Richard P.F. Holt is professor emeritus in Economics at Southern Oregon University. He is an award-winning writer and researcher. Among his many books is the leading reference for municipalities titled Local Economic Development in the 21st Century.
Disclaimer: The views expressed in these articles are the author's own and do not necessarily reflect the views of Ashland Forward.
By Ric Holt. Posted 12/4/25 at 9:04 pm
When the City of Ashland allocates about 30 percent of its Transient Occupancy Tax revenues to Travel Ashland for tourism promotion, it does so with the reasonable belief that marketing efforts will help sustain and expand the tourism economy on which the city has become dependent. The annual City Grant Report details these activities: digital advertising campaigns, social media engagement, website development, event planning, and collaboration with regional tourism organizations. The problem is not with the report itself or the activities it documents. The problem is that, in 2025, Ashland faces an existential economic challenge that makes the report meaningless – it is totally unrelated to reality.
The Oregon Shakespeare Festival's financial troubles are mainly blamed on the COVID-19 pandemic, which caused the cancellation of the 2020 season and major cuts to operations in 2021. However, from 2014 to 2024, OSF experienced a deficit nearly every year except for two. To cover these shortfalls, OSF depended heavily on endowment funds. Leadership instability has worsened these structural issues. OSF has had several directors who lacked prior experience. Artistic Director Tim Bond, who previously served as associate artistic director, is the first member of the executive team to have institutional experience since Rauch. No amount of tourism marketing can fix a decade of accumulated structural deficits. The Travel Ashland report can show advertising efforts that encourage visitors to attend the festival, but it can't change the fundamental economics of operating three professional theater venues in a small community that relies on an audience base that has not yet returned to pre-pandemic levels.
And then there is SOU. The scale of the crisis at SOU is significant. The university announced plans to cut its annual budget by 15 percent over three to four years. The Board of Trustees approved reducing $10 million, impacting 70 faculty and staff positions through layoffs, voluntary retirements, and unfilled vacancies. This crisis did not develop suddenly. Full-time equivalent enrollment dropped nearly 22 percent from 4,108 students in 2015 to 3,209 in 2024. The SOU Forward initiative, launched just two years earlier, had already eliminated the equivalent of 82 full-time positions.
For Ashland, the implications extend far beyond the university campus. Student spending supports local businesses. Faculty and staff live in the community. The contraction of this anchor institution ripples through every aspect of local economic life.
Yesterday, Asante Health announced that Ashland Community Hospital would transition to a satellite campus of Rogue Regional Medical Center in Medford by spring 2026. The hospital's 49 inpatient beds will close. The birthing center, which has operated continuously since 1907 when the City of Ashland founded the hospital, will end services. Patients requiring overnight stays or obstetric care will need to travel to facilities in Medford. For a community marketing itself to tourists, retirees, and potential residents, the loss of a community hospital represents a fundamental change in Ashland's value.
The institutional crises at OSF, SOU, and Ashland Community Hospital occur against the backdrop of the city government's own structural budget deficit—a problem that has been evident for years but is now reaching a critical point.
The crisis in Ashland has been building for years. As early as April 2022, city officials acknowledged the problem.
The most visible indicator of this structural problem is the decline in Transient Occupancy Tax revenue—the very revenue stream that funds the Travel Ashland marketing activities documented in the City Grant Report. TOT revenue was $3,142,000 in fiscal year 2019. By fiscal year 2023, it had fallen to $1,941,000—a 38 percent decline. Over 70 percent of this revenue goes to the city's general fund to support police, fire, community development, and municipal court operations. The remainder, under state law, must be spent on tourism promotion—hence the Travel Ashland allocation.
The council is now considering a range of revenue increases and spending cuts. Revenue proposals include public-private partnerships for the development of public land and buildings, a ticket tax at the Oregon Shakespeare Festival. What makes Ashland's situation particularly challenging is that these institutional crises are not independent. They compound each other, accelerating decline.
OSF's contraction reduces tourism, which reduces TOT revenue, which reduces both the city's general fund and the funds available for tourism promotion. SOU's contraction reduces the student population that supports local businesses, reduces the faculty and staff population that constitutes a significant portion of the city's educated workforce and tax base, and reduces the "college town" character that distinguishes Ashland from other small Southern Oregon communities. The hospital's service reductions make the community less attractive to retirees (a significant demographic in Ashland) and to potential residents considering relocation.
Each institutional contraction makes the others more difficult to reverse. The feedback loops are vicious.
This interconnected decline also means that traditional policy responses are inadequate. A targeted intervention to stabilize OSF does not address the SOU crisis. The problems require coordinated responses across multiple institutions and levels of government.
