As the budget season for the next fiscal year is underway and the City of Lebanon works through a tight economic outlook, Finance Director Brandon Neish provided a report on current third quarter finances during the City Council meeting on May 14.
So far this fiscal year, the city has brought in $34,634,484 in new revenue and spent $31,078,392.
Utility Service
Neish reported that the city had budgeted $13.79 million for 2025, and the city so far has collected $11.94 million in utility fees. Based on historical trends, the city estimates it will collect $14.24 million.
His report notes that the increases are driven primarily by increased water consumption across utility accounts and an increase in bulk water purchasing, while sewer revenue has held relatively stable. However, with increased water usage this year, he expects to see sewer revenue increase, as well.
Property Taxes
The city expects to receive approximately the amount budgeted for property tax revenue for this fiscal year. The city budgeted $8,534,769, and estimates show projected revenue totaling $8,579,986 – just $45,000 (.53%) beyond budgeted figures.
Neish reported that while taxes are nearly balanced, the variances differ fund-by-fund. In the General Fund, the city projects an extra $140,000 in property tax revenue while tax revenue in the General Obligation Bond Fund is projected to fall $94,000 short of the original budget. This will result in an inter-fund loan to cover necessary debt service payments which will need to be repaid in the 2026 fiscal year.
Intergovernmental
Intergovernmental revenue – revenue from other government organizations such as the school district, fire district, county, state or federal government – is projected to fall short of the adopted budget by nearly 20%, excluding state grant funds for work at Cheadle Lake Park.
This is due to a “significant” deficit seen in state revenue sharing, which impacts the General Fund.
The city projected state liquor taxes would fall 40% this year, but instead they only fell 20%. Cigarette revenue continues to fall year-over-year.
Neish said that the state liquor tax will need to be monitored moving forward – as it once was a stable source of revenue for the city – because it is falling short of the budgeted amount by
$75,000 this year.
Liquor taxes peaked in 2023 at $381,000 and are projected to be $357,000 this year. The state’s projection shows $317,000 for Lebanon next year, a decrease of more than 15% from 2023.
“As liquor sales decline – which is apparently a trend that I did not realize was occurring in the country – we will start to see a reduction in that revenue as well,” he told the council.
Franchise Fees
Franchise and contribution revenues this fiscal year are projected to slightly exceed budgeted expectations, with total collections estimated at approximately $3.34 million – about $300,000 more than the $3.03 million budgeted.
This is driven primarily by higher-than-expected receipts from Pacific Power and NW Natural, which together account for more than the overall increase, Neish reported. Rate increases across these two utilities are likely driving the significant increases.
A few categories, such as Comcast and Consumer Power, are projecting slightly lower returns than budgeted, but the shortfalls are more than offset by gains in other areas.
Interest
“Interest revenue is once again a high performer in outpacing the adopted budget,” Neish reported.
While interest rates have started to fall, the Federal Reserve has held off on rate increases recently, which is driving higher revenues, he reported.
The city projects $2.85 million in interest earnings this year, more than 1.25 times the adopted budget. As the city continues to spend more money held in reserve for capital projects, this will begin to fall again alongside falling rates, which is widely expected. Staff expects this to occur after the current fiscal year.
Other Revenue
Other revenue city-wide is projected to increase 41.90% from the adopted budget, or $1.21 million.
This includes increases in court fees ($83,000) and motel tax revenue ($88,000) based on year-to-date receipts, as well as the City Services Fee which is estimated to bring in $1.03 million this year.
General Fund
Neish reported that revenue generation in the General Fund has increased since the last financial update in January.
Revenue estimates for 2025 increased nearly three-quarters of a million dollars, with increases seen in state revenue sharing and a rebound in franchise fee revenue.
“As a result, the five-year forecast shows a much better picture, though still shows a need for the newly-minted City Services Fee throughout all five years and an increase of approximately 1% annually to maintain about $2 million in one-time, expendable fund balance,” he reported.
In other business:
- The council held a public hearing for and approved exemption to competitive bidding for Cheadle Lake Park projects;
- The council held a public hearing for and approved annexation of street segments into the city;
- The council held a public hearing for and approved the amendment of fees and charges for city services;
- City Manager Ron Whitlatch announced the City Council meetings will move to the Lebanon Public Library starting next month;
- Whitlach reported he and Public Works Director Jason Williams testified at the Capitol on the city’s capital request for the wastewater plant;
- Neish reported the city acquired 15 new vehicles through the Enterprise fleet contract, and sold 10 vehicles through the program for a profit of $70,000;
- Whitlach reported on a recent clean-up by Oregon Dept. of Transportation under the bridge on Park Street;
- The council heard a report from Library Director Kendra Antila on policy changes regarding amount of time staff will stay with a minor after closing, ADA guidelines for exclusion of “out of of control” service animals, smoking rules at Academy Square, prohibiting bathing/washing in restrooms, prohibiting bed rolls/bedding inside the library, and denying acceptance of “very long” overdue books.
- Councilor Michelle Steinhebel announced she spoke with Marty Cahill, CEO for Samaritan Health Services, about rumors that Samaritan Lebanon Community Hospital might lose the Girard Birth Center. According to her, Cahill confirmed the closure is under consideration, but it’s not yet a done deal and there will be a community engagement and feedback process before a final decision is made.
- Councilor Dave Workman said he believes it’s time to start considering logical steps on how to reopen the jail. Councilors Dominic Conti and David McClain agreed. City Attorney Tre Kennedy said there are some ideas on the table, and Whitlatch said the options can be presented, but “bottom line, it comes down to money.”
- McClain expressed concern about “water gushing down the inside wall of City Hall” during a recent rainstorm and would like to discuss what to do about the unsafe conditions of that building.