Portland Mayor Ted Wheeler turns to clean energy tax to fix budget woes

By Alex Zielinski (OPB)
May 6, 2024 11:33 p.m.
Portland Mayor Ted Wheeler as he speaks at a press conference at the Jordan Schnitzer Museum of Art, in Portland, April 2, 2024. Facing brutal budget shortfalls, Wheeler is turning to a specialized revenue stream to keep the city running this year.

Portland Mayor Ted Wheeler as he speaks at a press conference at the Jordan Schnitzer Museum of Art, in Portland, April 2, 2024. Facing brutal budget shortfalls, Wheeler is turning to a specialized revenue stream to keep the city running this year.

Kristyna Wentz-Graff / OPB

Facing brutal budget shortfalls, Portland Mayor Ted Wheeler is turning to a specialized revenue stream to keep the city running this year.


Wheeler’s proposed $8 billion budget – a $1 billion increase from the current budget – relies heavily on revenue collected through the Portland Clean Energy Fund, the voter-approved tax on large retailers meant to fund renewable energy projects and address the effects of climate change in communities of color. That fund has brought in far more revenue than initially anticipated, with the city forecasting an additional $540 million over the next five years. Wheeler said this pool of funds is “critical” to keeping the city’s budget whole during a financially rocky year.

“Without the partnership of the Portland Clean Energy Fund, we would’ve had to take more significant cuts,” Wheeler said at a Thursday press conference.

Budget season began last year with an anticipated shortfall of around $70 million, for a number of reasons. The revenue streams that have historically kept some bureaus afloat are drying up: For instance, the high cost of building in Portland has deterred construction, leading to a drop in permitting revenue that fuels the Bureau of Development Services. The city is also legally required to set aside funding for new voter-approved projects, like the creation of a new police oversight board and the coming overhaul to the city’s form of government. And, similar to last year’s budget, the city is seeing the one-time funding offered through federal COVID-19 emergency programs expire. And skyrocketing inflation rates only worsened the city’s budget woes.

The city’s revenue falls into two categories: discretionary general funds and non-discretionary funds. Non-discretionary dollars make up about 90% of the entire budget, and come from grants, utility fees, contracts and other revenues that are specifically dedicated for a particular purpose such as water and sewer utilities. Discretionary funds, which come from license fees and taxes, have much fewer restrictions on how they can be used. This year, the mayor has an estimated $732 million in discretionary general funds to spend. According to the City Budget Office, PCEF revenue accounts for about $177 million of the general fund.

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As the city’s general funding streams dipped, it saw specialized tax-funded revenues, like PCEF, skyrocket. Wheeler said his proposed budget uses PCEF funds to pay for eligible programs in ways that shore up additional dollars to pay for general city programs.

“By matching specialized funding sources like PCEF with appropriate projects, we were able to then fund other city priorities,” he said.

That includes using $25 million in PCEF dollars to transition the city’s vehicle fleet from gas to electric, and $1 million to lease a new building for city vehicle maintenance, replacing the city’s current, structurally unsafe maintenance shop in North Portland. Wheeler’s budget also suggests spending $8 million on grants to make clean energy upgrades to rental housing, and more than $30 million in various Portland Parks & Recreation programs that care for city trees and improve energy efficiency in parks buildings. And he proposed using $42 million to replace a streetcar, maintain bike lanes, replace street lights with LED bulbs and other programs in the Portland Bureau of Transportation.

Wheeler said he’s confident these funding decisions don’t stray from PCEF’s purpose.


”It is still being spent consistent with what the voters had intended,” he said, “and that frees up more of these discretionary dollars to support ongoing city programs that are also important to the community.”

Megan Horst is a co-chair of the PCEF Community Advisory Committee, a commission that oversees the way the fund is being distributed. Horst said she wasn’t surprised by the way PCEF is being used in Wheeler’s budget proposal, because the committee had given Wheeler’s office feedback on this plan.

“I think as a whole, the committee saw a lot of alignment with the funding and advancement of PCEF’s mission and values and its benefits to PCEF’s priority communities,” she said.

This budget-balancing act allows Wheeler to fully fund Portland Fire & Rescue, which was facing dire budget cuts due to a costly overtime problem. That was caused by a labor agreement that shortened firefighter workweeks, leading to more overtime requests. The mayor proposes an additional $6 million in ongoing funds to the bureaus to hire 10 firefighters to address overtime costs.

Another Fire Bureau program saved from cuts: Portland Street Response. Initially facing $3 million in cuts, the first response program’s budget will remain at its “current service level” for the next year. According to the City Budget Office, that means a budget of $7.4 million. Last year, the program had a budget of $10 million.

Potential cuts to Portland Street Response have taken center stage during public hearings on the budget over the past month. This concern comes after last year’s budget shortfalls caused the city to hit pause on a plan to expand the program to begin operating 24-7.

By maintaining current service levels, the mayor’s budget does not cover that expansion.

An advocacy group called Friends of Portland Street Response said they are grateful that Wheeler avoided including the proposed cuts in his budget.

“However, this proposed funding level is below the amount budgeted last year and far below the amount needed to expand Portland Street Respond to 24-7 citywide coverage, as was previously approved by Council in 2022. "

Other potential cuts that drew public attention have been made whole in Wheeler’s proposed budget, like a self-defense program for women and LGBTQ+ Portlanders and a gun violence prevention program called Ceasefire.

Wheeler’s budget doesn’t identify significant job cuts, but it does propose many “realignments,” or decisions to move staff from one bureau to another to address changing needs. For example, he proposes cutting dozens of staffing positions from Portland Parks & Recreation, Portland Bureau of Transportation, the Portland Water Bureau, and the Bureau of Environmental Services and moving them into the new Portland Permitting and Development Bureau.

City Council will discuss Wheeler’s proposed budget at a Tuesday work session. Members of the public can comment on the budget at a Thursday afternoon hearing. Council will hold its first budget vote next week. It will go into effect on July 1.

OPB’s Monica Samayoa contributed to this story.