Council hears financial forecast

By NICOLE MONTESANO<br />Of the News-Register

Annual sewer rate hike of 2.8 percent approved to build reserves

Had the city of McMinnville not begun commissioning three- to five-year budget forecasts after the recession set in, and sharply cut spending, it would have exhausted its reserves by now, consultant Bob Wells told the council Tuesday.

But the city is by no means out of the woods yet, he said. It is still on track to run into significant financial problems in fiscal year 2014-15, when forecasts indicate it will spend about $1.1 million more than it brings in.

The good news, Wells told the council — as he has been telling it annually for the last few years — is that it has time to formulate a plan.

“You have all the best practices,” he said. “It’s a real compliment to your staff and your council that you have all the right tools.”

The council is considering a variety of measures, such as implementing a room tax, and beginning to talk with residents about the eventual need to pass a local option levy. In addition, City Manager Kent Taylor has informed the city that it must continue to budget conservatively for the foreseeable future.

Councilor Kellie Menke told Taylor she was encouraged by the fact that many of the local option levies cities presented to residents in 2012 passed. Taylor, however, remains wary.

The council approved an annual sewer rate hike of 2.8 percent, intended to build up reserves for eventual repair and replacement work, following the city’s preferred policy of “pay as you go” rather than mortgaging the future.

Consultant Deb Gallardi told the council that, after years of following this policy, McMinnville no longer has the highest rates in the area, as other cities have had to sharply raise rates to upgrade or replace their own systems.

The council also approved a contract with CH2M Hill, for $249,962, to design an expansion of the city’s sewage treatment plant.

The three-year project, expected to cost about $13.6 million, will provide the city additional treatment capacity. It will also add redundancy, if for any reason a part of the treatment plant needs to be shut down, City Community Development Director Mike Bisset told the council.

In other business, the council scheduled a public hearing for Feb. 26 on the proposed vacation of Walnut Street between Cedarwood Avenue and Drumwood Avenue. That portion is no longer drivable.