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City 101: Budget Perspective Part I

Welcome to part 1 of a 3-part series on the City’s budget and planning for the future. In this edition, we’ll provide an overview of the current challenges, and in parts 2 and 3 we will share more details about medium and longer-term solutions for fiscal sustainability.

As a small City, North Plains has operated on a conservative budget for many years. Due to our current and projected population growth, the increasing cost of doing business, and investments needed in maintenance and upkeep, we are facing service-level challenges. North Plains’ rapid growth as a bedroom community to serve employers outside of North Plains has also resulted in an imbalance in the tax base, with our city having a heavy reliance on residential taxes and very little on business taxes like other Washington County cities.

The fact is that without additional funding our city will not be able to meet the expanding needs and expectations for services. A recently-adopted goal of the North Plains City Council is to shore up fiscal sustainability, safety, and service levels that provide a comparable quality of life to other Western Washington County residents. We are working to plan the right balance of resources to help us achieve that.

You can see from the pie chart at the bottom of this page (click it to enlarge) that City revenues currently come from a variety of sources including property taxes, service fees, business licenses, construction and development permits and charges, fines for violations, allocations from federal and county government partners, and grants.       

We sometimes hear people ask, “As more people move to North Plains and pay property taxes, why does this not cover the cost of city services?”
This is not as simple as it sounds. First, it is important to understand that property taxes currently account for just under 40% of the City’s yearly general fund revenues. Also, as mentioned above, North Plains has a heavy reliance on residential property tax revenue compared to other Washington County cities, which have more businesses and industry contributing to the tax base.

Second, the City has state and voter-imposed restrictions on the ability to increase property taxes to keep up with rising costs. Taxable assessed values within the City have continued to grow since 2008; however, yearly increases in property taxes paid by property owners are limited to 3% annually under Oregon’s Measure 50. Inflation in a normal year outpaces that 3% revenue growth, which contributes to an imbalance for service delivery.

What are the options to fund the increasing demand for City services?
We are looking at both medium and long-term options. Longer-term, we are working on ways to increase available land and step up our economic development efforts in order to attract more businesses for more employment right here in North Plains. This will take time, but would also create a better balance between residential and non-residential tax revenues to pay for services.

Watch for part 2 of the 3-part series in June and July for a deeper look into options the City is pursuing for more sustainable City services for our expanding community.