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Bend proposes $1.48 billion biennial budget; officials warn reserves will be drawn down
Summary
City of Bend staff presented a proposed biennial budget totaling $1,480,000,000 and described a strategy that relies on modest fee and rate increases, targeted investments, and limited reserve use while warning of state and federal revenue uncertainty.
City of Bend staff presented a proposed biennial budget totaling $1,480,000,000 and described a strategy that relies on a mix of modest fee and rate increases, targeted investments and limited use of reserves to balance near-term needs while acknowledging risk from uncertain state and federal revenue forecasts.
The budget presentation framed the plan as conservative on revenue assumptions and explicit about trade-offs: staff said property tax and room tax growth is slowing, some program support relies on federal and state grants that may change, and the city will draw down reserves over the biennium while remaining near its fiscal-policy targets. Samantha Nelson, the city’s chief financial officer, noted the state revenue forecast was due the next day and said the city was building the plan with “the sensitivity of balancing the needs of our community.”
Why this matters: the package funds dozens of capital projects and operating programs—public safety staffing, street maintenance, water system work, and climate resiliency efforts—at a time when Bend’s property tax system is constrained by Oregon measures enacted in the 1990s. Officials said the combination of capped property tax growth and slower room-tax and other revenue growth requires careful prioritization and periodic check-ins with the budget committee.
Key numbers and priorities - Proposed total biennial budget: $1,480,000,000 (about a 9% increase from the current biennium). - Operating revenues (excluding beginning working capital, debt proceeds and one-time resources): $591,000,000 across the biennium. - Proposed utility rate adjustments: roughly a 4% net increase for a sample residential customer bill (water/sewer/stormwater combined sample increased ~4%). Water-specific proposed increases: 4.9% (water), 1.8% (sewer), 8% (stormwater) in the next rate cycle. - Development-related fees staged over two years (phased increases to align with service delivery, generally 5–15% phased increases referenced). - Transportation phase 2 fee targets ~$10,000,000/year to support mobility and maintenance (framework approved by council earlier).
Reserves and risk management City staff emphasized that some reserves are being used to smooth one-time pressures, but cautioned deficit spending is not sustainable. The general fund reserve level is projected to fall during the biennium but remains above the city’s policy minimum (staff projected an end-of-biennium general fund reserve around 18% versus a 16% policy target). Staff said they will reconvene the budget committee this fall for a follow-up review after the legislative session and as bargaining results and state forecasts become clearer.
Operating cost drivers Personnel (wages, benefits, PERS and health insurance) is a dominant and growing share of the budget. Staff described several drivers: - Health insurance: budget assumptions used a large renewal estimate during budget development (the draft budget included a 20% annual increase built into assumptions staff said they intended to negotiate downward). - PERS: Oregon Public Employee Retirement System cost increases and changes in retirement rules are outside local control and add materially to employer costs. - Cost-of-living/step increases were included on a conservative basis pending collective bargaining.
Next steps and process Staff said the budget is intended as a starting point: the committee will hear department-level detail, then staff will return with fall updates after the state forecast and labor negotiations. The city manager and finance staff recommended a cautious approach to adding ongoing new positions and invited the committee to flag priorities for any further trade-offs.
Ending City officials urged the committee to view the budget as a balancing act between meeting service demands and protecting long-term fiscal stability. They recommended revisiting assumptions after the legislative session and maintaining an active reserve-monitoring posture throughout the biennium.
