City budget panel remands proposed 2025-26 general fund budget to staff after reserve dispute

The City of Cami budget committee on May 15 voted to remand the proposed 2025-26 budget back to the budget officer for revision after sustained debate over whether to draw down strategic reserves to 15% to avoid staff reductions.

City leadership's budget message explained the recommendation: managers and the city administrator proposed intentionally lowering the strategic reserve to 15% for the coming year to avoid layoffs and maintain services while the city expects to receive additional revenue when the Urban Renewal Agency closes in 2026. The city administrator said that the decision was intended to be a "bridge" approach while staff continue efforts to secure grants and other revenues.

Why it matters: committee members and several councilors said the council previously adopted a fund-balance policy that targets higher reserves and that any reduction below policy should be a clearly authorized council decision accompanied by a plan to replenish funds. Members asked for department-level options showing how various percentage reductions (for example, 5%, 10% or 15% cuts) would affect services and staffing.

Key details and concerns: staff told the committee the operating revenue base used to calculate reserve percentages excluded transfers and beginning fund balance consistent with GFOA and the Oregon budget manual. The proposed budget includes labor assumptions such as a 5% cost-of-living adjustment (COLA) and rising insurance costs; staff also projected a large increase in benefit costs that contributes to pressure on the general fund. The city administrator said the leadership team recommended lowering the reserve this year to avoid layoffs while the city plans for the URA closure and the additional revenue it will produce in mid-2026.

Committee direction: after extended discussion, Councilor Davis moved and the committee seconded a motion to remit the proposed budget back to the budget officer for revision. Members asked that the revised submission include: (1) a menu of department-level cuts with three options each showing service impacts; (2) a multi-year projection and plan to replenish the reserve if it is drawn down; and (3) clarification on what URA revenue will be available to the general fund and which programs, if any, the council intends to continue funding.

Votes and next steps: the remand motion carried on the record. Committee members urged the City Council to convene a public meeting to set policy direction on the reserve target and program priorities before the budget returns. Committee and council members said they would accept a revised budget that reflects the council's policy direction on reserves and prioritized service levels.

Department briefings in the same meeting: several department directors presented updates during the session. Transit staff warned that federal grant and STIF funding uncertainties could reduce service if grants are cut; transit's largest cost driver is contractor labor. IT staff said roughly 80 desktop machines will reach end-of-life by October and the department has $30,000 budgeted against an estimated replacement need larger than that, noting the trade-offs between capital outlays and operational constraints. The Parks-related swim center reported it would use levy reserves to fund a dressing-room renovation; that fund is separate from the general fund.

Quotes: "We made the decision...that in order to avoid layoffs or reductions in force, that we would intentionally lower our strategic reserve to 15%," the city administrator said. Councilor Davis, urging a council-level discussion, said: "We have a policy...that they've worked hard to bring the reserve account up to where it's currently at. I am not convinced there is not a budget shortfall."

Ending: Staff will prepare a revised budget and related options, and council members asked staff to schedule a public council discussion on reserve policy and prioritization before the budget returns to the committee.