City of North Bend release - North Bend passed a $51.5M budget but projects deficits from 2027-2031 totaling $1.2M. Grants matched 96% of tax dollars yet rising costs may force hard choices.  The City Council on Tuesday adopted a $51,525,326 budget for fiscal year 2025-26, balancing next year’s books but forecasting a steady slide into deficit spending within 24 months.  The plan keeps the general-fund tax rate at $6.1831 per $1,000 of assessed value and renews a 56-cent local-option levy for pool operations. The measure maintains a $2 million emergency reserve and fully funds current staffing levels.  Yet a five-year forecast included in the budget paints a starker picture. Finance Director Jeff Bridgens projects the general fund will fall short by $232,540 in fiscal 2027, $478,165 in 2028, $749,909 in 2029, $981,192 in 2030 and $1,224,684 in 2031. By 2030, reserves used to smooth cash flow between July and November property-tax collections will be nearly exhausted.  “The proposed budget reflects a city at a crossroads,” City Administrator David Milliron wrote in his budget message. “Inflation has risen more than 23 percent over the past five years while our primary revenue sources—property taxes and fees—have not kept pace.”  The squeeze is driven by multiple factors:  Personnel costs. Collective bargaining agreements, higher employer pension rates and guaranteed overtime for fire personnel will push wage and benefit expenses up 3.5 percent to 4 percent each year.  Material inflation. Staff applied a 15 percent increase to supplies in fiscal 2027, citing tariff uncertainty and the risk of recession, with 10 percent to 20 percent increases expected that year alone.  State limits. Measures 5 and 50 cap annual growth in property-tax revenue, limiting the city’s ability to recapture rising costs even when new housing is built.  To mitigate the gaps, North Bend has leaned aggressively on outside dollars. Since 2021 the city has secured $16.94 million in federal, state and private grants—equal to 95.5 percent of the $17.74 million paid by local taxpayers over the same period. Recent awards include more than $5 million each of the past two years for street, safety and downtown revitalization projects.  Councilors praised the grant performance but acknowledged that most awards fund one-time capital projects rather than ongoing operations. “The grants have helped, but they’re inconsistent and can’t be relied on to fund day-to-day services,” Milliron told the council.  Staff are exploring long-range options that could include a higher public safety fee, new service districts or legislative relief from state tax caps. In the meantime, departments have been asked to model potential cuts should revenue lag behind projections.  Despite the warnings, Milliron emphasized that North Bend remains in a relatively strong position compared with peer cities. Debt is low, and the city recently began leasing vehicles instead of purchasing them outright to flatten capital spikes and reduce maintenance costs.  “We owe it to the people of North Bend to face these challenges head-on,” Milliron said. “By being proactive and transparent, we can make smart decisions today that protect our city’s tomorrow.”  More Information: http://northbendoregon.us/finance  Got Questions? We've Got Answers! Contact us at www.northbendoregon.us/contact