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Multnomah County Chair Jessica Vega Pederson added new tension to a difficult budget season by announcing today that the Joint Office of Homeless Services now faces a $104 million budget shortfall.
That gap comes despite the Joint Office receiving a significant annual boost from the supportive housing services tax, which provided Multnomah County $134 million for the current fiscal year ending June 30.
“Today, I call on our state and regional partners to help avoid the closure of shelters and homeless services,” Vega Pederson said at a grim Friday afternoon press conference. “With this grim budget outlook, Multnomah County cannot do this alone.”
Vega Pederson said lower-than-expected SHS tax revenues—both in the current fiscal year and projected revenues in the next fiscal year—are causing the shortage. Also adding to the gap: cuts in the county’s general fund this upcoming year, expiration of one-time American Rescue Plan Act funds, and less funding from the city.
“Multnomah County has done what it said it would do in getting money out the door quickly,” Vega Pederson said. “Without help from our regional partners, this gap will mean cutting hundreds of shelter beds.” Other cuts will include outreach services and rent assistance, she said. Vega Pederson said the county would not announce which shelters will be first to close, should the gap not be filled—but the most recent information released by the county Friday afternoon says the closures would total 230 beds. (A top county official says one of those shelters will likely be the Wy’east Shelter, a 110-bed facility that prioritizes veterans.)
In a statement to WW, Gov. Tina Kotek said she is “not prepared to take a position on whether to send one more state dollar to Multnomah County unless and until my office and the Legislature have clear answers” about why the county is including homeless services in its general fund cuts. Kotek says she learned just yesterday about the Joint Office shortfall.
County officials said that they were able to build out more programs last year and services because of ample carryover funds from previous years' underspending and with other one-time funding sources. (TheJoint Office’s total budget for the current fiscal year is $430 million.) Now, though, with the lower revenue projection whiplash, the county says it cannot carry on some of those programs.
Among its other impacts, Vega Pederson’s announcement is likely to increase tensions between the county and regional government Metro, which collects the tax on high marginal incomes and distributes the cash to Multnomah, Washington and Clackamas counties to fund programs for people living outside and in vehicles. It may also present new obstacles to Portland Mayor Keith Wilson’s ambitious plan to shelter people sleeping outdoors.
Vega Pederson said Friday that she’s sent letters to both the state of Oregon and Metro, asking that they provide funding to prevent “devastating” cuts to homeless services. She’s requesting $55 million from the state and $30 million from Metro.
The shortfall comes as Multnomah County wrangles with Metro over the future of the supportive housing services tax.
After raising more money than expected during the COVID-19 pandemic, when emergency government programs and an improbable bull market in stocks boosted taxable incomes, SHS receipts have fallen back to earth. The latest forecast, released in December, shows the program bringing in $323 million in the 2025 fiscal year ending June 30, down from the $375 million forecast for the same period back in November 2023. Even at the diminished rate, the tax is bringing in more than the $250 million promised by the 2020 ballot measure that created it.
Metro Council President Lynn Peterson raised further alarm among the counties last month when she proposed a ballot measure for May that would lift the restriction on using SHS money only for services like day shelters and drug recovery, and divert some to building and buying low-income housing. She also proposed lowering the tax rate over time in exchange for extending the levy from 2030 to 2050.
Multnomah County commissioners wrote to Metro councilors soon after, urging them to delay any ballot measure “until we better understand the overall impact of these changes, including reductions in revenue.” Metro has since agreed to push any ballot measure to November.
This is not the first point of tension between Multnomah County and Metro over the SHS tax; after the county fell behind on spending tax dollars in 2022, Metro instituted a “corrective action plan” for the county to increase its spending, which it has since achieved. The county initially pushed back on Metro’s plan, and Metro councilors continue to call for greater transparency around how Multnomah County is spending the tax revenue.
Metro spokesman Nick Christensen said in a Friday afternoon statement that Peterson is just learning of this JOHS budget shortfall now. “Our team will be working over the coming days to come up with ideas on how to address this. Our top priority—everyone’s top priority—needs to be helping people get housed and sheltered, and maintaining our successes," Christensen said. “We owe it to them, and to each other, to make sure they stay housed or sheltered and don’t end up back on the streets—while also working to end chronic homelessness in the Portland region.”
Word of the shortfall comes two months after Vega Pederson told county department heads to prepare for budget cuts, as first reported by The Oregonian. In a November letter to department leaders, Vega Pederson asked them to submit plans for reductions of up to 12%. She hoped to avoid cuts to homelessness, behavioral health, and addiction programs, The Oregonian said.
In November, the county’s budget office told the board of commissioners that the county faced a $21 million shortfall in the $760 million general fund because commercial real estate values had fallen far enough to dent the amount of tax paid by property owners. Property taxes are the main source of revenue for the general fund.
Worse yet, payroll is taking up more of the budget because inflation is boosting cost-of-living adjustments. So-called COLAs are often built into labor contracts. Every percentage point increase in base pay represents $4.1 million in expenditures, county economist Jeff Renfro told commissioners in November.
The general fund accounts for about 20% of the county’s $4 billion budget. The rest is funded by the Metro’s SHS tax, the Preschool for All tax, and cash from state and federal programs.
During Friday’s press conference, Vega Pederson and JOHS director Dan Field emphasized that they’re not asking for any new tax dollars to fill the $104 million budget gap, but instead seeking taxpayer revenues from the state and Metro that already exist.