What Ashland faces is not a marketing problem but a fundamental transformation of its economic base. The community that emerged over the past several decades—defined by the symbiosis of a world-class regional theater, a comprehensive public university, a community hospital, and the hospitality infrastructure that served them all—is being dismantled by forces largely beyond local control: the economics of professional theater in the streaming age, the demographics of higher education enrollment, the consolidation pressures in healthcare delivery, and the structural inadequacy of Oregon's approach to funding local government.
An honest assessment of these circumstances is a precondition for an effective response. The mayor, city council, and city manager live in a world that no longer reflects reality. And then you have an advertisement campaign from the Chamber of Commerce that spends public money to support the fantasy. Amazing.
Ric Holt, SOU Professor Emeritus in Economics
Originally posted December 4, 2025 on NextDoor.com
By Ric Holt. Posted 12/3/25 at 9:30 pm
I just heard they plan to downsize the Ashland hospital significantly. Here’s reality. Ashland is on the verge of a perfect storm. The simultaneous struggles of its hospital, university, and leading cultural institution threaten not just the city's economy but its core identity as a livable, cultured community with a unique quality of life. The compounded nature of these issues—where each institution's decline worsens the others—creates challenges more severe than any single institutional crisis could cause.
The city government seems to be clueless. City Manager Sabrina Cotta's proposed 2025-27 budget projects an $11.3 million general fund deficit in the second year of the biennium. The city has faced warnings about structural deficits since at least 2022, when Finance Director Alison Chan informed the council that a shortage was "baked into the budget." At the recent council retreat, officials considered various revenue-raising and cost-cutting measures, all of which were band-aids, believing the perfect storm is behind them, not ahead. The simultaneous weakening of Ashland's three anchor institutions—its hospital, university, and world-renowned theater festival threatens the city's identity as a cultural, educational, and livable community.
The path forward should be to recognize tough realities while highlighting remaining strengths to build on. Ashland has valuable assets: natural beauty, an engaged citizenry, existing cultural infrastructure, and a solid reputation. Whether Ashland can navigate its current challenges depends on its ability to respond as an integrated community, which requires coordinated action. This is the challenge the mayor and the City Council face. Yet, besides not developing a long-term plan to help guide Ashland through this crisis, they seem to have their heads in the sand and their fingers in the dike. Stunning.
Ric Holt, SOU Professor Emeritus in Economics
Originally posted December 3, 2025 on NextDoor.com
By Ric Holt. Posted 12/3/25 at 8:00 pm
Amazing. Absolutely amazing. Why is the mayor smiling in the Ashland News photo when the City Manager says the city may face a "dire budget cliff”? The City Council's retreat again revealed a reactive approach rather than a strategic plan to address the city’s ongoing structural deficit.
The council's retreat generated two types of responses to estimated shortfalls, ranging from $1 million in a best-case scenario (not going to happen) to over $23 million in a worst-case scenario, over the next three biennia.
As reported in the Ashland News, ten areas for cuts were considered, with the most widely supported options including extending the service life of fleet vehicles, outsourcing human resources functions, recovering additional costs for burial services, using city staff to support ad hoc committees, and reducing staffing levels in police and fire departments. On the revenue side, proposals that received support included a local fuel tax, a local option levy, paid downtown parking, an event ticket surcharge, a redevelopment district, housing project partnerships, nightly hotel surcharges, a municipal service fee on non-taxable land such as churches, and seeking voter approval for a permanent Food and Beverage tax with ten percent allocated for infrastructure.
Each of these proposals addresses symptoms rather than causes. Extending fleet vehicle lifecycles delays capital costs but raises maintenance expenses and eventually leads to a significant capital shortfall. Outsourcing human resources may cut direct personnel costs but adds contract management burdens and potential service quality concerns. Staff reductions in police and fire departments create trade-offs in service delivery and public safety.
The revenue proposals face similar limitations. A local fuel tax generates revenue proportional to fuel consumption, which decreases as vehicle efficiency improves and electrification progresses. Paid parking downtown may generate revenue, but could harm retail vitality by competing with free parking at regional shopping centers. Event ticket surcharges depend on the success of the Oregon Shakespeare Festival and other cultural institutions, which are facing their own financial challenges. Hotel surcharges assume continued tourism growth in a market vulnerable to wildfire smoke, economic downturns, and competition from other destinations.
The core issue is that Ashland faces a structural deficit—an ongoing mismatch between recurring revenues and expenses that persists through economic cycles. Even permanent reductions in spending or increases in revenue, if not carefully aligned with trends in costs and revenue, might still fall short, as key cost drivers—such as personnel expenses, pension obligations, infrastructure maintenance, and public safety needs—continue to rise.
