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Budget tops $129.49 million for two years; council approves slight increase in taxing rate

PMG FILE PHOTO - The Newberg City Council has adopted a $129.49 million budget for the 2022-23 biennium.

There is not much to get excited about in the city of Newberg's 2022-2023 budget.

The document, approved by the City Council at its June 6 meeting, will serve as the city's financial framework for the next two years and, under state law, had to be adopted in early summer in a public manner.

The budget committee, made up of all six members of the council and equal numbers of volunteer citizens, began the process of scrutinizing the proposed budget with training sessions in early April, according to Finance Manager Kady Strode. The group then held three public meetings over the course of the next four weeks to discuss the budget proposal authored by Strode in concert with then-interim city manager Will Worthey. The committee signed off on the budget on May 18 and forwarded it to the council for final approval.

The document, though seemingly complicated on first blush, is straightforward. It totals a tick under $129,497,000, will pay the bills for a biennium and funds the employment of 144.79 full-time-equivalent employees.

"We consider this to be a status-quo budget," Strode said. "We have the usual increases of COLA (cost of living), pension costs, health insurance and inflationary factors taken into consideration for several materials and services items. Additionally, the city is taking a more proactive approach to internal capital improvements throughout the city such as our IT software and HVAC upgrades, which have been neglected for years."

The impact of the new budget on property owners is $2.81 per $1,000 of assessed value, meaning that an owner of a home or business with an assessed value of $300,000 will pay $843 for city taxes, an increase of $24 over the last biennium.

"By charter, the city is allowed to increase property taxes by 3% each year until we reach our permanent rate of $4.3827 per $1,000," Strode said. "The approved rate of $2.8139 per $1,000 is a 3% increase from the prior year rate. Given that labor and inflation costs are rising more than they have in the past, this is a revenue source the city needs."

The biggest account in the document is the public safety budget at $8.6 million. It includes the police department.

"The Public Safety Budget has remained status-quo like all other departments," Strode said. "Their budget includes the negotiated COLA from bargaining, pension increases, health insurance increases, and status quo materials and services expenditures, with the exception of few line items relating to software increases and the body worn cameras. The department is maintaining the same authorized personnel strength and has recently hired officers to replace gaps left unfilled during the Covid era."

In the new budget the city's capital projects fund tops $17.39 million. The city has plans for that money.

"We will begin the process of building a new groundwater treatment plant, which will span over several fiscal years (and) includes the recent purchase of redundant water rights," Strode said, referring to the city's recent purchase of water rights formerly owned by WestRock, the past owner of the paper mill. "We will finish the improvements to Elliot Road, which will include improvements such as the addition of a bike lane and sidewalks in that neighborhood. We will also begin the Riverfront Sewer Lift Station, which will open up the riverfront area for further development and will take two older inefficient pump stations offline."

Like cities across the state, Newberg has found it difficult to keep up maintenance of its streets.

"The street fund has been struggling the past couple of years due to the reduction of gas tax revenue and is expected to continue to decline in the near future as well. …," Strode said. "Newberg is working on ways to keep this fund in the black and looking at additional ways the city can generate revenue, which could help support this fund in the future."

Despite having to fund services with dwindling tax proceeds while servicing more customers, Strode said the city is on a good path while recognizing that challenges are on the horizon.

"The overall financial health of the city is at a good place, with a healthy fund balance in many of the funds," she said. "However, there are many future expenses the city is preserving those fund balances for, such as the continual rise of pension costs, the financing of the groundwater treatment plant and the financing of the bypass through Phase III, just to name a few."

The advent of the worst worldwide pandemic in more than a century hasn't helped.

"Much like many other municipalities, the city was hit hard during the pandemic and the general fund's fund balance took around a $1 million hit," Strode said. "However, the city was able to build that fund balance back up through conservative spending and holding off on hiring certain positions. The CARES Act and FEMA dollars the city received also helped boost the fund balance to offset COVID-19 related purchases."


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