Facing an historic budget shortfall, councilors opt for a no-frills budget for now but save several questions for later. Key decisions Wednesday include redirecting money from police to parks, and increasing rideshare fees and golf fees to fund core services.

Curbing homelessness, cutting costs and increasing revenue highlight an $8.5 billion budget approved by the Portland City Council on a preliminary basis Wednesday for the fiscal year that starts July 1.

Working from the "back to basics" budget proposed by Mayor Keith Wilson earlier this month, councilors proposed 126 amendments in the days leading up to the budget hearing. In a marathon session in Council Chambers that began at 9 a.m. and ended three minutes before midnight, the council ultimately approved about two dozen amendments – postponing several major decisions until a later session.

Now that the council has given preliminary approval to the budget, city officials will transmit it to the Tax Supervising and Conservation Commission for review as required by state law. That is not the end of the story, however. The council can still propose and vote on further amendments, so long as they don’t alter the allocation of any of the city’s funds by more than 10%. (See our frequently-asked-question guide for more details.)

The council is slated to consider more amendments June 11 and to vote on formal adoption June 18. Adoption makes the appropriations in the budget legally binding and is the final step in the budget process.

Several councilors emphasized that the City’s dire financial straits required tough choices and difficult votes. “We’re in a moment of crisis,” said Councilor Angelita Morillo.

Wilson’s proposed budget focused on curbing homelessness, increasing funding for Portland Street Response and other alternative crisis responders, strengthening public safety, and keeping parks and community centers open.

Some of the amendments that the council approved would:

Reduce the mayor's proposal for the Portland Police Bureau by $2 million to fund parks maintenance. The council hotly debated the impact of this action on the bureau.
Increase fees on rideshare services like Uber and Lyft from 65 cents to $2 per ride, generating $10 million to support the Portland Bureau of Transportation.
Increase golf fees to $5, generating $1 million to support parks maintenance.
Transfer $1 million from the golf fund to support parks maintenance and $1 million to support small-donor elections.
Reduce the councilors’ individual budgets by $120,000 each for a total of $1.4 million, to support shared council resources.
Draw down reserve funds to retain 31 positions in Portland Permitting and Development through the end of September.
Develop a comprehensive plan to manage the city’s infrastructure assets.
Eliminate the assistant city administrator position and evaluate salaries and classifications for bureau directors and deputy directors.

A comprehensive list of amendments that were approved will be available soon at Portland.gov/budget.

This budget marks the first in Portland’s new form of government – and addresses an historic funding gap mirrored in cities, counties and school districts across Oregon. The budget shortfall in the General Fund was estimated at $93 million in February. Shortfalls in other funds have pushed the overall gap to roughly $150 million.

Positions

Because the amendments did not all specify how many positions would be affected, budget officials are still tallying the impact on the City’s workforce.

For comparison, the budget proposed by Wilson called for 229.4 positions to be discontinued and 147 positions to be added, for a net loss of 82.4 positions. After the amendments, the exact number of positions discontinued and added remains unclear.

In addition, the number of layoffs may be different, because some positions aren’t filled. Some employees whose positions are discontinued may have the option to apply for vacant positions.

Background

Portland faced a historic budget shortfall this year, driven by falling revenues and higher costs.

On the revenue side, Portland’s economy is still recovering from the pandemic. Many downtown buildings struggle with high vacancy rates, pushing down their value and the tax revenue they generate. Parking revenues are down. Tourism has not yet returned to pre-pandemic levels. In addition, the city was able to use one-time resources over the past five years, which funded everything from homeless shelters to gun violence prevention. Some of those one-time resources came from a temporary influx of federal pandemic spending. These funds have now dried up.

Meanwhile, costs are climbing. Inflation has ratcheted up prices for the city, just like it does for consumers. Prices for equipment, materials, services, software, insurance, and maintenance have all increased. Over the past 10 years, personnel costs have been rising faster than inflation due to salary increases, health care insurance and retirement benefits. Other factors driving up expenses include legal obligations such as building curb ramps and support for fortifying the levees on the Columbia River and high overtime costs due to a shortage of police officers and firefighters.

Portland is not alone in this predicament. Multnomah County is facing a $16 million budget crunch. Seattle recently closed a $250 million budget gap and San Francisco is looking at a deficit of $1 billion.

Process

The city’s budget process was substantially different this year. In February, City Administrator Michael Jordan released draft budget recommendations. The city gathered extensive public feedback through a series of listening sessions, culminating in the proposed budget released by Wilson earlier this month. Councilors then introduced and voted on amendments to the budget.

Source: Portland City Council

Zann