Mayor Keith Wilson unveils new Portland city budget amid massive shortfall

On Monday, Portland Mayor Keith Wilson unveiled a budget for the city as it faces a massive budget shortfall. That deficit is $65 million if you don’t include the cost of the mayor’s ambitious plan to end unsheltered homelessness, or the city’s new obligations to pay for homeless shelters that Multnomah County previously paid for. Mayor Wilson’s budget calls for staff layoffs and cuts to some programs and services, while also expanding staffing for homeless services outreach, Portland Street Response and Portland Fire & Rescue. In February, City Administrator Michael Jordan outlined the scope of the deficit in the city’s general fund that is due to a range of factors, from steep declines in property and business tax revenues to mounting overtime and healthcare costs.

The 12-member city council has until June to approve a budget and has held budget listening sessions where it’s heard from constituents concerned about cuts to city programs and services. Joining us to share details about Mayor Wilson’s proposed budget is OPB’s Portland city government reporter Alex Zielinski.

Editor’s Note: During the interview, OPB incorrectly stated the amount of Mayor Wilson’s proposed cuts in his new budget. The actual amount is roughly $26 million. OPB regrets the error.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Portland Mayor Keith Wilson has just unveiled his proposed budget for the coming fiscal year. The city faces a massive shortfall, a deficit of $65 million before you add in the cost of the mayor’s ambitious plans to end unsheltered homelessness. In response, the mayor has proposed a budget that would lead to program cuts and staff layoffs, in addition to some program expansions. The 12-member city council has until June to approve a budget.

OPB’s Portland city government reporter, Alex Zielinski, talked to Keith Wilson about his proposal and she joins us now. It’s good to have you back.

Alex Zielinski: Great to be here.

Miller: Can you just first remind us how the city ended up with this shortfall?

Zielinski: There are a number of factors. First, you may remember that during the COVID-19 pandemic, cities like Portland received money from the federal government under the American Rescue Plan Act, or ARPA. That was one-time money, not an ongoing revenue stream, and Portland used that money to prop up a number of programs during COVID that still need to be funded, like homeless shelters, for instance, and salaries for folks doing homeless outreach. So that’s a piece of the deficit, finding money to fill that.

The city has also seen property and business taxes plummet since COVID, as offices have left Portland or have gone entirely remote. Those taxes make up 75% of city revenue. And then there’s just stuff that all companies are dealing with – rising healthcare costs for employees, inflation. So it’s not like there’s just one issue that has hurt the budget, it’s this mix of factors.

Miller: I want to start here with the budget increases. What would the mayor put more money towards at a time when some departments are facing cuts?

Zielinski: There’s not a ton of new things being added, since it’s a cut budget year, like you said. There are a number of programs, though, that were threatened that he’s restoring funding for, like some parks programs, gun violence programs. But in terms of new things, Wilson wants to increase the number of staff who do outreach work in homeless camps, increase programs that clean sidewalks outside of shelters and remove graffiti. He’s also looking to increase the size of the Portland police budget with the intent to hire more officers to do away with these big overtime costs, which is another issue that led to the shortfall.

One add is the cost to keep the city’s village-style shelters open. The city was under an impression that Multnomah County would be taking over control of these shelters in July, but the county backpedaled, so the city’s stuck with that bill and it’s $38 million. And the most well-known addition is Wilson’s new program to open 1,500 overnight shelter beds by December, which he initially estimated costing around $28 million.

Miller: So what is happening with that plan?

Zielinski: Well, it’s still on track. Right now he’s opened about 250 new beds towards that 1,500 goal. If you remember, the plan also intends to open four daytime shelters and one storage facility. There was one change that was dropped into his proposed budget around this. Apparently, he’s now sticking with only two indoor day shelters instead of four, and then opening two outdoor day shelters, which brings the price tag down to $25 million.

More importantly, Wilson believes that he can fund the entire plan without touching any city funds. He’s counting on $15 million from Metro Regional Government, and counting on about $10 million from the state after the legislative session ends. It’s worth noting that none of the state money is guaranteed. State lawmakers are still waiting for a revenue forecast to drop before making any major spending decisions, so it’s a bit up in the air.

Miller: Let’s turn to the proposed cuts. How big would they be?

Zielinski: In all, it’s around $10 million citywide, but some bureaus are hit harder than others. The ones hit the hardest are Portland Parks and Rec, Transportation and the city’s Permitting and Planning Bureau. At parks, he’s looking at reductions in facility maintenance, bathroom cleaning, trash cleanup and landscaping. With transportation, he’s proposed cuts to sewer maintenance, street sweeping, street paving. All told, Wilson wants to cut around 180 jobs across the city.

Miller: You mentioned some of the biggest staffing cuts would be to the bureau that does permitting. How did the mayor explain that part of his proposal?

