This the second part of a three-part series on the city budget. The next article will focus on the need and support for actions taken by the budget committee.
INDEPENDENCE – A tight budget of more than $37 million was approved for the coming fiscal year by the city’s budget committee last week, following revelations that past financial practices have led to an inability to qualify for some federal loans and reduced the opportunity to use certain bonds.
During a discussion prior to the budget vote, which included renewed debate over the loss of some library services, City Manager Kenna West was asked by a committee member if she expected the revenue-strapped situation to persist.
“We are expecting another shortfall next year, and the year after, and the year after, and the year after that,” stated West.
In what appeared to be a rare, if not unprecedented, action on the budget, three members of the 14-member committee voted against accepting it.
However, several budget committee members expressed strong support for the 2023-2024 budget plan.
City’s financial need explained
In the past, the city conducted inter-fund transfers of money, especially dipping into public works, which collects fees for water and sewer, West said. Stopping that reliance is a best-practice approach that’s being undertaken, but it means steep cuts, explained West, who joined the city less than a year ago.
Another cause of the severe belt-tightening stems from two historic state-wide ballot measures known as “five” and “fifty,” which curbed property taxes in ways that severely constrict city income, she stressed.
Due to the turn of events, bonds to generate revenue no longer are a “recommended option” for Independence, West said. For general-purpose property tax bonds to be issued, the debt ceiling is 3% of the current real estate market value. Current bond debt for the city is up to 2.66%, she announced.
Cities that West said she considers comparable to Independence – Silverton, Albany, Corvallis – have tried to balance their budgets by imposing fees. Another revenue-generating method for cities, a levy, takes time to prepare for an election – and passage isn’t guaranteed.
Asked by City Councilor Shannon Corr for her “insight” on Monmouth, which has a balanced budget with no shortfall this year, West responded that it is a “very different” city.
“They for many, many years continued to store money away and they have a good contingency and good reserves,” she said.
In addition, Monmouth also has an electrical utility, she added.
Also, Monmouth passed levies to support its police force and to build a new city hall, observed Independence Police Chief Robert Mason, who served as this year’s budget officer for Independence. Referring to the Independence Civic Center, where the budget meeting was being held, he noted that there was no voter-approved levy for it.
“This building wasn’t built that way,” Mason said.
The Independence Civic Center is a 36,700-square-foot, $12 million structure that was built a dozen years ago. Though nearly a quarter of the building was originally intended to be left as unfinished expansion space, it was constructed instead into an event center to attract a hotel developer – and the Independence Hotel broke ground nearby seven years later, according to news accounts from the Itemizer-Observer.
The impact of past practices
Interfund transfers eventually became a consideration for some prospective lenders, according to Gerald Fisher, Independence public works director.
For example, the record of interfund transfers meant forfeiting the ability to clinch a low-interest loan from the U.S. Department of Agriculture for one infrastructure project, he said. A loan at a higher interest rate was obtained from the Oregon Department of Environmental Quality, Fisher said.
This past spring, the DEQ fined Independence more than $8,000 for wastewater overflows into the Willamette River, a situation that isn’t likely to be resolved soon – public works is struggling to catch up with the needed repairs of the city’s wastewater ponds, Fisher informed the budget committee. Independence is likely to receive more unavoidable fines from DEQ until the treatment system upgrades are completed, he added.
In past budget sessions, City Councilor Marilyn Morton’s calls for more transparency about the money behind the transfers were dismissed, at least to a large extent, according to a report published by Trammart News in 2020. Seven years ago, Kamala Austin, who compiled the city’s annual financial report for the accounting firm Merina & Co., met with the same reaction from city officials; She affirmed that the books were balanced but cautioned “ten years from now, five years from now? I don’t know.”
During the budget meeting, Morton told committee members that she had inquired about the transfers years ago, out of concern, only to be told it was an accepted procedure by cities. After receiving three pages of interfund transfers one year, “no one could justifiably explain it, other than to say that this is the way that small cities have to do business,” Morton recalled. In fact, some cities did use it routinely, West confirmed. “Best practices change,” West said.
“It blows my mind that people are shocked that right now we are in this situation,” said City Councilor Dawn Roden. “We knew this was going to happen.”
She cited the riverfront project, Independence Landing, as an over-reach that contributed to the current, agonizing budget crunch.
“We have failed to have the proper infrastructure we need for this community,” Roden said. “We have looming debt coming up,” she said.
When she ran for public office, Roden said she tried to raise red flags over the precarious financial situation.
“Everybody looked at us like we were crazy,” she said.
Renewed debate on library cuts
Early in the budget meeting, City Councilor Sarah Jobe said she noticed that the minutes of the previous meeting, one week earlier, lacked a reference to the discussion of reductions at the Independence Library. In fact, the cuts had ignited a debate on the issue, primarily led by budget committee member Nathan Christensen, who wanted to find a way to lessen the impact of them.
“There is no mention of the question about library cuts in the notes, in the minutes,” said Jobe. “It is kind of a big deal. I think we were informed that there was nowhere to take money from to avoid cuts at the library,” Jobe said.
“I think several people mentioned the library during that meeting,” she added.
After agreement was reached to amend the minutes, the meeting progressed, but the library repeatedly surfaced as a topic. “I think we have thrown the baby out with the bathwater,” Christensen said at one point.
Roden called the cuts to the library “heartbreaking” but said she saw the proposed budget as reflective of the deep changes that are needed. She also pointed out that there are “overlapping services” between the Monmouth and Independence libraries, and now a trolley line for local residents to make trips to either site when one is closed but the other is open.
However, later when Christensen recommended that there could be some revision to sustain some library services, Roden joined him in calling for an interim step. Christensen asserted that there are creative ways the problem might be solved.
Several residents who attended the meeting to testify before the group sought a similar solution.
“I volunteer at the library,” said Shelby Platt, who explained she has a close-up view of the programs. “I am really sad, really sad.”
Bryanna Prado, a senior at Central High School, said the loss of the position for Ramon Martinez, the engagement liaison to the Latin community, and the reduction of library services, is a huge blow, citing the bilingual storytelling that helped her learn English.
“The library is such an important place,” she said, adding that, as a child, she had no money for books but could always count on getting them by making a trip to the library.
When the vote was taken on the budget, Roden, Christensen and committee member Erin Seiler all voted against it.
(Trammart News & Publishing is solely responsible for the content it provides. This is the second in a three-part report on the city budget. As previously noted, the spouse of the author is a member of the Independence Library Board, but he was not consulted in the preparation of this article.)
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