Newport council votes to warn Aug. 12 special meeting to seek voter approval for multiple borrowing measures

The Newport City Council voted July 7 to warn a special meeting on Aug. 12 that will ask city voters to approve borrowing measures tied to the water tower project, equipment and to refund operating deficits.

The Aug. 12 ballot will include five articles the council approved to be warned: permission to borrow up to $875,000 for a new fire truck; authorization to issue a bond anticipation note of up to $3,000,000 to cover construction-line obligations and related project costs for the new East Side water tower; a general obligation bond of up to $1,800,000 to refund a fiscal-year deficit in the general fund; authorization to borrow $1,000,000 to refund a sewer-fund deficit; and a proposed adjustment (about $220,000) to cover a budgeting error in fiscal 2026. Councilors approved the warning and separately adopted necessity resolutions for each borrowing item.

Why it matters: The measures are intended to keep ongoing construction and operations solvent while giving voters the final authority on new indebtedness. Several council members and staff said the requests stem from project cost increases, timing gaps between construction and bond proceeds, and a budgeting error discovered after the fiscal year began.

Council legal counsel David Grama advised that the actual ballot language should be kept concise and factual. "We do not recommend that council include explanatory sentences or phrases in warnings of special meetings," Grama said during the July 7 meeting, adding the council could prepare a separate informational sheet or FAQ for voters. He said the council needed to keep the warning short to avoid confusing the ballot question but that a companion information sheet "that explains, each article, the necessity" is appropriate.

Council members and staff said they will prepare a public informational hearing the night before the vote and an FAQ to explain the reasons for each article, how the amounts were calculated and alternatives if voters reject the items.

Key items and context - Fire truck: The original bond authorized by voters in March 2022 was up to $800,000; the council is asking voters to permit borrowing up to $875,000 to cover an increased purchase price and equipment. The council discussed that previously earmarked department funds had been expected to cover outfitting but those funds are now not available, prompting the higher amount to be included on the ballot. Legal counsel said the council should not expand the ballot language with explanatory text and should instead publish an informational sheet for voters. - Water tower bridge financing: Councilors agreed to warn an article authorizing a bond anticipation note (BAN) not to exceed $3,000,000 to pay off a construction line of credit (identified on documents as $2,400,000) and other project costs incurred on the East Side water tower. Staff said the city expects to repay short-term borrowing with proceeds from a voter-approved bond previously authorized (originally up to $4,985,000 in 2021, reduced by grant receipts). Finance consultant Chip Stearns said the BAN is gap financing and the city will not borrow more than the actual costs incurred. - General fund and sewer deficits: The council warned separate articles asking voters to permit borrowing to refund fiscal-year 2025 deficits: up to $1,800,000 for the general fund and up to $1,000,000 for the sewer fund. Councilors repeatedly said voters deserve an explanation for how these deficits arose and pledged to include that information in the public outreach materials. - Budget error (approx. $220,000): The council discussed an accounting error that resulted in double-counting state municipal tax revenue in the FY26 budget. The council debated whether to place an article on the ballot to authorize a tax adjustment to cover the $220,000 or to attempt internal budget reductions. Several councilors said they were not confident the council could identify $220,000 in cuts quickly and supported placing the question before voters, while also promising to pursue expense reductions going forward if voters reject the article.

Votes at a glance (summary of formal actions taken July 7) - Motion to warn special meeting for Aug. 12, 2025, using the language presented: Motion carried (voice vote, all in favor). - Necessity resolution to increase bonded indebtedness to purchase a fire truck from $800,000 to $875,000: Motion carried (voice vote, all in favor). - Necessity resolution authorizing a bond anticipation note up to $3,000,000 for the water tower project: Motion carried (voice vote, all in favor). - Necessity resolution to allow borrowing up to $1,800,000 to refund the fiscal-year deficit in the general fund: Motion carried (voice vote, all in favor). - Necessity resolution to allow borrowing up to $1,000,000 to refund the fiscal-year deficit in the sewer fund: Motion carried (voice vote, all in favor).

What comes next: The council directed staff to prepare an informational sheet for voters and scheduled a public informational hearing the night before the Aug. 12 vote. Legal counsel and the city's finance consultant said the informational materials should stick to facts and avoid advocacy. The warning and necessity resolutions are procedural steps to put the questions to voters; borrowing will only occur if voters approve the measures.

Quotes "We do not recommend that council include explanatory sentences or phrases in warnings of special meetings," said David Grama, the council's legal counsel. "You can create the information sheet that explains why we are here."

"We're not asking here for permission to borrow that money to spend on other things. It's clear ... that the only things that can be debited against this are things that were spent on the construction of the water tower itself," Chip Stearns, the city's financial consultant, said about the $3 million BAN.

Ending note: Council members said they want to return to the council in two weeks to review the voter FAQ and to finalize the posted warning (the packet used at the July 7 meeting had been updated multiple times). The council will publish the warning and informational materials in accordance with state notice rules prior to the Aug. 12 special meeting.