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Council approves 2012-13 budget

Decision reverses proposed tax rate cut


If you live in Lake Oswego, your property taxes will rise in the 2012-13 fiscal year the same as they do pretty much every year.

The Lake Oswego City Council Tuesday evening approved a budget that overturned a key component of the spending plan advanced by the citizen budget committee, which had built a budget incorporating a property tax rate reduction.

Initially proposed by Councilor Jeff Gudman, the reduction aimed to offset the automatic annual increase in assessed, or taxable, property values. The move was meant to ease the burden of recent increases on residents' water and sewer bills.

It led to a $242.5 million spending plan that held the line on most city spending, although City Manager David Donaldson warned that the rate decrease, shaving $750,000 from revenue the city would otherwise receive, could cause financing problems in future years.

On Tuesday, Gudman said concerns about the city's five-year financial forecast were unwarranted, as those projections were built on assumptions that were 'overly conservative.'

'We do not have to increase the property tax rate from what was approved by the budget committee,' Gudman said.

Mayor Jack Hoffman said if higher water and sewer rates were hurting citizens, the council should address those issues rather than looking to a property tax rate reduction as the solution.

'Frankly it benefits the wealthiest in Lake Oswego, those who have the most expensive homes, those homes with the highest assessed value,' Hoffman said, noting that the 'average Joe' wouldn't save much money compared to the owner of a $800,000 or $900,000 home.

Councilor Mary Olson called that sentiment was 'class warfare.'

She supported Gudman's proposed cut, as it would end up keeping the amount property owners pay level. In addition, the city usually ends the year with plenty of money leftover, she said.

Councilor Donna Jordan noted that the final version of the 2012-13 budget actually cut more employees and personnel and materials services than earlier versions of the plan. In addition, the city manager plans to bring the council a plan for additional savings in personnel costs this fall.

'We are actually contracting in order to make this a balanced budget,' Jordan said.

The council approved the 2012-13 budget with a 4-3 vote, with Hoffman, Jordan, Sally Moncrieff and Bill Tierney in favor and Gudman, Mike Kehoe and Olson opposed.