Beaverton City Council Work Session on Financial Recovery Plan

On September 9, 2025, the Beaverton City Council held a work session to discuss the city's fiscal sustainability and a potential financial recovery plan. The meeting, which began at 7:00 PM, featured presentations from the city manager and assistant city manager on property tax limitations, the fiscal sustainability action plan, expense reductions, and revenue generation options. Council members asked questions and shared perspectives on the path forward, including the possibility of a local option levy in May 2026. No votes were taken.

Discussion Items

• Property Tax Context: Assistant City Manager Elizabeth explained that property taxes make up 54% of the general fund revenue and are constrained by Oregon’s Measures 5 and 50. The city receives 21 cents of every dollar of property tax. Assessed values are not reset to market value upon sale; residential properties have an average assessed value of 55% of real market value, multifamily 37%, and commercial/industrial 65%. Compression (the $10 per $1,000 real market value limit) currently costs the city approximately $87,000 annually.
• Fiscal Sustainability Action Plan: The city manager presented the status of the plan adopted in FY22-23. Revenue enhancements include adjusting property tax to the cap (generated $4.2 million), a fee study (estimated $1 million, likely lower), and a future operating levy (originally estimated at $3.3 million but expected to be significantly higher due to rising costs). The transportation utility fee, estimated at $6.8 million, is now projected at $9–10 million and will be discussed on September 16.
• Expenditure Reductions: The city has reduced general fund FTEs from 380 in FY22 to 340 currently. The city achieved 95% of its expense reduction target ($9 million out of $9.5 million). Examples include $2.5 million in materials/supplies savings (target $1 million) and organizational assessments. Further cuts would directly impact services; eliminating a $10 million deficit through personnel cuts alone would require 42 fully general-funded FTEs or 75 partially funded FTEs—equivalent to nearly all staff in City Hall.
• Revenue Options: Staff outlined tools available to the council: fees (e.g., public safety fee, adopted via resolution), a local option levy (requires voter approval), business license fee study underway, and increasing the transient lodging tax (currently 4%, with 70% required for tourist promotion and 30% for general services, but much of that is dedicated to the Patricia Research Center for the Arts). For the levy, a May 2026 ballot would allow revenue by July 2027, whereas November 2026 would delay revenue until November 2027 and require interim budget adjustments. However, the Tualatin Hills Park and Recreation District plans a bond renewal in May 2026, creating potential voter competition.
• Council Reactions:
  • Counselor Duggar requested analysis of essential services, peer city comparisons, and polling on public appetite. He emphasized the need to explore revenue options and understand what neighboring cities are doing.
  • Counselor Hartmeyer Prigg supported a May 2026 levy path, noting that expense reductions have been as aggressive as possible and further cuts would harm services. She stressed the importance of timing to avoid losing another year of revenue.
  • Counselor Tibnon praised the staff’s work on efficiencies, including AI tools that save staff time, and asked that all options—even unattractive ones—be placed on the table for transparent deliberation.
  • Counselor Teter asked about raising the transient lodging tax to offset general fund costs for arts and other services. He also favored a May levy to align with city council elections and drive voter turnout.
  • Counselor Kimmy argued that the structural deficit cannot be solved by revenue alone; he called for identifying non-essential services to cut, warning that a levy only covers a portion of the shortfall and that without service reductions, the city will deplete reserves by mid-2026.
• Mayor’s Remarks: The mayor encouraged council to document all ideas and use one-on-one time with the city manager to vet them. He stressed the need for a unified front and urged council members to call county commissioners about the library levy, noting that the county does not see the value of services like the bookmobile. He also clarified that the city’s base property tax rate is already higher than some peer cities, making comparisons difficult.

Key Outcomes

• No formal votes or decisions were made; this was a discussion-only work session.
• Staff will refine the general fund forecast and bring a follow-up presentation to council in October 2025 for direction on the fiscal sustainability action plan.
• The council is likely to consider a local option levy on the May 2026 ballot, pending further analysis and public engagement (including a community survey and potential polling).
• The city will continue to explore other revenue tools (e.g., business license fee restructuring, TLT increase) and expense efficiencies (e.g., fleet study, shared insurance pools).
• Council will prepare for upcoming decisions on the transportation utility fee (September 16) and engage with county officials on the library levy.