What the council retreat notably lacked was a discussion of a long-term financial plan that would integrate revenue projections, expenditure forecasts, capital requirements, reserve policies, and debt capacity into a coherent decision-making framework. Interim Finance Manager Bryn Morrison presented spreadsheets showing best-case and worst-case scenarios, but scenarios are not plans. A scenario describes what might happen; a plan describes how the city will respond to various contingencies.
City Manager Cotta noted that the city currently has enough reserves to operate for only a few weeks, while Jackson County maintains a year's worth of reserves. This disparity reflects not merely different fiscal capacities but fundamentally different approaches to financial planning. Jackson County has presumably conducted risk assessments, identified potential revenue disruptions and expenditure spikes, and established reserve targets accordingly. Ashland's current reserve level appears to be a residual—whatever remains after meeting current obligations—rather than a deliberate policy choice based on risk analysis.
The urgency expressed at the retreat—with Cotta stating she wants decisions made no later than September 2026 to prepare for the 2027-28 biennial budget—reflects years of accumulated avoidance. Structural deficits do not emerge suddenly; they develop over time as expenditure growth outpaces revenue growth. I mentioned these yesterday, but again, my recommendations:
First, the city should develop a comprehensive long-term financial plan with a minimum ten-year horizon.
Second, the city should establish an independent fiscal oversight body.
Third, program evaluation should be institutionalized as an ongoing function rather than a crisis response.
Fourth, revenue diversification should be pursued strategically rather than opportunistically.
Fifth, public engagement should be redesigned to improve the quality of decisions. Instead of asking citizens what to cut, the city should involve them in developing the criteria that guide decisions, provide transparent information on the trade-offs, and present specific proposals for public review once professional analysis is complete. This method respects democratic values while maintaining the analytical rigor needed for complex fiscal choices.
What a mess.
Ric Holt, SOU Professor Emeritus in Economics
Originally posted December 3, 2025 on NextDoor.com
By Ric Holt. Posted 12/2/25 at 8:00 pm
Hard to believe the City Council and the Mayor recognize that we have a structural deficit. Unfortunately, using stickers on large sheets of paper to show preferences for different revenue-raising and cost-cutting measures doesn't provide a serious analysis of the problem's scope. Amazing.
The council's approach has three main flaws: it relies primarily on small revenue increases and slight spending cuts rather than addressing deeper structural problems; it lacks a thorough, long-term financial plan needed for sustainable city management; and it does not establish adequate reserve policies to shield the city from economic shocks.
Ashland faces a persistent imbalance between revenues and expenditures that will worsen over the next six years. There are best- and worst-case scenarios, but the outcome remains the same – a cumulative deficit.
Let’s first examine the council's tentatively approved revenue measures. While these measures could generate additional revenue, they face several structural weaknesses. Many of these revenue sources are very sensitive to economic conditions and tourism trends. The Oregon Shakespeare Festival tax, food and beverage tax extension, parking meters, and lodging surcharges all rely heavily on visitor traffic to Ashland. A decline in tourism—whether caused by economic recession, wildfire smoke seasons, or other factors—would simultaneously cut revenues from all these sources exactly when the city might need them most.
Stacking multiple taxes and fees on the same economic activities, like tourism and dining, risks weakening Ashland's competitive edge compared to other destinations. A visitor already paying a ten percent lodging tax, along with a proposed additional nightly surcharge, a food and beverage tax, and an event ticket tax, might opt to stay in nearby communities. This layering of taxes can lead to diminishing returns and potentially harm the local economic base.
Because of denying the structural deficit for years and spending foolishly, here's reality. The council must provide more stable, predictable funding streams, including franchise fee increases and the creation of special districts with dedicated property tax authority. Property tax revenue, while constrained by Oregon's Measure 50 limitations, tends to be more stable than sales-based taxes during economic downturns. The preference for tourism-dependent revenue sources over more stable alternatives tells me the city government is still living in a fantasy world. If the city had dealt with the structural deficit years ago and spent prudently, we would not have to do this. But right now, the city needs a steady stream of new revenue to tackle its structural deficit.
The council's approach to expenditure control is equally problematic. The leading cost-cutting measures include extending the lifetime of city vehicles, outsourcing the human resources department, reducing police and fire department staffing, ending financial support for the City Band, reducing staff time for advisory committees, and cutting cemetery burial subsidies. These measures represent a mix of modest efficiency gains and service reductions that fail to address the fundamental structural issues driving the deficit.
Notably, the council rejected cuts to public art and childcare programs — areas that in many municipalities would be considered non-essential during fiscal emergencies. The council also deferred decisions on reducing the parks and recreation department budget, the city manager's office, and council expenses. This pattern suggests that political considerations are constraining the scope of potential cuts. Another sign of the city council's unwillingness to act like adults and recognize that the city faces a crisis. There needs to be significant structural changes in how the city gets revenue and makes cuts, or it will not achieve fiscal sustainability. We are facing a severe crisis that requires more than putting in place little red stickers.
