The Philomath City Council on Monday approved the city’s 2026-27 fiscal year budget along with several related financial measures to cap a budget cycle that Mayor Christopher McMorran described as probably the most difficult he has been involved in.
The council adopted the $34,760,865 budget on a 6-1 vote with Councilor Teresa Nielson casting the lone dissent. The budget includes appropriations of $31,946,909 and a combined ending fund balance and reserve of $2,813,956.
The Budget Review Committee had approved and recommended the budget to the council on June 10.
One notable casualty of the budget cuts is Fridays on 13th, a proposed summer event series along 13th Street that City Manager Chris Workman had sought $1,000 to fund. The Budget Review Committee had eliminated that line item during its deliberations, which were aimed at reducing the size of a proposed monthly city services fee.
Workman proposed that the idea be revisited in a future budget when finances improve.
Workman noted that urban renewal funds will still support physical improvements in the area — including a planned pavilion and lighting — even without the event series.
Budget debate
Nielson, explaining her no vote, expressed confidence in city staff and department heads and argued that residents should expect to pay more for the services Philomath provides.
“I think that sometimes there are sacrifices we make to live in a good community, to live in a safe community,” Nielson said. She indicated she would have preferred a different approach to the monthly fee that is expected to accompany the budget.
City Councilor Jessica Andrade reiterated her position, which she had raised during Budget Review Committee meetings, that cuts to the Philomath Police Department budget were warranted.
“I still do think we should cut from the police budget and I do think $4,000 is an extremely reasonable ask,” Andrade said, adding that she believed the council had erred in prioritizing competitive pay over what she termed fair pay for officers.
Councilor Rich Saalsaa praised the Budget Review Committee’s work and noted that Philomath had managed to produce a balanced budget recommendation at a time when many cities are struggling.
Councilor Diane Crocker voiced concern about the city’s ending fund balance heading into an uncertain economic environment.
“I am concerned about not having more reserve balance or ending fund balance because inflation is affecting us, it is affecting everybody,” Crocker said. “I am sympathetic to the fact that prices are going up everywhere and that people do not want prices going up, but they’re going up for us, too.”
Andrade, while expressing continued reservations about any city services fee, said she was ultimately supportive.
“I am much happier with $5 than $14 and I honestly think that’s the best we’re going to get,” she said, referring to an earlier proposal that the fee be set at $14 per month.
Fee discussion
The budget as adopted assumes the fee will be set at $5 though the council has not yet formally enacted it. Workman said he will bring an ordinance to the council that cites that amount.
Crocker attempted to raise the proposed fee to $6 per month to provide additional cushion, but her motion failed on a 4-3 vote. Voting yes were Crocker, Nielson and Saalsaa. Voting no were Andrade, McMorran and councilors Brent Kaseman and Spencer Irwin.
After the budget vote, council members discussed renaming the fee to make it clear to the public that proceeds will support the police department. Workman suggested the ordinance include a name that reflects that purpose, though members agreed it should not be called a public safety fee, which could create confusion about whether it also benefits Philomath Fire and Rescue — which it would not.
The council also favored a 50% discount on the fee for low-income residents. At $5 per month, qualifying households would pay $2.50. Workman said approximately 50 households are currently registered with the city under low-income status, which qualifies them for half off on utility bills.
The council approved a supplemental budget adjustment for the current 2025-26 fiscal year on a 7-0 vote. The supplemental budget draws $72,000 from the general fund contingency account to cover unanticipated recording fees of $40,000 in the city manager’s administration department, $22,000 for unanticipated police department overtime related to a Fair Labor Standards Act review, and $10,000 toward a new LED readerboard at Dale Collins Park.
The supplemental budget also adjusts the system development charge (governmental fund) to reflect an increased beginning fund balance of $771,411, with $625,000 of that directed toward the North 11th and 12th Street construction project between Main and Applegate streets. Overall, the total budget increased from $32,170,494 to $35,951,905, a 2.43% increase.
State shared revenues
The council voted 7-0 to adopt a resolution declaring the city’s intent to receive state shared revenues for 2026-27, a step required annually under state law.
The city projects receiving $148,680 in general fund revenues from state shared sources, including $53,491 in general shared revenues, $83,579 in liquor tax, $2,946 in cigarette tax and $8,664 in marijuana tax. The highway gas tax is projected to bring in $454,629, split between the street fund and the capital projects fund.
Finance Director Mike Murzynsky noted the general fund portion is running about $10,000 below last year’s level, and said liquor tax revenue is the steadiest of the shared sources.
McMorran raised the broader concern about the declining trend.
“At some point, I think we should have a discussion about the fact that those keep going down,” McMorran said, noting the impact on organizations the city funds with those revenues and the disconnect between declining dollars and increasing community need.
The council also voted 7-0 to impose and categorize the city’s ad valorem property taxes for 2026-27. The permanent tax rate of $5.3005 per $1,000 of assessed value has remained unchanged since the 1997-98 fiscal year.
URA budget
Before the regular council meeting, the council convened as the Philomath Urban Renewal Agency and adopted the URA’s 2026-27 budget of $3,576,010 on a 7-0 vote. The budget includes appropriations of $664,669 — consisting of $440,669 for city administration and $224,000 for debt service — with an unappropriated ending fund balance of $2,911,341.
Murzynsky clarified that of the $440,669 designated for city administration, approximately $390,000 goes toward URA projects, with the remaining $50,000 covering administrative costs.
McMorran praised the impact of urban renewal funding on the community’s appearance.
“I really appreciate the impact that our urban renewal funding has had on our city,” he said. “I hear so much, especially this time of year, on how beautiful our city, and especially downtown, is and that is in large part thanks to the urban renewal fund.”
The URA is a separate governmental entity that works alongside the city to revitalize designated areas through investments in infrastructure, public improvements and economic development.
