The Philomath City Council voted 3-2 Monday night to direct city staff to draft the 2026-27 fiscal year budget with a $14 monthly city services fee included, setting the stage for a public process that will ultimately determine whether the fee moves forward.
Councilors Diane Crocker, Spencer Irwin and Brent Kaseman voted in favor of the motion, while Councilor Jessica Andrade and Mayor Christopher McMorran voted no. Two councilors, Teresa Nielson and Rich Saalsaa, were not present.
City Manager Chris Workman said the fee, which would be added to utility bills, is projected to generate roughly $400,000 annually. He said that amount would be enough to address two priorities — stabilizing the general fund’s cash flow and improving the city’s competitiveness in public safety compensation.
“That would take care of both of those targeted goals — public safety and ending fund balance,” he said.
The urgency behind the proposal stems from a steady erosion of the city’s unappropriated ending fund balance, which serves as the cash reserve that carries the city from the start of the fiscal year on July 1 until property tax revenues begin arriving in November.
Finance Director Mike Murzynski said the city’s available cash on hand before those tax revenues arrived was $1.53 million in 2022 but has fallen sharply each year since — to $1.05 million in 2023, $753,580 in 2024 and $514,583 in 2025. The city projects only $51,700 will be available at that point this year.
“By the time Nov. 1 rolls around, we’re running down to no money in the general fund,” Murzynski said. “I’ve got a payroll that’s going to be on Nov. 10 that I can’t cover. I mean, this is getting down into the nuts and bolts … That’s why we need to get this thing situated and rebuilt.”
Workman called the issue a structural problem that can be attributed to Oregon’s Measures 5 and 50, which cap property tax revenue growth at 3% annually, while inflation in the West region peaked at over 8% in 2023 and has increased overall city operating costs by more than 20% since 2020. Essential costs such as electricity and construction materials rose 30% to 40% during that same period.
To illustrate how other cities have responded, Workman shared a chart showing comparable fees in other jurisdictions, including fees totaling $58.66 per month in Corvallis.
“This has become an additional revenue stream that cities are reliant upon,” Workman said. “This isn’t a ‘let’s put this in there for a few years and see what happens,’ this is the additional revenue stream that cities have grown to lean on.”
The agenda summary outlined why staff recommended a fee rather than a local option levy. A fee can be enacted by council resolution without waiting for an election, can be adjusted more easily from year-to-year and creates a direct cost-recovery mechanism for services like police and libraries that don’t carry traditional user fees.
Workman noted the flexibility as an advantage.
“It can be adjusted annually a little bit easier, even throughout the year it can be adjusted as needed,” he said. “If we get a year or two out and the city’s doing well with cash and revenues, then the fee can come down with a pretty simple resolution.”
The vote came after a discussion in which several councilors expressed reservations even as they acknowledged the city’s financial bind.
Crocker said she supports the fee and understands the need but expressed a preference for not having to increase it annually. Workman responded that he does not anticipate the fee going up, citing signs that inflation has moderated.
Andrade said she does not believe the timing is right, particularly with utility rate increases already on the horizon. She also raised concerns about the city becoming reliant on the fee long-term and said she believes other revenue options deserve more exploration.
“I know $14 a month doesn’t seem like much to a lot of people or in certain contexts with the budget … but I just really hope that we can think creatively about this,” Andrade said.
Irwin said he is conflicted. “I hate to add a fee, especially on top of having to stabilize the utility (rates) … but also if we’re not cash flowing, that’s a significant problem,” he said.
McMorran said he had “very mixed feelings about this whole thing.”
Workman and Murzynski mentioned that a provision could be included to allow low-income households to pay a reduced rate or possibly avoid the fee altogether.
Monday’s vote does not establish the fee. Rather, it directs staff to build it into the proposed budget. The public will have opportunities to comment during Budget Review Committee meetings, which typically take place in May and into early June. If the committee retains the fee in its budget recommendation, the council would then need to adopt an ordinance to formally implement it.
“That’ll give the Budget Review Committee more of an opportunity to see how the fee is going to impact the budget and maybe more importantly, what happens if you pull that revenue out of the budget,” Workman said.
Philomath has navigated this terrain before. The city implemented a $10 general fund fee in 2017 for similar reasons, reducing it to $5 in 2020 and repealing it a year ahead of its scheduled sunset in 2022. Workman said the current situation calls for a longer-term commitment.
“We’ve got to find additional ways for revenue or we’ve got to substantially cut costs, which means stop providing some of the services that we’re doing,” Workman said. “But we can go either way — we definitely can make some cuts.”