Milwaukie Budget Committee approves biennial spending plan, holds property tax rate steady

The Milwaukie Budget Committee voted to approve and recommend the city managerproposed biennial budget totaling $208,917,000 for fiscal years 2027 and 2028 and to forward the package to city council with the existing certified property tax rate unchanged at $4.1367 per $1,000 of assessed value.

The budget hearing included department presentations, line-item clarifications and extensive discussion of capital needs and utility finances. Finance Director Michael Osborne and Public Works Director Peter Passarelli told the committee that utility rates will need adjustments to finance multi-year projects, most notably plans to treat per- and polyfluoroalkyl substances (PFAS) in the citywater supply; staff modeled an approximate 8% water revenue requirement to smooth the financing and reduce the likelihood of a steep single-year spike later in the decade.

"This was essentially the first biennium where we had enough increment in the bucket to start seeing and making things happen in the URA," Joseph Brillio, assistant city manager and executive director of the Milwaukie Redevelopment Commission, said as he summarized urban renewal accomplishments and priorities, including business grants and downtown capital work.

Why it matters: committee members pressed staff on the size of utility fund balances and reserve policy. Several councilors said they were uncomfortable with sizable fund balances at the same time residents face steady cost increases; staff said much of the cash is earmarked for near-term capital and loan-funded projects and that using gradual rate increases is a way to spread costs over time rather than impose a large one-time increase later. The committee asked staff to return with an explicit review of reserve-policy thresholds and customer-assistance options during the third quarter of fiscal 2027.

Key details - The committee approved the biennial operating and capital plan and recommended no change to the certified property tax rate (4.1367 per $1,000) for 2027 and 2028; bond levy amounts were included in the motion. - Staff identified a roughly $29 million PFAS capital program for consolidated treatment and said they are pursuing Safe Drinking Water revolving loan funds, some of which would be forgivable; the loan structure and required debt service factored into the modeled rate increases. - Staff proposed a water revenue-design that protects low-volume residential users from the bulk of the increase by relying more on base fees and a tiered consumption structure; the fiscal model aims to smooth increases so future spikes are smaller. - The committee directed staff to return with a reserve-policy review (including potential policy maximums) and options to target assistance to income-qualified ratepayers.

What department heads said - Michael Osborne, finance director: reviewed technical fixes to replacement pages, underlined conservative interest assumptions and confirmed the 50% URA reserve is an internal policy rather than a state law requirement. - Peter Passarelli, public works director: described a phased approach to PFAS treatment (a raw-water transmission line and a new treatment facility sized to allow consolidation) and said the city is pursuing low-cost financing and grants to reduce rate pressure.

Next steps: staff will bring a follow-up package to the committee with a proposed schedule for the reserve-policy review, additional details about the PFAS financing plan and options for targeted rate assistance. The committeerecorded the motion to recommend the budget to council and closed the public testimony portion of the hearing.