State of the city address

Feb. 9, 2011

Mayor Arthur Babitz presented his third State of the City address to City Council Jan. 28. Here is the full text.


This is my third time addressing you on the state of our city. The first two times I started with a history lesson, then spent most of my time addressing the city's budget crisis. This year I'll talk a little bit about our budget; but I want to really focus on our future. While we are not out of the woods yet, our course is set.

So let's get the fiscal discussion out of the way. Municipal finance should be boring. The city does pretty much the same thing for the same customers year after year. Funding is largely predictable. There just shouldn't be surprises. Municipal finances shouldn't generate headlines.

Five years ago we started to restructure how the city accounts for and spends revenue, and that effort is bearing fruit. We focused on three things:

Recasting the city's financial reporting so that it is accurate, timely and comprehensible;

Balancing the budget, primarily by reducing expenses to match revenues;

Rethinking how we fund operations with an eye to fiscal sustainability.

Let's look at the results:

Last fiscal year our auditors completed their examinations less than six weeks after the books closed. The auditors found no need to adjust our books, and we had no audit exceptions. No expenditures exceeded appropriations - for the first time in 20 years.

Late last month we reviewed our midyear numbers. Where a year ago we had a roomful of concerned citizens, employees and their families learning about the numerous surprises that would force difficult midyear actions, this year's midyear checkup was headline-free.

Five years ago we had a $1.2 million deficit in our General Fund and our budget committee was scrambling to address it. This year our budget committee will be discussing how large a reserve our General Fund will need in for normal operations.

Two years ago city water and sewer utilities had basically zero balances, large backlogs of needed projects and a projection that we would need to continue the rapid climb of billing rates far into the future. Now we have comfortable balances in both utilities, we are well into major projects and our rate consultant projects stable rates well into the future.

None of this happened easily. We cut city staff by 20 percent, instituted temporary furloughs, requested and were granted contract concessions.

Our finance director (Lynn Rasmussen) and her staff reworked literally every element of our financial systems. Our department heads and their staffs finally had the tools to track and control their budgets, and did a tremendous job keeping expenditures on budget despite the fact budgets were trimmed to the bone.

So at midyear I can say we know the city's fiscal state to a high degree of confidence, and we are on track to end the year as budgeted. No surprises revealed, no significant adjustments required; but most importantly, no big question marks hanging over us. We're not out of the woods, but we have a good map and we're finding all the signposts just where we expect to see them. Our fiscal challenge is to keep both hands firmly on the wheel.

Getting our fiscal house in order comes not a moment too soon, as we've got to stop fighting fires and get back to the hard work of planning for the future.

Let's talk about our local economy - where it is, where it's going and what role we have in helping it get there.

I'd like to share with you a very interesting discussion I had with one of our state economic development experts a few weeks ago. He observed how as he goes around the state, every rural community has essentially the same goal: to diversify an agricultural- or resource-based economy by bringing in clean jobs with good salaries. For most communities, he confided, that goal is "aspirational." For Hood River, not only is this achievable, but it is already underway.

The diversity of our local economy is one of the major reasons we've been able to weather this recession with one of the lowest unemployment rates in the state. Our agricultural and tourist sectors have been strong, but they are no longer the whole picture. We have seen a broad upsurge in manufacturing, with everything from brewing to food to clothing to sporting goods to technology being made in our area. We have become the regional healthcare provider.

In the latest job breakdown, we were unique among all rural counties. Our job mix looks like a miniaturized version of the state's mostly urban counties - but with lower unemployment.

Two years ago we talked about our great new waterfront park, and how it was only part of a vision that would transform the waterfront area within a decade. Let's look down there again. By the end of next year, there will be five new buildings, with new homes for Hood River Juice Company, Turtle Island Foods, Hood Tech, and flex space for several other manufacturers.

This very visible transformation of the waterfront area is just a reflection of the fundamental transformation which is happening less visibly all around our city.

It is important that we study these changes very carefully. We need to know what is happening and why Hood River is surrounded by obstacles to growth, both geographic and legislative. We have mountain, rivers, the National Scenic Act and Oregon's land use laws which guide our growth. The city of Surprise, Ariz., was our size in the 1980s and now is home to 100,000 people.

We can't have that.

Too frequently our vision for the future is couched in terms of what we don't want. I hear residents say we don't want to be Aspen; we don't want to be Bend.

But what do we want? We can't close the doors, but our growth potential is quite constrained. That means we have to consider very carefully how we will grow, with recognition that our residential lands will need to be used efficiently, and our industrial and commercial lands will need to house businesses that can provide more jobs in less area.

So let's go back to the diversified economy we've been talking about.

We're seeing new jobs with good pay and a small footprint. Clearly we want to encourage it. Why are these jobs here? For the most part they are here because people want to live here. Company founders and executives enjoy the recreational opportunities, the scenic beauty and the healthy small-town lifestyle of Hood River.

If we want to sustain the growth of this diverse job mix we need to preserve our quality of life. We will never out-compete cities with plenty of land for the next thousand-acre Intel campus, nor will we be able to offer tax incentives to sweeten the pot. It will probably always cost just a little more to do business here.

If we want to strengthen our economy and attract new businesses we need to be sure we're worth it. In simple terms, we compete for jobs based on our quality of life.

Our city government contributes to our quality of life in many ways, from providing security from crime and fire to providing streets and sewers and parks; but today I want to focus on planning. Quality of life may be a fuzzy term, but our planning department is where it becomes details on the ground.

Sidewalks to schools, roads to the supermarket, where an office building can be placed - it is all considered in detail, and that detail all must fit into a larger strategic plan. The more I study what works and what doesn't work in our city, the more I value the role of good planning in our future.

Our economic future depends on adjusting our commercial and industrial zoning code to assure our companies can grow, and the limited land we have doesn't all get used in less productive ways.

Our quality of life depends on making sure we have the time to do the planning to keep our shopping districts vibrant, and make sure our neighborhoods, our roads, our traffic and parking, our bike lanes and parks all function well.

Unfortunately, we've cut our planning department to the point that every major development application can sidetrack long-term planning efforts, and in doing so we've put our quality of life and our economic future at risk. At our goal-setting meeting this year I will propose we correct this, and recognize the particularly critical role planning plays at this point in Hood River's history.

Our community is a very fragile thing. We can over-grow it or we can over-constrain it. We're not the first council to face this dilemma. Our inactions will speak as loudly as our actions. We need to monitor, we need to analyze, we need to carefully adjust policy; we need to use all our collective powers of perception and wisdom to choose an appropriate path.

With our finances on the path to normalcy, a strong staff and a council committed to open and frank dialog, I believe we are well-positioned to do just that. We are emerging from our fiscal crisis fully prepared to guide our city through sustainable growth. We will not sacrifice our quality of life, because we cannot afford to sacrifice our quality of life.

In my experience, the best decisions you make seem so obvious in hindsight that it's hard to even remember there was any consideration of alternatives. It's the mistakes that you revisit again and again.

I'll end with a small prayer which I'd like to think I've invented but I'm sure is buried someplace in the Talmud:

"May all our decisions in the coming year be so wise that they are quickly forgotten."

Thank you, and I look forward to your questions and wise advice both now and t

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