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City will explore new revenue options
City government Six proposed tax, fee increases would help lower deficit, keep public services, officials say
The city of Newberg is facing a $600,000 deficit in the upcoming budget.
City Manager Lee Elliott said combined with three years of cuts, this amount is enough that without additional revenue, services will suffer. In an attempt to remedy some of the deficit and stave off additional cuts, Elliott has proposed six changes to fees and taxes. If all are approved by the City Council, they could net $510,000.
Were going to be bringing them forward, but it doesnt mean council will agree to them, he said.
The proposed increases include raising the Transient Lodging Tax from 6 to 9 percent, increasing planning fees by 7.5 percent, adding a stormwater franchise fee of 5 percent, adjusting the EMS fee for inflation, almost doubling the Public Safety Fee from $3 to $5.67 and increasing the Waste Management Franchise Fee to 5 percent, matching all other franchise fees.
We either have to reduce significantly or increase revenue or both, or use some reserve to smooth this over, he said. A structural deficit youve got to do something with.
Right now, the reserve fund is already being dipped into to cover costs, but it can only cover so much.
You can only use so much of your savings account, Elliott said.
Moving forward, two positions have already been cut to help with the deficit: animal control and the assistant city manager position. Elliott was serving as assistant city manager until last summer when he was tabbed to fill the city manager spot until the city could hire a replacement for Dan Danicic, who left the position after admitting to an inappropriate relationship with a subordinate.
Im leaving in 60 days to help with the deficit, Elliott said. Its weird firing yourself.
Cutting the two positions will put $120,000 back into the general fund, money the city desperately needs.
The administration the last three years tried to delay things on purpose, hoping revenue would come up, he said. Well the revenue, its just not recovering as quickly. The states getting better, well theyre income tax based. Cities in the south are sales tax based, theyve recovered as well. Were property tax based. Wed expected to last least catch up to inflation, but were 1.3 percent behind.
But if the revenue enhancements are improved, at least one new position will be added.
The only proposed new position that is in the general fund budget is we need another dispatcher on the communication side of public safety, Elliott said. Were spending enough on overtime right now to pay an entire employee. If we have anybody ill or on vacation, or just somebody their car breaks down, people are working a lot more hours.
Janelle Nordyke, finance director, said dispatchers are only supposed to work eight-hour shifts, because any more and they arent as responsive and effective.
But yet they work so much overtime theyre working 12-hour shifts, Nordyke said.
The added position would help alleviate some of the overtime and reduce the stress on the employees.
Elliott said although the additional fees and taxes may sound unappealing, its the only option for the city.
We realize people are still struggling financially; its not easiest time necessarily to say, `Oh your bills going up, he said. Youre starting to see the local economy going up. If we start cutting services is that really going to help the local economy? There a lot of factors that lead into it. The key is getting these revenue enhancements there to keep up with inflation.
If the increases arent enough, there are a few other options to relieve fiscal stress. Three options Elliott suggested are a public safety levy, a library levy and a local food and beverage tax.
Were a retail-based, tourism-based city. Property taxes are providing the services. If you dont have a consumption tax and are bringing in people to your community youre actually subsidizing them, he said. So you can look at diversification of the tax base.
The proposed increases will be discussed at the May 19 Newberg City Council meeting. Elliott said they are open for input and encourages residents to participate in the discussion. The meeting starts at 7 p.m. at the Public Safety Building.