Portland budget gap, homeless crisis ‘tremendously challenging’

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A $2 million budget shortfall could result in the city abandoning the use of hotels as emergency shelters or result in a higher tax rate.

Mayor Kate Snyder on May 2 told the City Council the city manager’s proposed $269 million budget for fiscal year 2023, which would require a 5.5 percent tax increase, is the most challenging she has ever seen.

Seal of the city of portlandSnyder said the budget reflects the city’s priorities and obligations, and this budget reflects a “tremendously challenging” time. She said the biggest obstacle is how the city will respond to homelessness.

Like all other municipalities, she said Portland is required to pay for 30 percent of General Assistance costs, with the state paying the balance. A bill in the Legislature that would have reduced the municipal obligation to 10 percent did not succeed, leaving Portland “in a situation which is not what we wanted,” Snyder said.

“We have a ($2 million) gap between planned revenues and need,” the mayor said.

She said there are four options available.

The first is to no longer outsource overflow sheltering to area hotels. Snyder said this would require access to $22 million from the state to find other sheltering opportunities. The second option is to find $2 million worth of budget cuts. The third is to “reassess our approach to homelessness,” which would be a “significant pathway,” she said, and the fourth would be some combination of the other three options.

“We really are at a point where this won’t happen easily,” Snyder said. “We do have some difficult choices to make.”

During the past two years, the city reduced its operating budget because of revenue losses caused by the coronavirus pandemic, which helped to reduce the fiscal 2022 burden on taxpayers by 4 percent. It also is receiving more than $46 million in American Rescue Plan Act funding to offset revenue lost because of the pandemic.

Snyder said the fiscal year 2023 budget is even more challenging than 2020, which was delayed several months due to the early stages of the pandemic.

The budget, which takes effect July 1, is scheduled for final action on June 6. If approved as is, the city’s portion of the tax impact would be an additional $6.56 per $1,000 of assessed value. The school portion of the tax rate would increase by $7.05 per $1,000 of assessed value, increasing the mil rate to $13.61.

However, the council has called for a $1 million reduction to the School Board’s $133.1 million budget

The city’s portion of the budget would mean a tax increase of $119 annually for the owner of a home valued at $350,000. If both budgets were approved without any changes, the owner of a property valued at $350,000 would have to pay an additional $217 in taxes.

Some Portland voters face redistricting

Approximately 1,600 voters may be shifted to different City Council districts in a redistricting plan mandated by the most recent U.S. Census. 

Paul Riley, an election clerk for the city, told the City Council during a May 2 workshop that minor shifts in district lines would address changes made to legislative districts. He said the state-mandated changes created an “imbalance” between the boundaries of Districts 2 and 3 that could result in “administrative errors” when votes are counted.

The current boundary follows Interstate 295. Riley said the proposed change would move about 830 residents in the block north of Falmouth Street into District 2 and about 800 into District 3.

Additionally, he said a portion of District 3 voters from Congress to Vaughan streets would vote at the James A. Banks Sr. Exposition Building on Park Avenue, rather than Reiche Elementary School in the East End, because precinct lines would also have to change.

The proposed changes will come back for a first reading at the council’s first meeting in June, and therefore would not take effect for the June 14 elections. If approved, they would be in effect for the November general election.

Riley said the city would notify residents ahead of the election.

The changes are independent of the work of the Charter Commission, which has proposed increasing the size of the council to 12 councilors from nine, and the number of districts from five to nine, while retaining three at-large positions. If the commission proposals are approved by voters in November, they would require a separate redistricting process.

Riley said the city is required to ensure that every district is no more than 10 percent larger than the smallest district. District 1 is the city’s smallest, with just under 13,500 residents, and the four remaining districts are all relatively close to that. No district can have more than 14,836 residents.

— Colin Ellis