To better manage finances the Damascus budget is broken down into funds and may be further divided into departments within a fund.  Following is the structure of Damascus funds:
1. General Fund

• City Council
• Administration
• Finance
• Public Works
• Municipal Court
• Non-departmental

2. Community Development Fund

• Planning
• Engineering
• Non-departmental

3. Road Fund
4. Street Fund
5. Tax Anticipation Note Fund
6. Parks Capital Projects Fund

General Fund (GF) records and tracks financial transactions relating to all activities for which specific funds are not required.  GF is the general operating fund for the City.  The City’s GF is organized into six departments:  City Council, Administration, Finance, Public Works, Court (new in 2009-10) and Non-Departmental.  Property tax revenues, two franchise fees, state shared revenues, fines and penalties are received into the GF.  Grants specifically for a GF project will also be shown as revenue.  Other funds may receive some of this fund’s revenue through budgeted transfers.

COMMUNITY DEVELOPMENT FUND

The Community Development Fund (CDF) records and tracks financial transactions relating to development activities for the City.  Currently the CDF is organized into departments: Planning (long-term), Engineering and Non-Departmental.  Currently the City has delegated, through intergovernmental agreements with Clackamas County, the functions of Current Planning and Building Services.  As these services are brought into the City, additional “departments” will be established.  2009-10 funding for the CDF is provided by transfers from the GF and from grants.  When the City brings current planning (issuance of building permits) in-house, additional revenues from permit fees and application fees may be realized contingent on voter approval of each fee.  Typically the Building Department will be funded by permit fees.  Other departments are normally funded by fees.  With the passage of Measure 3-282, revenue (fees and charges) associated with current planning will require voter approval.

ROAD FUND

Revenue sources for the Road Fund are the City’s share of the State Gas Tax and interest earned.  The Road Fund records financial transactions relating to road-related purposes according to Section 3, Article IX, of the Oregon Constitution.  This gas tax revenue and expense must be accounted for separately from other funds and is restricted to expenditures identified in statute.

STREET FUND

Revenue sources for the Street Fund are from all other sources other than gas tax, including transfers from the General Fund, grants, local improvement districts, and other entities.  These revenue sources are not as restricted as gas tax revenue.  The Street Fund records financial transactions relating to road and street construction and improvements and can be used on other road-related projects that gas tax money cannot be used on.    Revenue for this fund is currently limited, due to voter rejection of the franchise fees that were previously dedicated to this fund.  These revenues and funded projects were stopped following voters' decision not to ratify the franchise fees at the November 2008 election.  The revenue collected up to the end of 2009 remains in the Street Fund and is unappropriated (can’t be spent) until such time as City Council re-addresses franchise fees.  This fund could be used in conjunction with the Road Fund for a project providing the project meets the criteria for the use of the State gas tax. 

PARKS CAPITAL PROJECT FUND

The Parks Capital Project Fund records all resources and expenditures used to finance building or acquisition of capital facilities (land, buildings or other facilities) that are non-recurring major expenditure items for parks.  Resources could include the proceeds from the sale of general obligation bonds, tax revenue transferred from the GF, from local option taxes, transfers from other funds, System Development Charges (voter approval now required), donations, grants or other revenues authorized for financing capital projects.  This fund was initially established early to facilitate the receipt and expenditures associated with the City’s share of Metro’s Open Space Bond.

TAN FUND

The TAN (Tax Anticipation Note) Fund is to record interest and/or principal payments for short-term loans.  As the name states, these loans are in anticipation of taxes to be received.  The City’s fiscal year starts July 1.  It takes until November before the City begins to receive property tax revenue.  The City operates on revenue carried over from the previous budget year and, if necessary, it may require a short-term loan.  Oregon budget law does not require that principal payments be included in the budget if the loan is repaid in the same fiscal year; however, interest payments and corresponding revenues are required to be budgeted.
 

The City Manager (Budget Officer) then takes Council policies and goals and works with staff to develop a draft budget.  The budget process, budget organization and budget administration must follow Oregon Budget Law.  The City’s Finance Director works hand-in-hand with the City Manager to ensure these rules and laws are followed.  The proposed budget then is presented to the Budget Committee for approval.  The Budget Committee consists of 14 Damascus residents (Mayor, Council President, five city councilors and seven appointed Damascus at-large citizens).  The Budget Committee approves the budget by fund and approves the tax rate.  Once approved, the budget is forwarded to City Council for adoption.  City Council holds a budget hearing(s) and then adopts the budget by fund and levies the tax rate at an amount not to exceed the amount approved by the Budget Committee.
 

Annually an independent auditor performs an audit on the City’s budget and financial processes.  The auditor reviews budget versus actual expenditures and revenues.  They review compliance with Oregon Budget Law and the City’s purchasing policy.  Once the audit is completed the auditor provides an audit report directly to the City Council covering the items mentioned.   The combination of internal controls, management oversight, Council oversight and the independent audit provides City financial oversight.
 

