The Budget Process in Four Simple Steps

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Mark Wolf

It’s hard to believe that it’s already the end of March and budget season is upon us. For many of you, you’re off and running. This letter explains the budget process in four simple steps. It also serves as a reminder that ORS 192.670 requires governing bodies (to the extent reasonably possible) to make public meetings accessible by telephone, video, or other electronic means and to allow written testimony by email or other electronic means.

Budget Process in Four Simple Steps:

If you haven’t already done so, the first step in the budget process is to appoint a budget officer. Typically, the budget officer is the chief executive officer (i.e., the fire chief or the city administrator), but your finance officer or even your attorney may function as the budget officer.

Step two is to review the composition of your Budget Committee. Your Budget Committee consists of the members of your governing body and an equal number of appointed electors. The appointed members of the Budget Committee may not be officers, agents, volunteers or employees of your entity. If for some reason you cannot find enough electors for the Budget Committee, you may still move forward with the budget process. Just make sure that your minutes reflect the efforts you made to recruit citizen members.

Your third step is to make a copy of your proposed budget available for public review immediately after the budget officer releases it to the Budget Committee. Your budget officer must publish notice of the Budget Committee meeting, as well as a notice of the budget hearing held by your governing body.

Both the notice of your first Budget Committee meeting and the notice of your budget hearing can be published in one of four ways. The most common method of publication is to publish the notice in a newspaper of general circulation, at least 5 and not more than 30 days prior to the budget meeting or hearing. If you chose to publish in the paper, the notice of the Budget Committee meeting must be published twice. Notice of the budget hearing only needs to be published once. If your entity is located in Washington County, you must also send budget information to the County.

The notice of your budget hearing must include a summary of the budget approved by the Budget Committee. The Oregon Department of Revenue provides forms you can use to develop and publish your budget. You can find these forms by clicking on the following link and scrolling down to “Local budget”:

http://www.oregon.gov/DOR/forms/Pages/default.aspx

The fourth step is to adopt the budget. Remember, your governing body has the ability to make changes to the Budget Committee’s recommended budget. New information introduced at the budget hearing should be carefully considered by the governing body prior to budget adoption. If a proposed change to the budget includes an increase in taxes, or more than a 10% increase in a fund, additional notice is required. Changes to the budget after adoption also generally require action by the governing body and sometimes require additional publications and public hearings. For this reason, all available information should be collected and considered during the budget process.

Your budget must be adopted on or before June 30.

Two Final Thoughts

First, it’s very important that the Budget Committee approve any proposed taxes as part of its approval of the budget. If a tax election is scheduled for March or May (especially May), the Budget Committee should include the revenue from any anticipated additional tax authority in its approved budget. Act like the proposed tax election will pass and budget for it. If it fails, the governing body may reduce the budget. But if a Budget Committee fails to plan on the tax passing, you can run into timing issues as the governing body must publish a revised budget summary and hold a second hearing on the budget, which might prevent the tax from being certified prior to June 30.

Second, in thinking about your budget, consider which projects and purchases are planned for this upcoming year. Not only will this process assist you in projecting your entity’s expenditures and revenues, this level of planning will also allow you to provide the required notice to the Bureau of Labor and Industries (BOLI). State law requires that at least 30 days prior to budget adoption, your entity must submit to BOLI a “WH-118 form,” listing each public improvement your entity plans to fund in the upcoming budget period. For example, if you are planning to budget and use public funds to build a new fire station in the next year, you must file a form WH-118 with BOLI at least 30 days before your budget is adopted. Form WH-118 is available on BOLI’s website at http://www.oregon.gov/boli/WHD/PWR/docs/wh118.pdf.

As always, if you encounter any legal issues during your budget adoption cycle (or if you learn of information or receive additional revenue requiring a change in your adopted budget) please contact your legal counsel as early as possible. An ounce of prevention is worth a pound of cure. It is much more cost effective and efficient to consult with your legal counsel before a problem develops.

2022 Public Contracting Rules Update

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Carrie Connelly

From our Fall 2022 e-newsletter

Many of you have previously adopted our public contracting rule packet. As you know, our packet is based on the AG’s Model Rules, with changes that simplify and tailor those rules for our clients – plus add exemptions not available under the AG’s Rules. In the absence of locally adopted rules, your entity is governed solely by the AG’s Model Rules, which include state agency requirements not applicable to smaller, local governments. Over the years, we have recommended not only for your entity to adopt its own purchasing rules to replace the AG’s Model Rules, but to update them as required to accommodate legislative updates.

