Portland City Councilors favored somewhere between a five- to seven-percent budget increase for the upcoming fiscal year, but expressed concerns with the kind of core service cuts that would be needed to keep the budget in check.
The Council got its first real look at what department requests would cost the city on Monday. Brendan O’Connell, the city’s finance director, said if all department requests were granted, it would result in a more than $29 million increase to the budget, which would increase the overall mill rate to the tune of 14.7 percent. The mill rate is the tax rate applied to assessed property value, and is measured per $1,000 of property value.
One factor to significantly impact the budget stems from a long-overdue revaluation of city properties in 2021. The process is commonly undertaken every 10 years, but hadn’t been conducted since 2006. That, plus an influx of new homebuyers moving to Portland during the pandemic, have skyrocketed home values to much higher figures than their previous valuations for city budget purposes. Higher regional property values means less revenue-sharing allocation money coming from the state, which municipal budgets have to make up for.
The city also has to account for increasing payments on its debt service for bonds issued in 2001 to pay for unfunded pension liabilities, which expire in 2026.
Some of the biggest increases come from staffing the new homeless services center on Riverside Street as well as increasing output at other city-run shelters. Despite the forthcoming closure of Oxford Street Shelter, O’Connell said that the city’s commitment to sheltering is “nearly doubling” in the upcoming fiscal year, with an increase of more than $6 million. Other increases are tied to continuing services originally funded by expiring federal pandemic-relief grants.
Mayor Kate Snyder said she wanted to keep the increase around the same as inflation, which O’Connell said is around 7 percent.
“These are pretty sobering numbers,” Snyder said following O’Connell’s presentation, where he explained the tax levy of all the budget requests would be an increase of $113 million.
The current budget approved by the Council is $269 million. According to O’Connell, a five-percent increase would add roughly $255 to the average homeowner’s tax bill. Every percent increase beyond that would add another roughly $50 per year.
Interim City Manager Danielle West will meet with city councilors individually to talk about their priorities as she begins to craft her budget proposal.