Unsustainable Budget
The current budget messaging says it is not sustainable, but it is a manufactured “crisis". The city’s ulterior motive is to raise more revenue to fund new projects and programs.
$44 Million
Historical operations average surplus for last
4 budgets
($8 Million)
2026-2027 Projected operations shortage
$47 Million
2026-2027 Surplus using historical trends
47% Increase
In capital outlays over the last 4 years
Key points
- The long trend of the operations’ surpluses ended because:
- Overly cautious low revenue projections.
- Extremely high expense projections where caution was thrown to the wind.
- The previous operations budget had a surplus $64M and then the current budget has a shortage of ($8M).
- Reserves were used to fund the skyrocketing capital outlays and then the public is told that more revenue is needed for basic services.
- The community should have been included as “active participants” in the design and cost of the public works campus and the vision & cost estimate of the city hall.
Biennial Budget 101- The Accounting Structure
#1: How the Budget Works
Key Points
- The biennial budget’s “comingling” of the type of “Money In” and the type of “Money Out”, and the lack of detail, inhibits the public’s ability to check budget sustainability.
- The biennium budgets increased by about 9% per year (or 18% per biennium).
This diagram illustrates how “money” generally moves through the “Biennial Budget”
The biennial budget combines five different types of resources and four types of requirements into single totals, making it nearly impossible for a citizen to determine whether operations are truly sustainable on recurring income alone. “Resources” = “Requirements”
* “Interfund transfers” are transfers of money between “funds”. Transfers are 100% redundant values. Each transfer is a “resource” in one “fund” and a matching “expenditure” in another “fund.”
Budget Resources (Money In)
- Beginning Fund Balance
- Operations Revenue
- Debt proceeds
- One-time funds (land sales, grants, misc.)
- Interfund transfers *
Budget Requirements (Money Out)
- Ending Fund Balance
- Operations Expenses
- Capital Outlays
- Interfund Transfers *
#2: Cash Flow Summary - 10 Years of Trending
Key Point
The current biennium’s “operations” ($8M) shortage is a major shift from the $178M of surpluses from the last four bienniums. This shift is a manufactured crisis.
2025-27 Biennial Budget
Major shift from the previous biennium $64M surplus
#3: Operations Revenue - 10 Years of Trending
Key Point
The current biennium’s projected OPERATION REVENUE is $57M less than what the value would be if the historic revenue sources trend was used in the projection.
From 2018 to 2024, historical OPERATIONS REVENUE sources increase at about 9.2% per year. Then the new fire levy and TUF started in 2025.
For the current biennium, the city staff used caution in the projections because of “economic uncertainty”.
This table shows the split between historical sources and the increased fire levy and new TUF.
Staff’s cautious projection of the historical revenue sources was only about 1.5% per year.
Applying 9.2 % yearly increase on historical sources, the total biennium operations revenue
increases by $57M. The ($8M) operations shortage would change to a $49M surplus.
#4: Operations Expenses - 10 Years of Trending
Key Point
The current biennium’s 29% OPERATIONS EXPENSE growth is fueled by major increases in every area of the expense budget. Caution was thrown to the wind.
From 2018 to 2025, actual operations expenses increased by an average of about 16% per biennium.
However, the current biennium increases 29% over the previous biennium.
The staff said:
High projections were used for personnel services because employee benefits negotiations were not completed.
The budget “message” versus the budget #’s:
- The message inaccurately said “materials & services”increase by 1.7% citywide (versus budget’s 28%).
- The message inaccurately said debt service increased by 29.4% (versus budget’s 45%).
The staff failed to highlight the biggest variance in the expenses:
- The Public Works Campus debt service is 50% of the current biennium’s debt service increase.
#5: One-Time Revenue - 10 Years of Trending
Key Point
The community needs more TRANSPARENCY on the uses of the ONE-TIME REVENUE.
Several observations:
- Staff stated they have concerns about the projected grant amounts in a time of “economic uncertainty.”
- The use of “grants” is not clearly stated in the budget.
- The use of “land sales” seems to be entirely discretionary.
- County records show that between 2022-2025, the city purchased about 3 acres of properties in Core Area for a total about $10.3M.
#6: Capital Outlays - 10 Years of Trending
Key Points
- CAPITAL OUTLAYS have skyrocketed by 108% in the last two bienniums (4 years). Reserves paid 47% ($134M) of the capital outlays in the current 2025-27 biennium.
- The city ambitions are leveraging the next generation of Bend’s residences’ future with a “have it all now” attitude.
#7: Debt - 10 Years of Trending
Key Points
Skyrocketing total DEBT accumulation “challenges” the ability of the historical sources to pay for the corresponding skyrocketing DEBT SERVICE.
The accumulated total debt INCREASED by $480 million (200%) over this 8-year period. Here is a breakdown:
- GO Bonds (2) debt is $183 million (25%)
- Water, reclaimed water, storm system, other transportation projects $416 million (58%)
- Public works campus $120 million (17%)
The annual debt service INCREASED about $64M (123%) over this 8-year period.
- In just the current 2025-27 biennium, the increase is $37 million (73%)
- The GO Bonds property tax revenue covers only about 26% of the annual debt service.
- The 74% balance of annual debt service must be covered by historical revenue sources.
#8: Ending Fund Balance - 10 Years of Trending
Key Points
The community needs more transparency on the sufficiency of the ENDING FUND BALANCE [EFB] level (reserves and contingencies).
The “actual” citywide EFB has always come in higher than the budgeted value. A primary reason is the capital outlay on some projects are multiple-year.
- 2018 to 2024 are “actual” values.
- 2025 is an “estimated” value
- 2026 and 2027 are projected values
Staff uses the General Fund EFB as a trend gauge. In the December 2025 Annual Financial report, 2025's EFB was $38M, which is $6M higher than the July 2025 Biennial Budget's $32M estimate.
The orange line illustrates two changes:
- The additional $6M for 2025
- If historical operations revenue trend was applied.