The disagreement between Councilors Dylan Bloom and Bob Kaplan during the retreat encapsulates this tension. Bloom advocated immediate budget cuts to address deficits in the current and future years, while Kaplan argued that ending fund balances would provide a sufficient cushion to defer action. Kaplan's position reflects a common but dangerous tendency in municipal governance: treating structural deficits as temporary problems that can be smoothed over with reserves rather than addressed through fundamental reform.
Fiscal sustainability means that a local government can consistently provide essential public services now and in the future without relying on temporary measures such as one-time revenues, deferred maintenance, or depleting reserves. By this standard, Ashland is currently failing, and the measures under consideration from last night’s meeting will not correct this failure. Period. End of story. This lack of leadership from the Mayor, City Council, and City Manager is really getting old and simply digging us deeper in the hole. Someone needs to take the shovel away. Achieving genuine fiscal sustainability will require comprehensive structural reforms in several areas. Here are my suggestions:
First, Ashland should develop and adopt a 10-year financial forecast that projects revenues and expenditures under multiple scenarios and update it annually. This forecast should drive budget decisions, ensuring that current spending commitments are sustainable over the planning horizon.
Second, the city should implement a formal policy requiring recurring revenues to cover recurring expenses. The current practice of using ending fund balances to fund operating deficits violates this principle and hides the true structural imbalance. A balanced budget policy should ban using reserves or other one-time funds to balance operating budgets except in declared emergencies.
Third, City Manager Sabrina Cotta correctly identified that Ashland's current $2 million reserve fund is dangerously inadequate. A major financial or environmental crisis could quickly drain this reserve. Her proposal to increase reserves to cover three months of operating costs sets a minimum standard.
Fourth, Ashland's revenue proposals rely heavily on tourism-related sources, making the city more vulnerable to economic fluctuations and external shocks. A financially sustainable revenue system requires diversification across multiple sources with distinct economic drivers. The city should reconsider the rejected proposals for franchise fee increases and assess whether a local option levy, which would distribute the burden among all property owners, might provide more stable funding than tourism-dependent taxes. Additionally, the city needs a long-term plan to diversify its economy. That means you need to do a serious analysis (Yes, hire a consultant) to develop a plan that considers Ashland’s unique position and identifies which businesses to support internally to grow. This will not happen overnight. But you first need a plan.
Fifth, rather than approaching cost reduction as a list of potential cuts to be accepted or rejected politically, Ashland should conduct a comprehensive service level review that benchmarks current service delivery against comparable Oregon municipalities. This analysis should identify whether the city is providing services at above-market costs, whether staffing levels are appropriate for the city's size and demographics, and whether organizational structures are efficient.
An example I know is Milwaukee. It faced a $200 million annual deficit, the city engaged in a comprehensive analysis that identified not just where to cut, but how to reorganize service delivery to achieve the same outcomes at lower cost. The study demonstrated that, given the magnitude of the shortfall, the deficit could not be eliminated solely through efficiencies and belt-tightening. Still, this finding came from rigorous analysis rather than political negotiation that seems to be the Ashland way.
Sixth, the ad hoc nature of the council's retreat process—voting with stickers on paper charts—indicates a lack of a formalized fiscal policy framework. Ashland should establish written policies addressing reserve levels, debt management, use of one-time revenues, multi-year forecasting requirements, and balanced budget definitions. These policies should be embedded in city ordinances or charter provisions to ensure consistency despite changes in council membership and city management.
Seventh, the years of ignoring budget warnings from finance professionals, civic watchdogs (and me!) suggest a breakdown in communication between city officials and the community about fiscal realities. Sustainable fiscal reform requires transparent discussion about trade-offs—residents must understand what services cost, what revenues are available, and what choices are possible. The mayor's closing comment that the council was not dealing with a "one and you're done" scenario acknowledges the need for ongoing engagement, but this must be translated into structured processes for community input on fiscal priorities.
Achieving true fiscal sustainability will require Ashland to move beyond the ad hoc approach shown at the retreat and adopt a comprehensive fiscal framework. This should include long-term financial planning, adequate reserve policies, diverse revenue sources, thorough service level evaluations, formal fiscal policies, and transparent community involvement. Without these structural changes, the city risks repeating the past pattern of addressing only immediate issues: small responses to ongoing deficits, slow depletion of reserves, and, eventually, a fiscal crisis. It is time to end the circus show.
Ric Holt, SOU Professor Emeritus in Economics
Originally posted December 3, 2025 on NextDoor.com
