Below is a summary of the proposed budget to be reviewed by the Oregon Wine Board of Directors at their public meeting on March 11, 2021. If you would like to provide comments on this budget proposal for consideration by the Finance Committee, please email them to email@example.com by March 5, 2021.
Annually, the Oregon Wine Board adopts a budget in March to allocate funding for programs and general and administrative expenses for the next fiscal year. Board approved budgets are also approved by the Director of the Business Oregon Commission.
This budget proposal summary includes a 9% revenue reduction and a 18% expense reduction from the prior year.
Grape Assessment and Wine Tax
Since it is difficult to predict the results of the grape harvest for all regions of the state a year in advance, the OWB relies on the 3-year average assessment as a preliminary revenue number. As it is needed to reflect more accurate harvest figures, the OWB occasionally develops an adjusted revenue and budget in the fall or winter, for the remainder of the year. Budget adjustments are approved by the Board of Directors. The wine tax is also projected at a 3-year average. For the 2020-21 annum, the tax rates are as follows and paid directly to the OLCC:
- Grape Assessment:
- $25/ton tax on grapes harvested in Oregon and used to produce wine
- $25/ton tax on grapes imported into the state and used to produce wine
- $25/ton tax on wine produced from juice or concentrate
- $12.50/ton tax on wine grapes sold to businesses outside of the state
- $0.021/gallon tax on wine made from all other agricultural products (i.e. cider)
- Wine Tax:
- $0.02/gallon tax on wine sold within the state of Oregon (the first 40,000 gallons are exempt for wineries producing less than 100,000 gallons annually)
Ticket fees and program sponsorship dollars are estimated based on the current cost estimate of adjusting the Oregon Wine Symposium education content to be delivered virtually. This budget anticipates that 100% of the cost associated with the event can be covered with sponsorship and ticket sales. Actual sponsorship and ticket rates are yet to be determined.
Program revenue captures winery contributions for participation in programs such as OWB hosted trade tastings and educational workshops. Also included are any anticipated earnings from consumer event ticket sales. Budget estimates for 2021-22 are currently $0
The OWB leverages opportunities for mission-appropriate grants. The 2021-22 budget reflects $0 of grant funding The OWB has applied for a significant Specialty Crop Block Grant for a DTC resource and additional industry training on DTC management. If approved, the 2021-22 budget for grant income and expenses will be updated. The OWB continuously pursues grant funding for mission-appropriate program development when it is in alignment with our strategic planning goals and priorities.
HB5006 – MARIS
During the 2017 legislative session, congress allocated $500,000 of general fund budget to the Oregon Wine Board for market access and research activities. $22,068 was used in FY 2017-18 to provide professional sales training to winery staff. In FY 2018-19 $294,281 was used to fund domestic and international trade tastings, technical research grants and additional professional sales training. In FY 2019-20 $187,694 was used to continue funding domestic and international trade tastings and technical research grants. Budget was included in FY 2020-21 to utilize the final marketing allocation balance of $96,898 for domestic and international market expansion activities. There are no additional funds allocated to the 2021-22 budget.
Less than 1% of OWB revenue includes interest income.
SIGNIFICANT BUDGET ADDITIONS/ADJUSTMENTS
Due to the expected decrease in funding, the proposed research grant budget has been adjusted to $280,000. Included in this amount is a roll-over of $20,000 from a 2019-20 project cancelled due to COVID-19 constraints. There is no business and economics research budget allocated. Programming in this area is managed part-time by an assigned staff member.
$16,000 in budget is included to provide additional sales and DTC training to the industry in an effort to support a recovery from the COVID-19 pandemic. $5,000 is allocated to continue the maintenance and enhancement of the Profitability Calculator developed in 2018 and updated and relaunched in 2020. It is currently estimated that the costs of the future Oregon Wine Symposium will be and offset entirely by sponsorship and ticket sale income. Programming in this area is managed full-time by an assigned staff member.
The marketing and communications budget category has been restructure to reflect the new strategic plan priorities in brand identity, tourism, market expansion and communications.
$30,000 is included to finalize the branding work and design and launch a new consumer website. $35,000 is budgeted to support a consumer marketing campaign utilizing the branding and website.
The tourism budget largely includes maintenance of existing tourism marketing assets and programs, such as the Oregon Wine Touring Guide, Wines Fly Free and Oregon Wine Month.
The market expansion budget reflects adjustments to programming due to a depressed on-premise sales from the COVID-19 pandemic. Budget is included to maintain and upgrade the Oregon Wine Resource Studio and explore additional trade education offerings. Budget is also included to maintain current International Marketing programming. This area of work is funded by federal USDA grants, but the Oregon Wine Board provides budget to cover operational contractors and non-reimbursable expenses. The return to OWB in grant funding for this investment ranges from $3 to $10 for every $1 of OWB funding.
Programming in the marketing area is managed full-time by two assigned staff members.
Media Relations budget was increased slightly to allow for additional PR support and programming. Programming in this area is managed full-time by an assigned staff member.
Knowledge & Insights
Budget is included to maintain the annual Vineyard and Winery Survey, as well as funding for additional important market sales and insights reports to be shared with the industry. Programming in this area is managed part-time by an assigned staff member.
Leadership & Partnership
Budget has been maintained to fund regional stakeholder meetings, information sharing task force committee management, grant writing support and program sponsorships. Programming in this area is managed part-time by assigned staff members.
Overall Compensation and General & Administrative
Approximately 45% of the total annual expense budget is related to staffing (e.g. salaries, payroll taxes, employee benefits). This reflects an increase of 10% in total compensation budget to the prior year. Compensation budget has been held at an even level for the last two fiscal years. An annual salary and benefit increase of 3.5% is budgeted, with an additional 1.5% for an annual bonus pool. Total staff count (FTE) is 8.
Overall a 17% decrease from 2020-21 actual expenses is expected in General and Administrative costs, due to a strategic move to a remote working arrangement for staff. Significant decreases in cost are in office rent, maintenance and equipment. Additional budget is added to cover the costs of the biennial financial review required by statute.
COMPARISON TO 2020-21 BUDGET
For fiscal year 2020-21, the OWB adopted an annual expense budget of $2,910,747. The 2021-22 budget proposal is for $2,399,099. This reflects a decrease of 18%.
2021-22 NET INCOME AND SURPLUS
The 2021-22 budget reflects a decrease in revenue of 9% and a decrease in expenses of 18%. The total dollars required to cover expenses are $2,399,099. This is expected to create a deficit of $52,978 at the fiscal year end, leaving a remaining funds surplus of $104,324.
2021-22 YEAR END RESERVES
It is the policy of the Oregon Wine Board, as adopted by its directors, to reserve an amount equal to 30% of the prior three year average grape assessment income for the purpose of covering expense commitments should the annual harvest be limited. The OWB also maintains access to a line of credit in the amount of $100,000 for the same purpose. To date, the OWB has not needed to access the line of credit or the reserve. The reserve goal for this budget is $565,193, which reflects an decrease of 3% from the prior year. Total year end reserve and surplus is equal to $669,517.
If you have any questions, comments, or desire more detail on this budget proposal, please email firstname.lastname@example.org.