What's the Deal with Portland's $100M Budget Shortfall?

Portland’s budget office announced last week that there’s an expected $100 million shortfall going into the next fiscal year, which begins in July.

Here are some quick facts to understand the news:

How big is the city budget?

It’s an $8 billion budget. So one way of looking at the shortfall would be: This is around 1% of the overall city budget.

Why is $100 million significant then?

Most of the city budget — about 90% — is already set. For example, gas tax revenue goes to fixing our streets. Another example: Your water bill pays for water service.

This budget shortfall is more significant when talking about the discretionary budget — which is on the order of $700 million. That’s the part of the budget that city leaders have some say in how to spend. Then a $100 million shortfall could look more like a 14% cut.

Why is there less money going into next year?

A City Hall memo from last week outlines few key reasons:

First, about $40 million came from one-time sources of funding, like federal pandemic relief funds, that will disappear.

Second, $27 million is needed to maintain existing services at their current levels. The increased costs of salaries and benefits are rising faster than tax revenue.

Third, the city is expecting to have some "significant new expenditures," according to the memo. Specifically, the city anticipates spending money on raises and benefits once labor contract negotiations are complete and also having more costs related to addressing homelessness.

What will the cuts look like?

It will include cutting positions that are already vacant and likely layoffs. That also means programs and services will get cut. But that’s the big question in front of City Hall right now.