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Sobering news arrived from City Hall on Friday morning: The city of Portland’s budget deficit for the upcoming fiscal year will likely to grow to $100 million, forcing elected officials to make hard decisions about where to cut services and personnel.
Interim city administrator Mike Jordan, who oversees the administrative branch of the city under Mayor Keith Wilson, wrote in a budget memo to the Portland City Council that the projected $27 million budget shortfall projected earlier this year will likely grow to $100 million before the 2025–26 fiscal year.
WW has previously reported that the real size of the city’s budget shortfall was double what had been publicly revealed. Even so, Jordan’s memo was grim. It laid out, for the first time this year, just how serious the city’s budget crisis is—and what could be on the chopping block in terms of services when the city balances the budget.
“We expect that required reductions will have broad impact on all areas of the City—from field staff to management, from planning to maintenance to capital investment, to nearly all City services, and in all city council districts,” Jordan and the city’s chief financial officer, Jonas Biery, wrote in the letter to the City Council. “Acknowledging this reality is difficult and identifying solutions will be difficult to do.”
There are a number of reasons the city is in a $100 million hole.
First, declining property tax revenues paired with inflation and increasing costs of city services mean that the city’s income is lagging behind its expenditures in the general fund.
Then there are the bureaus that generate their own revenue to support their annual budgets, like transportation, parks and permitting. Those bureaus are funded primarily by non-general funds, like the gas tax for transportation, permitting fees paid by developers for the Bureau of Development Services, and the Parks Levy to sustain Portland Parks & Recreation’s operational costs. But nearly all of those special sources of revenue are also declining and cannot keep up with bureau expenditures, meaning each of those bureaus individually is looking at a significant budget shortfall.
Then there are one-time dollars for programming that are expiring this year. Should the city want to continue funding all of its current programs buoyed by federal relief dollars and other one-off sources of funding—like the city’s temporary alternative shelter sites and various public space transformation programs—it would cost roughly $40 million, according to city officials.
Finally, rising health care costs and ongoing labor union negotiations are likely to tack on another $5 million to $10 million to the deficit. (WW has previously reported on the expiration of one-time dollars and hidden labor costs.)
All added up: Approximately $100 million will be needed to maintain the city’s current levels of service.
In a joint statement, Mayor Keith Wilson and City Council president Elana Pirtle-Guiney wrote: “We inherited an unprecedented and painful budget crisis,” adding that they are “steadfast in our commitment to exploring every option, thinking creatively, and working together as a team to make sure we keep city services moving.”
In his memo, Jordan laid out city services, including parks, transportation and emergency response, that might be on the chopping block for the city to achieve a balanced budget. However, the proposed cuts would not make up the entire $100 million deficit—only a portion of it.
The 12-member City Council is the city’s official budget committee and therefore must approve the city’s final budget. Jordan is expected to release his first budget draft in late February.
Potential cuts in Jordan’s memo today include: $23 million from Portland Parks & Recreation that would result in less frequent trash pickup and park maintenance visits, fewer summer programs, and the closure of a community center; $10 million from Permitting & Development, which could significantly slow down the time it takes to obtain building permits and receive necessary inspections; $10 million from the city’s central administration that would reduce the availability of 311 hours and cut staff in human resources, the City Attorney’s Office, and in the budget offices, among other items; and $25 million from the Portland Bureau of Transportation that would result in fewer road and pothole repairs, RV removals and street cleanings.
City officials laid out no concrete ideas for cuts to the Portland Police Bureau and Portland Fire & Rescue, as it was only earlier this month that Jordan, at the behest of members of the City Council, asked public safety bureaus to present cut concepts. In recent deficit years, the public safety bureaus have been exempt from budget cuts. That could change this year.
Jordan and Biery made it clear in their Friday memo that layoffs were inevitable to close the budget hole.
“The combined concepts—excluding Police, Fire and Emergency Communications, which are still under development—include reductions of over 120 [full-time employees] citywide,” Jordan and Biery wrote. They warned that the number would inevitably grow in the coming months.