Zielinski: He’s asking to cut 65 jobs in permitting. That’s about 19% of the current staff size. These are people who process building permits, and go out and evaluate construction sites. This office relies a lot on the permit fees to stay financially stable and Portland has seen a serious decline in new construction in recent years, so the budget is tight. Here’s how he explained it to me …

Mayor Keith Wilson [recording]: Five, six years ago we were building 5,000 homes. Today, our permitting is 800. To some degree, some people had prognosticated this year that we’re gonna have 500 new housing units. When you think about that, that’s a 90% decline. Unfortunately, the biggest cuts are in permitting because the activity is so slow. And I’m incredibly disheartened about that because those are good people that have given a lot to Portland.

But also, we have to take this as an opportunity to address the permitting slowness that a lot of people complained about, so we’re using technology as an enabler. We’re gonna build back better. Once we start getting those permits coming back in, the team is committed to turning them faster, with a higher level of quality to just meet the moment.

Zielinski: It’s worth noting also that Wilson just announced a plan with the governor to suspend some city permitting fees in order to attract new construction, and if that does increase development, the permitting department might not have the staff to handle it under this plan.

Miller: What kinds of broader city bureau restructuring is the mayor asking for?

Zielinski: Since he entered office, he’s been really laser focused on streamlining some jobs that exist in every city bureau. For example, every bureau, from police to water, has a media spokesperson. They all have equity officers, IT folks, HR. What Wilson wants to do is put these under one umbrella and remove some redundancies, which, as you might guess, means layoffs. It’s not sure how many yet, but he’s suggesting cutting these shared positions by $10 million. That’s significant. So that’s where that lands.

Miller: How have public employee unions that represent city workers been talking about the possibility of layoffs in the lead up to today’s announcement?

Zielinski: They’re worried and they have been for months. Earlier in the budget process, a number of city unions came out and joined together to send the mayor a letter offering some tips on how to balance the budget without layoffs. It appears he didn’t take them up on it, necessarily.

One union that is especially concerned is the City of Portland Professional Workers Union. It represents a lot of city employees in those positions I just mentioned: communications, equity, IT. The union has been in negotiations with the city over its first contract for nearly a year and a piece of that contract includes the rules around layoffs, so they really want to make sure their contract is finalized before the budget drops to protect their members. So that’s kind of where things land.

Miller: Are there programs that had been on the potential chopping block that have survived in the mayor’s proposed budget?

Zielinski: I mentioned before that Portland Parks and Rec is going to see a lot of cuts with maintenance and tree care, but there are also a number of previously threatened programs that Wilson has found money for. Here he is talking about the tradeoffs …

Mayor Wilson [recording]: We were going to close SUN [Community] Schools. We were going to close community centers. We were going to defund parks programming for our youth. I added it all back, because we have to focus on community safety, community health. Did I have to make cutbacks on park maintenance? Yes, but when I looked over arborists, for instance, we were spending about 9,000 hours for arborists three or four years ago. We’re spending over 18 hours today. So cutting back 3,000, 4,000 hours of arborists made sense to me because we had already plussed it up by 100%. It’s important. I agree with that. But to what extent are we willing to maintain our trees versus our kiddos?

Zielinski: I should add that probably the loudest, most organized group of people who showed up at the city’s budget sessions were parents of kids who rely on these programs and city employees who run youth programs. So this was very much in response to that.

Miller: It’s interesting to hear that because so often, and maybe it’s cynical, but you think what difference do public comments make? But it seems like sometimes squeaky wheels do get a response, they get some grease. What did the mayor say about potential efforts to bring in more revenue?

Zielinski: He’s proposed increasing some city fees to boost revenue, specifically fees for Airbnb hosts, rideshare companies and people who use Portland golf courses. He’s also pushing for a 25% increase to parking meter costs. What he’s not suggesting is any new taxes.

It’s something that city councilors have discussed, like taxes needed to fund new city infrastructure programs. There’s also the voter-approved tax on big retailers, which funds are meant for programs that cut greenhouse gas emissions. The program is called Portland Clean Energy Fund or PCEF, and in the past it was used to backfill the city budget, even when that’s not necessarily its purpose. Some councilors have suggested doing that again. Wilson just really wants to stay focused on what voters supported and not let the city’s unregulated budget problems hack away at it.

He did tell me that he is interested in some new tax or revenue stream down the line to focus on maintaining city roads. So I think that’s something we can expect in a year or two.

Miller: This budget was only officially released today, I think 16 minutes ago is when it became public. Have any members of the city council started to give a sense for what they think about it?

Zielinski: There’s a state law that limits councilors from speaking publicly about the proposed budget until it’s formally presented to them by the mayor, and that’s going to happen on Wednesday. So technically no, but I’ve spoken to a number of them off the record and there’s definitely going to be some amendments coming from councilors to make changes – folks want to tweak revenue here and there. Councilors will spend the next few weeks proposing amendments to change the budget, and then in early June, councilors will vote on amendments and the budget itself. The final vote right now is scheduled for June 18, so by mid-June we should have a budget adopted.

Miller: Alex, thanks very much.

Zielinski: Thank you.

Miller: Alex Zielinski is OPB’s Portland city government reporter.

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