue regular forecasting and monitoring throughout the biennium.
