NEWPORT — An additional $1.1 million in tax revenue is projected for this fiscal year than is in the budget, City Manager Spencer Nebel told the Newport City Council during its regular meeting Monday.
Anticipating the COVID-19 pandemic would have a substantial impact on the city’s property tax and room tax collections, council passed a conservative 2020-21 budget that included cuts to programming and personnel. Twenty-two full-time positions were eliminated, and non-represented staff were required to take 10 furlough days.
Nebel told councilors Monday that property tax revenue had in fact been on par with previous years, and said he would recommend in a forthcoming supplemental budget that the council increase General Fund property tax revenues by $100,000. He said it was a conservative projection that he and Finance Director Mike Murzynsky were confident would be hit.
The city manager said he anticipated an even more significant increase in transient room tax revenues.
Given the more than two-month prohibition on tourist rentals imposed last spring, a 50 percent reduction in room tax revenue was built into the budget. Nebel told councilors Monday that occupancy rates following the rental prohibition had made up for much of the shortfall. As of Dec. 31, 2020, 95.3 percent of budgeted revenue had already been collected, with six months left to go in the fiscal year.
Nebel wrote in a report to council, “We are projecting, very conservatively, that we will have $1 million in additional revenues between the Room Tax Fund and the General Fund,” $460,000 and $540,000 respectively.
Owing to the unexpected surplus, Nebel said, he felt it was appropriate to consider a 2 percent cost-of-living pay adjustment for non-represented city employees. Employees represented by a union already received that cost-of-living adjustment on July 1, 2020. Increasing pay for non-represented employees retroactive to last July, Nebel wrote in his report, would “maintain parity in compensation internally” and allow the city to remain competitive with other municipalities. The total cost to the city would be $119,488.
Councilor Dietmar Goebel said he supported allowing the cost of living adjustment. He added he would also push for additional public arts funds, given the cuts to those programs in the 2020-21 budget.
Council voted to give preliminary approval for the cost-of-living adjustment. The measure will still need to be approved as part of a supplemental budget. Councilor Ryan Parker voted against preliminary approval.
“I think we should save that for the budget process and see where we’re at with those funds before they’re dispersed,” Parker said. “I would say it would be awful rosy to say that we have COVID under wraps with 29 counties still in the extreme risk category. I just don’t think we’re out of the woods yet.”
City Attorney David Allen noted that he would not be included in the cost-of-living adjustment, although he is a non-represented employee, but will wait until July 1 of this year as stipulated in his 2020 contract with the city.
Nebel said another potential use of the unbudgeted funds could an evaluation of city facilities for needed repairs, a recommendation of the Finance Work Group that will soon come before the council.
Mayor Dean Sawyer said, “I’m glad we’re doing this, from my perspective, because I think that we did not want to make the cuts last March, and I think we were all dedicated to bringing programs and employees back as soon as we could afford them, and this is just one step in that long ladder.”