Portland City Manager Jon Jennings has proposed cutting 65 jobs and requiring virtually all departments to cut their budgets by at least 5 percent in a recommended city budget of $202 million for the 2021 fiscal year.
Jennings made the initial budget presentation to the City Council finance committee on Aug. 5, introducing a budget plan he called “drastically different” from his initial plan because of the setbacks the city has faced from the COVID-19 pandemic.
“This budget does include a tax decrease which I felt was very important for residents and businesses and others during these difficult economic times,” he said.
Finance Director Brendan O’Connell said the city finalized the budget proposal in July, after telling department heads that across-the-board reductions were necessary. He said the city manager’s office took a 20 percent reduction, while most others were reduced around 5 percent.
Only a few had increases in their proposals, O’Connell said: Health and Human Services, which is largely social services, and the city clerk’s office, mostly to handle the upcoming general election in November.
O’Connell said the hardest part of crafting the budget was accounting for 65 layoffs. He said several positions that were added in the fiscal year 2020 budget are now targeted for elimination, although nearly half of these positions are vacant. Jennings said many senior officials have been told to take furloughs during the pandemic.
O’Connell said the budget does not include cost-of-living increases for five of the city’s eight labor unions that are currently negotiating contracts. One union agreed to sacrifice a 2.75 percent increase, which O’Connell said was very helpful. The remaining unions, the City Employees Benefit Association and the Labor and Trades union, voted to maintain their COLAs, for a total of $400,000.
O’Connell said the proposed budget represents a $12 million shortfall in nonproperty-tax revenue, to $108 million. He said the budget overall represents an overall tax rate decline and includes $4.2 million in spending reductions.
O’Connell said the city is proposing reducing the tax rate by 5 cents per $1,000 of assessed value. However, county taxes – which are out of the city’s control – are increasing by 4 percent, meaning the overall property tax rate decline for city residents is just 1 cent per $1,000 of assessed value.
O’Connell said the School Department budget did not increase residents’ tax rates.
He said while the city did recover nicely in projected loss from excise tax, there were other revenue losses to account for. He said cruise ships, for example, are not contributing to local revenue this year and had been expected to add $2 million. He said Parks, Recreation and Facilities is down $2.5 million, since that department depends on events for revenue. He said parking, which had been expected to produce revenue from meters, garages, and tickets in a busy tourist season, instead is expected to show a revenue loss of $3.2 million.
He said COVID-19 expenditures were also an unexpected burden because departments had to account for not only purchasing personal protective equipment but also reconfiguring offices to allow social distancing when employees could return to work. There was $370,000 worth of these kinds of expenditures.
Revenue from the Portland International Jetport has also taken a big hit. Jetport Director Peter Bradbury said the deficit – a 39 percent revenue decline as passenger volume shrinks to about half of past years – is not one he could have ever anticipated.
Overall, Bradbury said, he is proposing a budget that is down 8.7 percent, with total expenditures of under $24.1 million, compared with projected revenue of just over $16.1 million. He said this puts the jetport “in the red” by about $7.9 million for 2021, which is “something we never would have imagined.”
He said business at the jetport “dropped like a rock” because of the coronavirus pandemic. The greatest decline this year was on April 14, Bradbury said, when passenger volume was down more than 97 percent from the same day in 2019.
“Business today was totally gone tomorrow,” he said.
The Aug. 5 committee meeting was the first of seven planned sessions.
O’Connell said department heads would have the opportunity to present their proposals to the committee, which met again on Aug. 6 and will meet again on Aug. 12. Following that, the finance committee will hold a public hearing via Zoom on Sept. 2.
The budget proposal will go to the City Council for a first reading Sept. 9, a workshop Sept. 14, and a second reading, public hearing, and expected vote on Sept. 21.
Jennings said the city automatically carried forward the 2020 budget for the last few months to give staff more time to look at revenue and analyze what they would have to do.