The City of Lebanon held two town hall meetings in October to explain and answer questions about the proposed city services fee.
Mayor Ken Jackola and council members Wayne Dykstra, Michelle Steinhebel, and KJ Ullfers were in attendance where city officials presented a proposed $18 monthly city services fee to help close Lebanon’s projected budget deficit. The fee, which would be added to water bills, is intended to stabilize the city’s general fund without compromising essential services.
Mayor Jackola opened the meeting, followed by City Manager Ron Whitlatch and the city’s finance director, Brandon Neish, who explained the city’s structural deficit and outlined the measures officials have taken to reduce costs over the last two years.
“Tonight is about providing the information you need and hearing from you,” Mayor Jackola told attendees.
The Proposed City Services Fee
The new fee would apply to all single family homes, apartments, and commercial properties – with higher rates for commercial properties – and would generate an estimated $1.6 to $1.9 million annually. Whitlatch explained that the fee, set to begin in January 2025, is based on the city’s water meter system because it offers a straightforward way to collect revenue and has been used by other cities in Oregon.
“The proposed fee ensures a balanced budget, but does not expand it,” Whitlatch said. “It simply addresses the current deficit and maintains our existing services.”
Addressing the Deficit
According to five-year projections, Lebanon’s general fund will face an approximate $1.6 million deficit by the 2025-26 fiscal year, which could impact essential services such as police, parks, recreation, library, municipal court, and senior center. The deficit, Neish explained, is a result of various factors, including inflation, property tax limitations, and increased costs associated with the Public Employees Retirement System (PERS).
Oregon’s Measures 5 and 50 restrict how much local governments can collect in property taxes, limiting increases to 3% annually.
“These limits mean property tax revenues cannot keep up with inflation, which has risen 20.61% over the past four years,” Neish said. “Meanwhile, PERS costs for the city increase by 16-25% every two years to cover unfunded liabilities for retiree benefits.”
Property Tax Breakdown
The city’s presentation broke down how property tax dollars are allocated. Currently, 29 cents of every dollar go toward Lebanon’s municipal services, including police, planning, the senior center, and bond payments for the library and justice center.
The remaining property tax dollars are allocated this way: 20 cents fund county services, including criminal justice and the sheriff’s department, while the fire district receives 13 cents for operations and bond payments. Education accounts for 36 cents, with less than one percent remaining funds distributed to the aquatic program and 4-H.
Steps Taken So Far
To reduce costs, Lebanon has cut 9.75 full time positions, eight of which were in the general fund, saving the city approximately $1.2 million. The city has also reduced materials and service expenses by $180,000 annually, pursued grant funding, and switched to a five-year budget forecast model for more proactive financial planning.
“We’ve held multiple budget meetings and work sessions on this issue,” Whitlatch noted, “and this fee is what the council decided was the most effective way forward.”
Public Concerns
Several residents expressed concerns about the proposed fee. One attendee questioned if outsourcing city services might be more cost effective. Whitlatch replied that the city already contracts services where feasible, such as using Enterprise Fleet Management, which saves an estimated $750,000 over 10 years by leasing rather than purchasing new vehicles.
“Every cost is discussed at length in a public setting with community involvement,” Mayor Jackola added, underscoring transparency in city budgeting.
Another concern mentioned was how the fee would impact low income residents. City officials responded that a reduced rate for low income households is in development and will likely be determined by November.
Economic Challenges
The city’s finance team highlighted that inflation has been a significant budget challenge, compounded by an unexpected $450,000 expenditure for water system repairs due to issues with the Green Peter Dam drawdown. Whitlatch explained that these types of costs are difficult to predict and often impact budgets suddenly.
With city revenue constrained by Oregon’s property tax laws, city officials said they have limited control over expanding tax revenue.
Next Steps
The proposed $18 fee is still under discussion, and city officials will continue reviewing public feedback before finalizing any decisions. Additional information, including the city’s budget documents and past work session records, is available on the city’s website. City officials encouraged residents to stay informed and involved in the decision making process.
“We’re searching for grants and other funding solutions,” Whitlatch said. “But this fee is the city’s best path forward to preserve essential services and balance our budget.”