By Steve Bagwell • Managing Editor • 

Virus is crimping budgets in both Newberg and Mac

Marcus Larson/News-Register##Atticus Hotel manager Brandie Blanco answers a phone call in an empty lobby. Like most hotels in the county, the Atticus remains open but is having few rooms booked.
Marcus Larson/News-Register##Atticus Hotel manager Brandie Blanco answers a phone call in an empty lobby. Like most hotels in the county, the Atticus remains open but is having few rooms booked.

Because of the fallout from the COVID-19 pandemic, Newberg’s proposed city budget for 2020-21 is down $4 million or 3.5% from this year’s approved budget. And officials say the decrease a harbinger of things to come in McMinnville, though cushioned to some extent by bigger reserves.

The major causes in Newberg include a projected 50 percent decline in the transient lodging tax collected by local hotels and motels, and a steep drop in systems development charges paid by developers. Together, they figure to cut the flow of dollars into city coffers by $3.2 million.

Newberg is also braced for a $430,000 lodging tax shortfall in its budget for the current fiscal year, ending June 30. According to the budget message, only one local lodging facility remains open, and it is only operating at 30% capacity. 

In response, the city is proposing in the budget released Wednesday to eliminate cost-of-living increases, leave vacancies unfilled, reduce hours and cut the full-time employee equivalency count by 3.1%.

McMinnville isn’t that advanced in its budget process yet. However, it is anticipating a similar impact, which it hopes to mitigate to some extent by dipping into strategic reserves and taking measures to tighten operations.

The city recently laid off 120 mostly part-time workers. But it is hoping to largely avoid having to resort to layoffs to balance next year’s budget. It is hoping to rely instead on furloughs and reduced hours.

McMinnville is also projecting a 50% drop in transient lodging revenue next fiscal year, according to Jeff Knapp of the city’s tourism promotion agency, Visit McMinnville.

In contrast to Newberg, many hotels and motels in McMinnville are continuing to operate, at least on a minimal basis, according to Knapp and Gioia Goodrum of the McMinnville Area Chamber of Commerce.

But Knapp said his agency, which splits the tax revenue 70-30 with the city, is expecting “near zero” for April and May. It is responding by cutting back sharply on its promotional efforts and redirecting staff to other duties, he said

McMinnville is somewhat better positioned than Newberg because it is not trying to operate a visitors’ center, Knapp said. Going forward, Newberg is proposing to maintain center funding at the expense of promotion funding — an approach McMinnville has rejected, he said.

According to The New York Times, the hospitality industry is forecasting a 31% decrease over the next six months. And that’s not good news for either Newberg or McMinnville, given the degree of their dependence on wine-oriented tourism.

Despite the rather bleak outlook, Newberg City Manager Dan Weinheimer struck at least one positive note in his budget message.

“I am confident that the community will recover, and that 2020-21 will be a year of growth in Newberg,” he said. “While this budget includes overall cuts, it also puts the organization’s focus on executing its plans and goals.”

The city budget document can be found online at www.newbergoregon.gov/finance/page/annual-budget.

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