The Medford City Council meets Wednesday. Screenshot

Spending increase fueled by state-mandated upgrades to water treatment plant, hikes in personnel costs

A unanimous Medford City Council Wednesday approved a $679,486,400 budget for 2025-27 — about 28% higher than the current two-year budget.

The spending hikes are fueled by state-mandated upgrades to the water treatment plant and to sharp increases in personnel costs, particularly for benefits.

Revenue bonds, which will be paid for through higher utility rates, will help pay for the $200 million upgrades to the Regional Water Reclamation Facility over the next two years.

Before voting on the budget, which takes effect July 1, the council saw a graph showing escalating labor costs over the past four biennial budgets.

“This is one of the slides that makes me cry every time I look at it,” said Ryan Martin, the city’s chief financial officer.

Mayor Mike Zarosinski questioned the surging labor costs.

“What’s driving that?” he asked.

Martin said sizable rate increases for Oregon Public Employee Retirement (PERS) and for health benefits are fueling most of the labor cost increases.

Benefits consume about one-third of total personnel costs, he noted.

Martin said PERS continues to increase up to 25% every two years, and health benefits jumped by 12% every year.

In budget years 2019-21, personnel costs amounted to about $130 million. For the new budget, labor costs have shot up to about $220 million, roughly $50 million higher than the current biennium, Martin explained.

The city has 516 full-time employees, but combined with a number of part-time and seasonal positions, it amounts to about 600 workers.

New hires coming

Under the new budget, the city will be adding four police officers, two emergency medical technicians, one paramedic, two firefighters, five parks employees and several other city workers.

Some of the staffing changes are required for Rogue X, which opened in 2024, as well as for the Medford Police Department Livability Team and to handle increased calls for emergency services.

The 2025-27 budget approved by the council is more than 40% higher than the $378,262,667 budget in 2019-2021. The 2021-23 budget was $368,77,116, and for 2023-25, it is $532,554,600.

Both the 2019-21 and 2021-23 spending plans are “actual” budgets, which are prepared once all expenses and revenues are determined. Both the 2023-25 and 2025-27 budgets are based on projections of revenues and expenses.

Revenues for the city continue to show gains because of the growth in residential and commercial construction, which provides additional property tax revenue. The city has seen a number of annexations in recent years, which will continue to bring in additional revenues.

Budget committee work

The new budget is the product of a seven-month effort by the city’s Budget Committee, staff and council members.

Just over 11% of the budget — $76,820,300 — is for contingencies, which help buffer against unexpected cost increases.

Medford has largely escaped budget issues that have hit other local cities.

“We are proactive rather than reactive,” Martin said. “We will look at a budget cycle two years in advance.”

He said that if there is a potential deficit looming, the Budget Committee, made up of councilors and local residents, takes steps to avoid any fiscal problems before they arise.

As a result, Martin said the city will not be cutting any positions.

Reach writer Damian Mann at dmannnews@gmail.com