Portland City Manager Jon Jennings is scheduled to present a $212 million budget proposal to the City Council on Monday that would begin restoring cuts made last year because of the coronavirus pandemic.

But with the help of federal recovery funds, the proposed budget for fiscal year 2022 will not increase the municipal portion of the property tax rate, though the proposed school budget calls for higher taxes.

Despite a nearly $9.4 million, or 4.6 percent, spending increase, the municipal budget proposed by Jennings would result in a 4 percent decrease in the municipal portion of the tax rate. However, property taxes may still increase, since the proposed school budget calls for a 5.5 percent increase in taxes and the manager’s budget does not yet include council priorities, other than funding for a study about how the city’s 12 historic districts have impacted residents and the local economy.

Jennings’ budget includes $8.75 million in revenue from the American Recovery Plan funding. That’s a small portion of the $48 million the city expects to receive over the next two years.

Without the federal funding, Jennings said in a memo to councilors, his budget would have increased taxes by 4 percent.

“I have made it a priority to run our municipal operations and implement Council policies in the most efficient and effective manner, and in a way that limits the burden on taxpayers,” Jennings wrote. “I believe it (is) also important to bring forward a budget decrease due to the implementation of the city-wide revaluation process. Should there be any additional priorities the Council wants to address, I felt it most appropriate for those decisions to be made by the Council before being added to the final budget.”

Jennings did not respond to interview requests on Wednesday, Thursday or Friday to discuss his budget proposal, which was made public on Friday.

Mayor Kate Snyder, who said she worked with Jennings on the budget, declined to comment Thursday. She is scheduled to deliver formal remarks on Monday, kicking off the council’s budget review process, which will culminate in a June 7 vote.

Next year’s budget will be the first following the city’s first revaluation in 15 years. Most property values citywide are expected to increase, which will cause the overall property tax rate to decrease. The exact impact of the revaluation has not been made public, but the assessor has said revaluations typically result in a third of property owners paying more in taxes, a third paying less and a third paying about the same.

Jennings said in a budget memo to the council that the city is still awaiting final guidance from the U.S. Treasury about how the federal recovery money can be used. However, he said one approved use is replacing revenue lost because of the economic shutdown caused by the coronavirus pandemic. The city says the pandemic has resulted in the loss of $28 million in revenue over the last year and a half from parking, parks and recreation, cruise ships, excise taxes and more.

Jennings said he and Finance Director Brendan O’Connell have developed a three-year plan to fill pandemic-related revenue losses with recovery money, which must be spent by the end of 2024. They’re proposing to use $5 million to $6 million in fiscal year 2023 and $2 million to $3 million in fiscal year 2024. That would leave roughly $30 million to $32 million in unallocated federal funding. 

Once lost revenues are replaced, Jennings suggested the use of the remaining recovery funding should be decided outside of the budget process by the City Council with staff recommendations.

Last year, the city cut 65 positions. But this year’s budget suggests adding back 20.5 full-time equivalent positions, including 7.4 positions at the city-run Barron Center nursing home.

The city’s Health and Human Services Department will see the biggest increase of any other department for the third year in a row. The department is proposed to receive a $2.7 million, or 8 percent, increase – the vast majority of which will go into the city’s General Assistance program, a voucher-based safety net program that helps people pay for rent, food and other necessities. GA would see an increase of $2.1 million, or 14.3 percent.

Permitting and Inspections could see a $246,000, or 12.8 percent, increase, in funding, which Jennings said was driven primarily by new positions needed to implement the five citizen referendums that passed in November. Those include two positions to manage the rent control ordinance and two other positions to handle marijuana retail licensing. Jennings said he expects those costs to be offset by additional revenue.

And public works could see a nearly $796,000, or 5.8 percent, increase next year to fill engineering positions, an island maintenance worker and a project coordinator.

Jennings’ budget message to the council draws a comparison to school spending. He said during his six years as manager, including this year’s proposal, the municipal budget has only increased taxes by roughly 4.6 percent. “To provide some context,” he wrote, the school portion of the tax rate has increased by 21.8 percent, while the county tax rate has increased by 29.4 percent.

“I’m proud of what we’ve accomplished over my six years as City Manager – the progress we’ve made in making municipal government more compassionate, innovative, inclusive, and transparent,” said Jennings, who is expected to step down from his post when his contract expires next year. “As well as our efforts to address some of the long neglected critical infrastructure projects.”

The council’s Finance Committee will review both the municipal and school budget proposals over the coming weeks. The council sets the bottom line for school spending, but does not control how the school money is spent.

The Portland Board of Public Education recommended a $125.2 million budget to the council earlier this month. That’s $5.3 million higher than the current budget, with $2.9 million in new investments proposed to further equity for students who are English language learners, have disabilities or are economically disadvantaged.

Portland’s tax rate is divided almost evenly between city and school spending. The combined mill rate is currently $23.31 per $1,000 of assessed value. The municipal and county assessment is currently $11.62 of the current mill rate, though Jennings’ proposal would drop that to $11.16.

The school budget would result in a 64 cent, or 5.5 percent, increase in the school portion of the tax, which is currently $11.69 per $1,000 of assessed value.

If approved as proposed, the combined budgets would result in a nearly 1 percent increase in property taxes, which would result in a $54 increase on a home with a tax-assessed value of $300,000.

The council’s Finance Committee is scheduled to hold a public hearing on the school budget on Thursday and a public hearing on the municipal budget on May 20.

The full council is scheduled to hold a public hearing on the budget on May 17 and vote on June 7.

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