Portland officials on Monday night warned that the fiscal year 2022 budget would likely include lingering challenges from the coronavirus pandemic.
While it will still be several months before an actual spending plan is discussed, city Finance Director Brendan O’Connell and City Manager Jon Jennings said there are a handful of revenue sources they had hoped would rebound by now, but have not even come close to bouncing back.
“The uncertainty we faced last year is still with us,” Jennings said.
One of the largest shortfalls has been in parking revenue. Jennings said parking garages have been “virtually empty” throughout the pandemic, with many people working from home or not venturing out. He said there is also concern that many monthly parking tenants in various garages will opt not to renew their leases.
He said city parking meters have also been idle, although there is hope that revenue source will eventually return.
O’Connell said the city’s Parks and Recreation Department has also taken a major hit since it relies on events like summer camps and sports events to sustain the department.
“Unfortunately, the estimate of them bouncing back was too optimistic,” he said.
Cruise ship revenue, O’Connell said, is nonexistent. “We’re not anticipating any significant cruise ship revenue this year,” he said.
Jennings said if programming for Parks and Recreation doesn’t come back this year, it will “make it that much more challenging” to put together the city budget.
Monday was the first workshop the full council had on the budget, although the Finance Committee began its discussions on Jan. 21.
The council only approved the fiscal year 2021 budget last September – $256.7 million, or nearly $7 million less than the previous operating budget – after the pandemic emergency upended city operations and delayed the budget process for several months. It includes $202 million in general fund expenses and $108 million in non-property tax revenue.
Prior to the pandemic, the city had been expecting that revenue to total $120 million.
The current budget resulted in a tax rate of $23.31 per $1,000 of assessed value for fiscal year 2021, the same as the previous year.
The 2021 budget also called for the city to eliminate 65 jobs, which O’Connell said was the city’s largest cut in more than a decade. He said the upcoming budget presents the city with additional labor challenges. For example, he said, several of the city’s unions agreed to defer regular cost-of-living adjustments.
In the coming years, O’Connell said, the city will also face increased debt service for pension obligations, which would add 13, 14, 15, and 16 cents respectively to the tax rate each of the next four years.
“Overall, there are fewer tools in our kit,” O’Connell said.
Jennings, who said it is important to get back on the regular budget cycle, will begin meeting with Mayor Kate Snyder and then the city councilors individually to find out their priorities. That work will be done in February, with the Finance Committee continuing to meet on its own and with its counterparts from the School Board.
Following those meetings, the Finance Department will create a draft budget for Jennings, who will present his recommendations to the Finance Committee. That panel will send the final budget proposal to the full council.