Cautious approach to tax increase needs assurances

Following nearly a year of discussion internally and with community members, the McMinnville Budget Committee struck the proper balance this week with a decision to enact one-third of the city’s leftover fire service taxing authority for the 2024-25 budget.

The city previously devoted $1.50 of its $5.02 property tax assessment to fire and ambulance service. When voters approved creation of a fire district, merging the city department and Rural McMinnville Fire (which now taxes at $2 per $1,000 of assessed value), city leaders indicated they plan to retain authority and likely utilize some or all of the $1.50 for other city services in the future.

Taking into account data from a professional survey, the committee was unified in suspending any increases for the 2023-24 fiscal year, in part to increase the likelihood for voter approval of the fire merger. They agreed to canvass the community for feedback on additional levying going forward.

It became clear many residents had concerns of feeling over-taxed. Raising taxes is always unpopular. But given information about ongoing budget deficiencies in the City, the 50-cent addition seemed at least palatable to most. What remains unclear, however, is just how this additional revenue to the general fund will be utilized. And that’s what city leaders must continue to provide clear communication about if it hopes to avoid upheaval from voters in budget cycles to come.

The city’s Finance Director Jennifer Cuellar told the budget committee in her report that the $5 million in funding previously devoted to the fire department would be necessary to avoid a budget deficit by fiscal year 2025-26. That’s a harsher message than one presented during the “Dollars & Sense” polling campaign, which asked residents to rank the city services they would like to see more money invested in.

The question must be asked and answered by the city: Is this additional tax money from locals to improve services, or simply to avoid — as Cuellar put it — future budget cycles that “negatively impact current service levels”?

The city’s work to build sustainable budgets year-after-year in the face of myriad constraints — many handed down from the state level — is no enviable task. Staff continue to navigate burdens of Public Employee Retirement System payments, aging buildings and deferred maintenance and other costs increasing faster than revenues are allowed under state property tax rules.

As councilor Sal Peralta mentioned during Tuesday’s hearing, they spent several years “trying to crawl out” of a budget deficit, achieved that in the current cycle, and there’s no appetite to return to that scenario.

The city’s current cautious approach remains to be the correct track. We are still not convinced a return to the full $5.02 rate by the city is prudent, especially with lingering distaste for the recently passed city service fee. These difficult discussions will continue.

During this initial tax increase phase, constituents need continued communication on clear priorities and specific projects from the city; and assurance that all their dollars are being spent wisely and openly.