Council Considers Monthly Fee Plus Levy to Plug Budget Deficit

Data presented by staff shows how much revenue the city could expect if it tacks on a “city service fee” to monthly utility bills.

After raising utility rates, city staff discussed the possibility of a city fee and levy, followed by a discussion on costs to move the council chambers to the library during a work session on April 24.

“I think we’re definitely not going to make everybody happy, but we can at least have a good message as to why this has happened,” Interim City Manager Ron Whitlatch told the council. “If you look across the state, this is happening in almost every community and every district right now.”

Whitlatch said the city is currently looking at a budget that will be approximately $2 million short by FY 2027 and the city council made it clear they don’t want to reduce services (such as police and library). As such, staff are tasked with finding new revenue streams to fund budget needs.

“Our target amount, whether that’s through reductions, whether it’s through a combination of levy, fee and reductions, it’s gonna be that $2-$2.5 million range,” he said. “That gets us to even. That doesn’t allow for any growth in the future as we move through because this is a five-year forecast, so that leaves us very stagnant. That is what the dollar amount is that we need to break even at that point.”

Looking at 15 other Oregon cities, Whitlatch showed fees they use to supplement their revenue, including city service, transportation, parks, public safety and street maintenance fees that range between $4.50 and $17 a month. The City of McMinnville’s city service fee offers a $1.30 charge for low income accounts.

Data shows what $1-3 million levies would cost taxpayers.

He also reviewed 13 cities that are using levies to fund their needs for libraries, police, swim centers and city operations.

Using a general term of “city service fees” for Lebanon Council’s consideration, Whitlatch presented different monthly charge options in addition to the possibility of doing both fees and a levy. There are a variety of ways the city could determine how to charge the fees, so he used a methodology based on water meter size.

If the city charged $5 a month, single family homes in the city would contribute an estimated $23,660 a month, apartment complexes would contribute about $16,430, and commercial properties $5,650, providing the city about $548,800 a year.

If the city charged $20 a month, single family homes in the city would contribute an estimated $94,640 a month, apartment complexes would contribute about $65,720, and commercial properties $22,600, providing the city almost $2.2 million a year.

The city service fee would not require a vote by the people, and would likely go up every year according to the Consumer Price Index.

Finance Director Brandon Neish presented levy options with examples of how they might impact taxpayers. To generate $1 million a year at 70-cents per $1,000 assessed value, a $221,000 home valuation would contribute approximately $155.68 per year (or $12.98 per month). To generate $3 million a year at $2.19 per $1,000, the same home would contribute approximately $484.89 per year (or $40.41 per month).

He noted that the downside to levies is that taxpayers might vote it down and, if they don’t, the city would still be reliant on voters to continue approving a levy about every five years. He also mentioned the city is starting to see a reduction in homeowners paying their property taxes.

Whitlatch told the council the library and justice obligation bond will come off in FY 2028, freeing up about $1.6 million. As such, that might create a potential strategy to perhaps go up for a levy at that time, he said, adding that the city fee could be dropped at that time or they could keep the fees and go out for a smaller levy.

Councilor Dave Workman said he doesn’t think the community will “buy off” on a $20 city service fee, but regardless, none of the fee and/or levy strategies will even cover what he believes the council wants; namely, for him at least, the reopening of the city jail.

Whitlatch responded it’s the $3 million levy that will get them to be able to open the jail.

“Yeah, it’s gonna be an uphill climb,” Whitlatch said.

Councilor Michelle Steinhebel said she appreciates the city’s recent move to make reductions in costs, but she doesn’t see how they will satisfy the budget without a combination of both fees and a levy. Whitlatch told Lebanon Local that staff have reduced 9.75 full time equivalent positions for the upcoming fiscal year.

The council seemed to agree that both a monthly fee and a levy are warranted.

Whitlatch said there are some ideas as to how to present messaging to the community, including perhaps town hall meetings.

“I’ll just be honest with you,” he added. “It’s not going to be a fun process, but we’re at that crossroad.”

The council directed staff to consider a $15 city service fee and in addition to a levy. Councilors and Mayor Ken Jackola noted this is not a money grab, but a necessary survival strategy due to inflation.

A diagram shows how a proposed dais in the library’s community room would pencil out.

Moving on, the council began looking at plans to move the council chambers from Santiam Travel Station to the library community room, which is estimated to cost the city a ballpark figure of $150,000 – which is budgeted for next year with remaining ARPA funds – plus approximately $18,000 to $20,000 for the dais.

Whitlatch said they are looking at how they can make the room functional for city council meetings while keeping it functional for community use. They reviewed options for how to set up immovable council tables that would take up about 11 feet.

“With a move like this, there would be some initial cost up front, but I think the benefits outweigh any concerns in that we would have maintenance cost savings on this building (the travel station),” Jackola said.

He also said by leasing out the travel station or vacating it altogether, the city is consolidating its assets and also “updating the city image.” It also provides more seating and parking for the community to attend city council meetings.

Whitlatch told Lebanon Local there are currently no maintenance needs with the building, but noted Jackola was referring to future costs such as roof, painting, etc. He also noted at the meeting that the travel station was paid for with a grant, so staff have to determine if they would need to repay that grant if the city sells the property.

“Kelly (Hart) and I are of the opinion that it was kind of intended for a travel hub and, if we could give it to somebody or sell it to somebody that was going to use it as that, then that would be more of a use and we shouldn’t have to pay it back,” Whitlatch said.