Council adopts reduced city budget
The city of Newberg carried through on its proposal in April to cut back its annual budget in response to the COVID-19 pandemic and the strain it has placed on local businesses and residents.
On June 1, the Newberg City Council approved a $109.57 million budget, with total appropriations at $97.41 million and reserves and unappropriated ending fund balances totaling $12.16 million. The council followed the recommendations of the budget committee, which met four times in April and May and is staffed with all council members and six volunteers, in reducing the budget from the $113.69 million 2019-2020 budget. The general fund, City Manager Dan Weinheimer said, was $15.73 million in 2019-2020 and was reduced about 6 percent to $14.62 million this year.
The impact of the new budget on ratepayers is $2.65 per $1,000 of assessed value, an increase of 7.7 cents per $1,000 over the 2019-2020 budget. On a home assessed at $250,000, that means an increase in the annual property tax bill of $20 under the city's new budget. The city is one of a handful of districts that levy taxes on Newberg residents, the other large ones being the Newberg School District, Yamhill County and the Chehalem Park and Recreation District.
The new budget will pay for 139.55 full-time equivalent employees, down from 145 FTE the year prior. The reductions will manifest themselves in reduced hours, decreases in staff numbers and the city not hiring for vacant positions.
The overwhelming majority of funds in the Newberg budget go toward operations of the Newberg-Dundee Police Department, which will garner $7.27 million of the $14.62 million general fund budget. The library is second at $1.74 million with communications the third most costly program at $1.31 million. Planning ($1.30 million), transfers ($386,385), municipal court ($332,510) and general government ($230,908) complete the list of general fund expenditures. The city will carry over $936,608 in contingency.
The primary decrease in the available funds coming to the city can be blamed on the precipitous drop in transient lodging taxes levied on hotel stays and restrictions on travel, Weinheimer said, as well as a sharp decrease in funds the city receives from system development charges on new development.
"COVID-19 is the primary reason for cuts at this time," he added. "There are anticipated to be state and federal program impacts also because of COVID where we expect to see lower funding amounts available from other levels of government."
While a big chunk of the TLT proceeds are required by state statute to go toward measures promoting tourism, the remainder would normally go into the general fund. The nearly three-month closure of the Allison Inn and Spa alone had an impact of hundreds of thousands of lost TLT proceeds going to the city. The city projected in April that it would see a two-year decrease in TLT proceeds of $997,000.
Compounding the problem was the sharp downturn in SDCs, brought on primarily by reductions in construction due to the pandemic and the floundering economy. The city estimated that it will lose $2.6 million in SDCs over the next budget period.
The new budget also includes a two-year freeze on cost of living increases for its rank and file employees, a measure recommended by Weinheimer and city finance director Matt Zook. The freeze will save the city approximately $355,000 over a two-year period, Weinheimer told the budget committee.
"2019-20 was a year of transition and uncertainty," Weinheimer said in April. "The year included a number of unforeseen events, including internal leadership transitions and a global pandemic that brought unprecedented economic hardship. I am confident that the community will recover and that 2020-21 will be a year of growth in Newberg. While this budget includes overall cuts, it also puts the organization's focus on executing its plans and goals."
Weinheimer added that the city will take a look at its numbers as the budget year progresses: "We do anticipate a check-in mid-year to review our projections and determine whether additional cuts are needed."
He also explained that not all city programs suffered cutbacks as some, capital projects for example, "are more insulated from short-term economic shocks" because funding for those typically occur over the course of many budget periods.
"General fund programs see immediate cuts in hard economic times so departments funded primarily from general fund are most impacted," he said.
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