Hillsboro city councilors last week voted to use $2.3 million in general fund reserves to balance next year’s budget.

Suzanne Linneen, director of the city’s finance department, said the city still expects to end the current fiscal year with around 15 percent in reserves, which is the amount recommended in budget policies adopted by the council two years ago.

The reserves were up to 18.9 percent before the council dipped into them.

Linneen said she believes that if the economy is recovering as some economists say it is, the budget that takes effect on July 1 can also end with a 15 percent general fund reserve.

“If the stars align right, we can remain in compliance with council policies,” said Linneen.

This year’s general fund reserves were bolstered with $1.43 million in state funds received from the Gain Share program, which helps offset property tax waivers the city offers in order to encourage economic development projects. Hillsboro received a total of $4.2 million in Gain Share funds this year. The balance was added to the general fund to bolster next year’s reserves.

The 2013-2014 budget includes $90.8 million in general fund revenues, which are the funds the council has the most authority over. Most of the money in the general fund comes from property taxes. According to Linneen, the city’s assessed property tax values grew by only 0.3 percent last year — well below the double-digit growth of the 1990s and even the 5 and 6 percent levels of the 2000s.

According to Linneen, there were several reasons why assessed values grew so slowly last year. One was a successful assessment appeal by Genentech that reduced property tax collections by about $850,000. The Oregon Department of Revenue, which assesses industrial property, also reduced the value of parcels owned by Intel, SolarWorld, Frontier Communications and Northwest Natural. And the housing slump that started during the Great Recession continued to play itself out with the assessed values of some residential properties falling below their assessed values, an unprecedented development.

Altogether, Linneen estimated that these reductions reduced property tax collections by approximately $1.25 million.

There are signs the residential market is recovering, however. For example, several apartment buildings are under construction or recently completed in the Orenco Station area. Physical assessments tend to lag behind the completion of such projects, however, meaning only some of their increased values are likely to be added to the property tax rolls this year.

But, Linneen said, with any luck, overall assessed values in the city should start inching up this year, helping to ensure that next year’s budget ends with at least 15 percent in general fund reserves.

The budget is partly tuned by a local option levy first approved by voters in 2006 and re-approved in 2012. Roughly 90 percent of that money pays for police and fire services, with the remaining 10 percent dedicated to parks’ maintenance. The approved budget leaves 16 positions in the Hillsboro Police Department vacant to help balance the books.

The approved budget includes approximately $60 million for capital projects, including the completion of Northeast Veterans Drive, improvements to Northeast 28th Avenue, bicycle and pedestrian improvements along Northeast 37th Avenue, completion of the Crandle Reservoir, renovation of the Shute Park Library and the start of the Brookwood/Helvetica extension. It also increases the pavement management program that helps extend the life of the city’s street network to around $3.8 million.

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