On the day the White House announced a formal end to national emergencies for the COVID-19 pandemic, the Portland City Council was informed that one of the biggest budget challenges they face is continuing programs propped up by one-time funding received during the pandemic.
At the Council’s first workshop discussion for the 2024 fiscal year budget on Jan. 30, city finance director Brendan O’Connell outlined challenges in developing the municipal budget.
While the “number one” challenge was overcoming inflation, O’Connell said the expiration of one-time funding, namely the conclusion of the roughly $46.2 million the city received in American Rescue Plan Act funding, could burden city taxpayers in coming years.
The city used ARPA funding for various projects, like boosting the city’s housing trust fund to promote and create affordable housing and funding mental and behavioral health programs and addiction programs. The Council also approved $2 million last summer to overcome a budget shortfall created by the city paying for hotel space for asylum seekers. The loss of these funds could add 32 cents to the mill rate, he said.
The mill rate is the amount of taxable assessed value a property has per $1,000. Portland’s current mill rate is $13.61 per $1,000 of assessed value.
O’Connell also named the expiration of one-time General Assistance funding provided by the state. Portland received around $7.4 million as part of a larger “bucket” of around $10 million provided to municipalities for GA reimbursement. The city is undertaking another lobbying effort for more GA reimbursement, O’Connell said, which could add a 50-cent increase to the mill rate if it is totally lost.
The new homeless services center is another challenge, O’Connell said, citing the lease cost compared with the Oxford Street Shelter will jump from $168,000 annually to $2.5 million. He said it would be “safe” to estimate a $4 million price tag to operate the shelter, which would add 27 cents to the mill rate.
O’Connell listed other challenges ranging from debt services, the loss of parking revenue at Ocean Gateway (where a public park is being built), ongoing collective bargaining agreements and payroll, county obligations, and the funding of two citizen-approved initiatives from the fall, clean elections and new tenants’ protections. He framed it as a $23.3 million impact to the budget, which would result in a nearly 24-percent hike on the municipal mill rate, and an 11.5 percent overall mill rate change. O’Connell said these aren’t increases the city “can live with.”
The workshop marked the first discussion the Council had with the budget. It would be discussed again on Tuesday night at a Finance Committee meeting after the Phoenix’s print deadline.
City Hall departments will file budget requests in the coming days for review. Interim City Manager Danielle West will meet in March with staff, councilors and the mayor to discuss priorities. West will present her budget proposal in April, and the Council will ultimately be asked to vote on it in May.
Councilor Mark Dion, who chairs the Finance Committee, saw this as a “stabilizing budget” following three years of “cash infusion” from the federal government. Receiving those funds was an effort to “try to recover lost revenues” from the pandemic and “to protect property owners,” he said.
“I see this cycle as bringing stability and a frank assessment of what’s available to us moving forward,” Dion said.
West cited the city’s ongoing struggle with filling nearly 270 vacant positions as another challenge that burdens the budget.
“Morale has been an issue,” West said. “Not being able to fill capacity even though we have open positions has been difficult.”