Anticipating ongoing financial challenges, City of Portland leaders are taking action now to stabilize next year’s budget and develop long-term solutions.
This week, Mayor Ted Wheeler directed city leaders to prepare for a difficult budget year ahead by making the most of voter-approved changes to Portland’s government. The city recently reorganized services in the lead-up to Portlanders electing new leaders in November and launching a new form of government in January.
“After taking office next January, the new City Council and Mayor will make important decisions about how to balance the budget for the fiscal year beginning July 1, 2025,” Wheeler wrote in a memo. “In the meantime, our obligation this fiscal year is to identify efficiencies, reduce expenses where possible and reasonable, and limit cost increases while maintaining critical services.”
Wheeler outlined several action items:
- This month, city leaders will recommend guidelines to curb spending during the current financial year – which can begin to address long-term financial challenges.
- Very limited new resources will be available during the fall “budget monitoring process,” an annual check-in to review and refine the city’s financial blueprint for the current year.
- City leaders should work across Portland’s new service areas to propose one cohesive budget for the next financial year, weighing tradeoffs across the organization.
- Community engagement, equity expectations and performance measures should be updated to improve the budget process in the city’s new form of government.
This direction comes just one month into a new financial year, which required cuts from almost every city bureau. “Unfortunately, the next fiscal year is expected to be at least as difficult as the last,” Wheeler said in his memo.
Several revenue sources are projected to be lower than prior forecasts. Development permits, parking fees and gas tax dollars have all declined over the past few years, while other revenue sources are growing more slowly than anticipated. Temporary funding is expiring, including pandemic-era American Rescue Plan dollars.
Meanwhile, health benefit rates are expected to continue climbing. Construction costs are up. Funds are committed to essential capital projects such as replacing the aging City Fleet headquarters. And the city is responsible for legal obligations, including a settlement with the U.S. Department of Justice regarding police use of force and a new Flood Safety Benefit fee to support the Columbia River levee project.
A detailed economic forecast will be released in December, once November tax receipts are available, said Chief Financial Officer Jonas Biery, who oversees the Budget & Finance Service Area. He and his team will lead the city’s budget process, working closely with City Administrator Michael Jordan and the rest of the City Leadership Team.
“Nobody wants to face a tough financial forecast,” Biery said. “The good news is, we have clear direction and collaborative leadership to deliver the best possible outcome for Portland.”