Bend budget committee approves 2025–27 biennium budget after debate over reserves, housing and development fees

The City of Bend budget committee on June 3 approved the city's 2025'27 biennial budget with amendments after multi-hour briefings from staff on the state economic outlook, pensions, community development operations, economic development and housing programs.

Committee members and staff spent the bulk of the meeting reviewing department budgets and a set of reserve scenarios prepared by city finance staff. Presentations highlighted three policy pressures: (1) uncertainty in state revenue and a forecast of slower growth, (2) rising personnel costs tied to public-employee retirement and health insurance, and (3) a sustained decline in planning-fee revenue that requires temporary general-fund support while staff recalibrate planning fees.

Why it matters: The approved budget includes modest program increases while preserving a higher reserve level than staff's originally proposed plan. Committee members pushed staff to show a path to long-term sustainability for public safety, transportation and housing services while recognizing the city's limited property-tax capacity. The committee also recorded a string of votes that put tax levies and bond levies in place for the next two fiscal years.

Key facts and decisions - The budget committee approved the city's 2025'7 biennial budget as proposed with amendments that increase contingency and reduce certain personnel program appropriations to reflect revised health-insurance premium assumptions (12% in FY25-26, 15% in FY26-27). The motion passed by voice vote; committee recorded "aye" and the chair declared the motion carried. (Motion language and voice vote recorded on the transcript.) - The committee set the city's property-tax rate at $2.8035 per $1,000 of assessed value for FY25-26 and FY26-27. - The committee approved voter-authorized general-obligation bond levies related to transportation: $1,615,000 per year for the 2011 bond schedule and $7,222,000 per year for the 2020 bond schedule (each for both fiscal years shown). The measures passed by voice vote. - The committee approved the fire local-option operating tax levy at $0.76 per $1,000 of assessed value (the levy voters approved in May 2023) for both fiscal years; the motion passed by voice vote. - The Bend Urban Renewal Agency budget for FY25'FY27 and the agency's tax-increment financing (TIF) arrangements for Juniper Ridge, Murphy Crossing and the core-area TIF were also approved in committee votes.

Discussion highlights and staff presentations - State economic forecast and risk: City staff summarized the State of Oregon economic forecast presented the same morning, which emphasized "known unknowns" (trade, tariffs, and federal budget uncertainty) and a near-term "growth recession" scenario that reduces projected state revenue. Staff said that the state downward revision of revenue could have indirect impacts on the city's operating environment and revenue requests to the state.

- PERS and retirement-related factors: Staff reviewed components of the Public Employees Retirement System (PERS) liability, including side accounts and the February 2003 OPSRP (the Oregon Public Service Retirement Plan). Side-account prepayments are saving Bend roughly $2.4 million in FY26; staff also noted the 2025 salary cap for PERS-covered wages ($238,567, tied to CPI). The committee discussed drivers of the city's unfunded actuarial liability and recent state legislative adjustments, including Senate Bill 1049 (referenced by staff as part of recent PERS reforms).

- Community Development Department (CDD): Colin Stevens, community development department director, presented a department budget totaling about $62.4 million for the biennium (fee-supported building, engineering and planning funds, plus some general-fund support). Key points: - CDD implemented a "ready / set / go" monitoring model that flags revenue trends monthly and triggers staged operational responses (hiring freeze, reallocation, or additional cuts) if permit revenue falls below historical medians for consecutive months. - Building and engineering review times have improved after process changes and two rounds of community-led continuous-improvement reviews; the department reported residential first-review turnaround times now at or below the stated 35-day target and commercial first-review times below the 90-day target. - Planning fund shortfalls are driven by a change in permit mix (fewer large master plans since the 2016 UGB expansion, and some middle-housing reviews shifted from planning to building as a result of state law). Staff explained planning will need approximately $1.4 million in general-fund support for the biennium while fees are recalibrated; staff will present a deeper planning-fee proposal to council on June 4.

- Economic development, Juniper Ridge and city hall planning: Matt Stewart, real estate director, described a strategy to diversify economic-development spending and to use proceeds from city-owned lands at Juniper Ridge to support long-term city objectives. Staff reported about 100 acres were selected for initial sale; the city currently holds roughly 3.2 acres downtown for potential future city-hall use. The budget includes an allocation of about $900,000 over two years for technical and financial analysis of a future city-hall project (cost allocation to departments will cover a portion of that work). The city is also pursuing TIF-driven development in the core area: five projects applied for site-specific TIF and four new TIF districts were being advanced to create roughly 694 residential units (23 restricted to 90% AMI).

- Housing and shelters: Rachel Baker, housing division manager, reviewed federal and local funding sources (CDBG, pro-housing grants, the city's affordable housing fee and commercial/industrial construction tax). Highlights: - The city plans to deploy pro-housing grant dollars (about $4 million) as a revolving loan fund for affordable housing and to support at least 525 shelter beds and programs expected to facilitate about 300 transitions to permanent housing over the biennium. - The houses fund and many shelter services remain heavily dependent on federal and state grants; staff warned that if state shelter funding is not renewed the city may have to scale back or close some programs, including parts of the Franklin Shelter operations that are largely state funded.

Reserve scenarios and committee deliberations - Finance staff presented three (later expanded to four) reserve scenarios showing how different combinations of hiring freezes, delayed new positions and temporary transfers from Juniper Ridge land-sale receipts would affect the general-fund reserve trajectory through FY28 and FY29. - Committeemembers questioned the prudence of using sales proceeds from Juniper Ridge (a non-recurring land-sale resource) to backstop ongoing operating shortfalls. Some members argued that those proceeds are a strategic asset for capital projects (for example, a future city hall or catalytic development) and should be held separately. Others favored moving a portion into the operating reserve now to demonstrate stronger near-term reserves. - After discussion the committee reached a working consensus to approve the budget but to leave the Juniper Ridge land-sale receipts outside the operating-reserve calculation (scenario 4 in staff materials). The committee also approved staff's adjustment to health-premium assumptions (12% then 15%) and asked staff to return with updated monthly metrics and an implementation/status report in September.

What staff will do next - Staff will track monthly revenue and permit activity under the department's ready/set/go model and will present updated metrics and proposed fee adjustments for planning to council on June 4 and further status reporting to the budget committee in September. - City staff will continue to refine the city-hall financial/technical analysis and to evaluate options for public-private partnership delivery models.

Ending - The committee voted to approve the budget, set the tax rates and levy schedules, and then adjourned the City of Bend budget committee meeting and reconvened briefly as the Bend Urban Renewal Agency budget committee to adopt the agency budget and TIF actions.

Sources: City of Bend budget committee meeting transcript and staff presentations.