1. Federal Earmark  - $1,000,000
2. Transportation Growth Management Grant (TGM) - $250,000
3. State Planning and Research Funds - $200,000
4. City’s cash match - $154,454
5. Total project amount - $1,604,454

The City then tracks its expenses and staff time that is dedicated to this project.  We submit monthly reports to ODOT who will then reimburse the Cityup to an agreed total amount of $136,000.  In the end the total cost to Damascus residents is as low as $18,454.
 

1. Property taxes - $2,779,942 (28%)
2. State shared revenue - $612,644 (6%)
3. Court fines and penalties - $197,500 (2%)
4. Franchise fees - $350,000 (4%)
5. Grants - $903,121 (9%)
6. Beginning fund balances - $3,400,257 (34%)
7. Transfers - $1,540,219 (16%)
8. Other (interest and misc) - $74,250 (1%)

1. 1% start and stop in Damascus.  These are typically Damascus residents (to the store, school, visiting friends, etc.)
2. 21% start or end in Damascus.  These are a mix of Damascus residents and non-Damascus residents (to work or shop outside Damascus, outside workers or shoppers to Damascus, service delivery, vacation travel, etc.)
3. 71% pass through Damascus with no stops.  These are non-residents.

1. (Column #1 in the following chart) The measure passed by Damascus voters dealt with all franchises fees adopted after January 1, 2006.  Voters did not ratify the franchise fees in the November 2008 election and as a result franchise fees for telephone (Verizon), cable television (Comcast, Verizon and Clear Creek) and solid waste (Hoodview Disposal and Waste Management) were discontinued.  Electricity (PGE) and natural gas (NW Natural Gas) were adopted prior to the effective date.
2. (Column #3 in the following chart) Damascus area residents were paying a 5% franchise fee to Clackamas County for cable television and solid waste prior to Damascus’ incorporation.  Damascus imposed the same 5% fee.  Damascus residents were not paying a telephone franchise fee.  County governments can not charge franchise fees for telephone, electricity and natural gas.
3. (Column #2 in the following chart) Damascus residents are no longer paying franchise fees to City of Damascus for telephone, solid waste or cable.  Franchise fees for solid waste and cable television have been completely eliminated. It’s a different story with telephone.  Damascus had implemented a 7% franchise fee for telephone.  4% was already calculated in the base rate that residents were already paying.  Verizon was not paying it out to any government agency.  The additional 3% was not in the base rate and was shown on monthly bills as a separate line item.  When city residents voted to not ratify franchise fees the 3% was eliminated but the 4% still remains in the base monthly bill Damascus citizens pay today.  Although not affected by the vote to not ratify franchise fees, this same issue applies to the electricity and natural gas franchises.  Residents of Damascus would continue paying them even if Damascus did not collect them.  The regulatory agency for each of the utilities allows for each company to calculate into the base rate a percentage for franchise fees.  They do this because the vast majority (close to 100%) of all cities in Oregon charge franchise fees.  The utilities retain the portion of the franchise fee included in the base rate that is not paid out to cities.
4. Originally Damascus City Council approved franchise fees to be received into the General Fund for city operations.  Later, when controversy arose about franchise fees, Council directed that all cable, telephone and solid waste franchise fees be dedicated to the Street Fund.  They did so to show the tax payer exactly how the revenue was being spent (transportation maintenance and improvements).  Franchise fees of $159,919 remain in Street Fund.  This revenue is the fees collected between the time of the March 2008 vote that required voter ratification of the fees and the November 2008 vote where voters did not ratify the fees.  This revenue is shown as unappropriated (can not be spent).  Annually this is a loss of approximately $200,000 to the Street Fund. 
   

These amounts are taken directly from the City’s annual audit report from the section labeled “Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Funds." You may access audit reports from each year on the Finance Department web page.  You may also view a copy of the audit report by visiting City Hall.
 

1. Cigarette Tax – Currently the State of Oregon places a $1.18 per pack tax on a pack of 20 cigarettes. Based on population, the State divides $.02 out of each $1.18 collected among all of the cities throughout the state. 
2. Liquor Revenue – There are two separate distributions to cities from the Oregon Liquor Control Commission (OLCC) account: 1) Liquor tax - 20% of the State’s liquor receipts are allocated as revenues to cities based on population and 2) State shared liquor revenue – 14% of State liquor receipts are allocated to cities on a formula basis, as outlined in ORS 221.770 (this portion is known as “state revenue sharing”).
3. Highway Fund Revenue (often referred to as State gas tax) – State Highway Trust Fund collects revenue from the gasoline tax and from the Department of Motor Vehicles (DMV) licensing and registration fees. The majority of trust revenues are divided between the State’s counties and cities with the cities receiving 15.57%. The cities then divide this revenue based on population.

Note - As explained above, Damascus receives its share of State shared revenues based on population. That is why it is important that the upcoming Census process accurately counts all residents.