The 2021 legislature adopted several Oregon Public Contracting Code amendments. The AG is currently in the process of updating its model rules to reflect those legislative changes. Since the AG’s rules have yet to be issued, I have reviewed all statutory amendments and incorporated needed modifications into our public contracting rule packet. Pursuant to ORS 279A.065(6)(b), such a review is required for any entity which has adopted its own rules.

While some legislative amendments do not affect our clients, the following amendments authorize desirable updates:

1. The 2021 legislature increased the small procurement threshold for public improvement contracts from $5,000 to $10,000, which matches the threshold for goods and service contracts.

2. Public hearings are no longer necessarily required for public improvement contract exemptions. Rather, statewide published notice continues to be required, followed by a hearing only upon request.

3. For those of you who have not adopted rules since 2019, another helpful update allows your agency to use price information in architect/engineer consultant (i.e. Division 48) selection procedures.

As with our prior rule updates, we will provide an explanatory letter, updated rules, an adopting resolution, and accompanying findings for a flat fee. Entities which have adopted our public contracting rules since 2014 can update for $185, while those who have not previously purchased rules or updates since 2014 can purchase a full packet for $725.

Please contact Carrie Connelly (chc@localgovtlaw.com) or Kim Dahlgren (kimd@localgovtlaw.com) if your entity wishes to purchase a 2022 public contracting packet from our office.

Enforcing Policies Saves Money

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Christy Monson

Clients sometimes call us with questions regarding the discipline of employees for violation of sick leave or vacation policies. As public employers, your discipline options may be governed by a collective bargaining agreement, by personnel policies, or by both. However, before jumping to your discipline options, it is often useful to review these policies and agreements to see if your staff is properly applying them. You may have provisions in either your collective bargaining agreement or your personnel policies which allow you to effectively manage employee behavior without initiating discipline as your first option, such as: requiring a doctor’s note and disallowing the use of other paid time off once an employee’s sick leave allotment has been expended. Using these provisions correctly and applying them even-handedly may help you avoid discipline problems, costly grievances, and can control costs.

Allowing continued violations of your sick leave policies can cost a government thousands of dollars, can injure employee morale, and may jeopardize your government’s ability to enforce your rules later on. As just one example, in Nevada, Clark County tracked firefighters’ use of sick leave and found a pervasive pattern of abuse. The county then started enforcing its own sick leave policies and within one year the use of sick leave by the fire department fell by 57,000 hours. This change in supervisor and employee patterns saved the county millions of dollars.

If after reading this you review your personnel policies or your collective bargaining agreements and find that you’d like to change the way you are enforcing existing policies, you should contact your attorney before significantly changing any past practices. Furthermore, should you decide that individual employee discipline is warranted, we always recommend that you contact an attorney and your insurer before taking significant disciplinary action. In taking these simple steps, you enforce your policies, avoid labor strife, and save your government time and money.

Food, Travel and Lodging

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Carolyn H. Connelly

As you are probably aware, Oregon ethics laws impose limits on the value of gifts that public officials (such as city councilors, board members and staff) may accept from entities with a legislative or administrative interest in the decisions made by those public officials. There are several exemptions from these gift restrictions. These include an exemption for the receipt of reasonable food, travel, and lodging expenses related to officially designated negotiations or economic development activities, or officially sanctioned trade-promotion or fact-finding missions or trips.

The most recent version of the administrative rules adopted by the Oregon Government Ethics Commission requires that the entire governing body must officially designate or sanction the trip or activity and authorize the payment of expenses before a public official can accept reimbursement.

A previous version of the Ethics Commission’s administrative rules allowed public officials to personally authorize their acceptance of expenses for officially designated negotiations or economic development activities and officially sanctioned trade-promotion or fact-finding missions or trips. The current administrative rules no longer allow this type of “self-sanctioning” unless the public entity officially delegates that authority to individual councilors or board members.

If your government determines that it would be more time or cost-effective to delegate the authority to accept payment of expenses to individual councilors or board members, your governing body must adopt a resolution delegating that authority.

If you would like this type of resolution or have any other questions, please contact our office.