Weddle Bridge, Declining Gas Tax Revenue Focus of Discussion in Budget Committee

The Budget Committee approved a $97,654,000 2024-25 proposed budget on May 30 with only one change, namely the transfer of $75,000 from the General Fund to the Community Enhancement Fund for a Weddle Bridge project.

City Manager Kelcey Young’s message noted the city should continue being “financially conservative,” but overall it displayed a positive outlook on the coming year’s proposed budget.

“While many other cities are currently facing a deficit, we feel extremely fortunate to not only be financially stable over the next year, but to also be able to complete several capital projects set by the council’s goals, as well as having a solid strategy to start construction on the Mahler Wastewater Treatment Plant which has been an ongoing challenge for over 25 year,” she read from her statement.

Young also highlighted an increase of $1,554,000 in General Fund, including a higher than normal contingency fund, as well as an increase in the sewer budget for the wastewater treatment plant, which is budgeted for $67 million.

As the committee worked through each fund account, discussions revolved mostly around a forecasted decline of gas tax revenue, understanding of property tax and compression, and anticipation of a deep drawdown at Green Peter, in addition to the Weddle Bridge project.

The original proposed budget for Weddle Bridge had a beginning balance of $5,000. City Councilor Greg Mahler brought up the matter regarding the bridge, expressing interest in more funds being needed for its repair.

“One of my biggest concerns is the deterioration of Weddle Bridge,” he said. “I’m concerned for the future of that bridge.”

Councilors Angelita Sanchez and Dave Trask also expressed interest in fixing the bridge for the purposes of safety and preservation of history.

Young said she was in complete agreement, adding that it is a priority that should be discussed during the next year. She noted the Sweet Home Community Foundation has pledged $10,000 for Weddle Bridge, in addition to fundraising activities the Park & Tree Committee plans to do and grants the city will apply for. Young also said she foresaw a contingency fund might be used for the Weddle project.

Young shared that the city did have an engineer look at the bridge and they put out a request for bids, of which only one was received and it was much higher than the city expected.

Mahler said he understands the city would try to get grants for the bridge, but he is not comfortable relying on grants that the city may not ever be approved for.

After some discussion, the committee agreed to place $75,000 from the contingency fund in the Reserve Fund to the Weddle Bridge project to be used if grants were not received. It also provides the city an opportunity to show granters the availability of matching funds, if a grant requires such.

Another item of discussion focused on an expected decline in revenue from state gas taxes during the coming years, though it should be noted that the decline is not forecasted this coming year.

“This has been for a number of years a point of contention for a lot of cities because they’re starting to see reduced transportation fees coming in from your Oregon DMV fees and those types of things,” Finance Director Matt Brown said.

Some of Sweet Home’s street capital improvement projects and staff in Public Works are paid for by those funds, he said, and the city is beginning to keep an eye on how it will continue paying for those items with less gas tax funding. Personnel services might soon be paid for from other funds, but Brown also noted City Council may in the future begin having discussions around options to add utility fees onto bills.

“If you have street improvements that you want to make, pavement improvements, a variety of other street improvements – sidewalks, those types of things – if you don’t have the resources to do them, how do you make those improvements?” Brown posed. “This is not a fund balance that grows on trees, so you have to make decisions and choices over the next couple of years on how you want to move forward with making improvements like sidewalks, street improvements.”

Due to property tax measures ordered by the state, utility fees are the only way for cities to acquire additional funding for those types of improvements, he said.

Young clarified there are really three options: add utility fees, ask voters for a city gas tax or not improve infrastructure.

Sanchez shared that her business spends between $5,000 and $10,000 in fuel per month and if the city passes a gas tax, her and similar businesses will go somewhere else for gas. An unidentified budget committee member said she’s not in favor of a utility fee, but would prefer a gas tax due to the fact many visitors drive through town and should “pay their fair share.” Mayor Susan Coleman added her disinterest in a utility fee, but noted there are limited ways to fund needed improvements.

“We have to evaluate how we’re going to address our streets because that’s probably one of the biggest complaints I have is the condition of the streets,” Coleman said.

This was not a topic that required any decision by the committee, but it was noted for what can be expected in City Council discussions in the next one to three years.

Other highlights during the budget meeting include:

♦ Brown noted the beginning fund balance in the General Fund is $1.37 million higher this year than last.

“This stems from some of the reorganizations that we’ve done over the last couple of years, as well as we’ve seen increases in a few areas, specifically like in interest revenue,” he said.

He pointed out that in 2021-22, when the city was not doing any outside investments, they earned only $25,000 in interest, but in the next two fiscal years – after hiring a firm to use funds to earn money – there was $339,793 in interest in 2022-23, $600,000 earned the following year, and an expected $400,000 for the upcoming year.

♦ The city anticipates using Path Program funds as matching funds to a possible grant for sidewalks, particularly a $3 million sidewalk project at Mountain View. If the city does not get the grant, they will roll the funds into the following year.

“Our city definitely needs some sidewalks, so that’s one of our priorities,” Young said.

♦ Brown noted the budget includes a transfer of $15,000 from the Reserve Fund to the Special Events Program “to help kind of build up that program a little bit more.”

♦ Young noted the General Fund contingency ($1 million) is high this year in anticipation of a possible deep drawdown this fall. For comparison, the 2023-24 FY budget had a $255,000 contingency fund in the General Fund.

“We’ve also requested funding from about eight different places in the hopes that we will get some support,” Young said regarding expected problems from the drawdown.

♦ And, following some explanation about compression and how it limits how much property tax the city can impose, Young shared that new opportunities such as urban renewal plans can now be considered because there’s a higher population.

The budget will be presented to the City Council at which time a public hearing will be held and the council may adopt the budget or adopt it at a later date.