Monitoring City finances over time enables public officials and residents to assess the City’s financial condition and fiscal sustainability and identify problem areas that may need attention.
A financially sustainable city can meet its obligations and provide public services on an ongoing basis. It can address effects of fiscal interdependency between governments, withstand economic disruptions, and respond to changes in the environment. A financially stable city collects enough revenue to pay its short and long-term bills and finance major needs without shifting disproportionate costs to future generations.
Portland’s financial health is stable. Revenues have increased, debt is down, the City has a balanced annual budget, and the City’s liquidity and credit ratings are strong. The City needs to monitor its increasing liabilities and unmet infrastructure needs. During our audit, we found:
The City’s total net position continues to decline. Net position is the difference between what a government owns and what it owes. Some of the reason for the decline is due to increased liabilities, which the City has little control over. This is largely because of the City’s pension system for police and fire, as well as policy and assumption changes for the Oregon Public Employees Retirement System.
Some of the City’s assets are losing value faster than the City can make repairs. This also affects the City’s net position and is an area where the City does have control. While the City is making significant investments in its water, sewer, and stormwater assets, most transportation infrastructure is in fair to poor condition. It will be up to the Council to use the new 10-cent per gallon gas tax wisely to invest in the City’s streets.
In previous versions of this report, we recommended that the Office of Management and Finance provide Council with an annual analysis of the how the City’s long-term financial position could be strengthened. The Office is making progress towards this recommendation by producing a Popular Annual Financial Report for the first time this year, and presenting Council with a long-term fiscal health snapshot. Continued evaluation of the factors contributing to the decline in net position can enable Council to take actions to slow the decline.