Newport leaders ask voters to approve borrowing to spread $1.8M deficit and correct $220,000 budgeting error

At a special council meeting Aug. 11, Newport officials asked voters to approve two related questions on the Aug. 12 ballot: Article 3 would allow the city to issue general-obligation bonds or notes not to exceed $1,800,000 to refund an accumulated deficit in the general fund; Article 5 would authorize an increase of $220,000 to the amount to be raised by taxes to correct an income-side budgeting error in the fiscal-year 2025 budget.

Mayor Rick Alfred Chase and Council members said the $1.8 million general-fund shortfall reflects a multi-year accumulation of spending in excess of recorded revenues. The mayor said the city traced a large portion of the problem to a repeated bookkeeping error: municipal adjustments—state payments that return property-tax revenue to municipalities—were counted twice in the city’s revenue figures. Mayor Chase said the total of those duplicate counts over several years amounts to about $1,290,000 and that $220,000 of that double-counting occurred in the current budget year.

Mayor Chase summarized amortization effects for a homeowner as an example: "for someone who owns a $200,000 house, if we had to pay it off all at once in 1 year, that would mean an $1,100 hit; if it were amortized over 10 years, it would likely be in the neighborhood of $165 per year," and longer amortizations lower annual impact. Financial consultant Chip Stearns and members of the finance task force are conducting a deeper review and producing simplified balance-sheet reporting the council said it will use to prevent similar accounting errors going forward.

Residents asked why voters are being asked to authorize borrowing before all investigations are complete. Officials said the city has an immediate cash-flow problem that requires short-term solutions: without voter authorization to spread the liability, the city charter would require the accumulated deficit be paid within one year, which officials warned would necessitate a large, immediate tax increase. Mayor Chase and the finance committee emphasized the council’s commitment to avoid further deficit spending this year and to pursue budget cuts where feasible.

Discussion vs. decision: No council action to borrow was taken at the Aug. 11 meeting; voters were asked to decide on Aug. 12. Council members described the borrowing request as a remedy for past accounting and rate-setting issues and said staff and the finance task force will continue detailed investigations and monthly financial reviews to strengthen controls.

Ending: Officials urged residents to attend the Aug. 12 ballot and invited community participation on finance task forces; they said the council will refine reporting and budget controls in the coming months.