Portland’s city manager unveiled a $269 million general fund budget Monday amid several challenges that include rising inflation, an influx of asylum seeking families in need of emergency shelter and persistent staff shortages.

“Overall, I think this is a reasonable budget given everything that we’re facing,” Interim City Manager Danielle West said during a City Council meeting Monday night.

West’s proposed budget, which now goes to the council’s finance committee for consideration, includes a 5.5 percent increase in the city side of the tax rate. Taken in conjunction with a proposed school district tax rate increase of 4.1 percent, the combined tax rate increase would be 4.8 percent. That would be an increase of about 62 cents on the current tax rate of $12.99, or a tax increase of $226 on a $365,000 home.

The $269 million doesn’t include another $65 million for self-funding enterprise accounts, such as the Portland International Jetport and sewer and storm-water fees, which bring the total budget not including school spending to $334 million.

The general fund, which serves as the basis for the tax levy, is up nearly 27 percent from the current year’s $212 million, though that doesn’t include an additional $20 million the council approved on an emergency basis this month to cover increases in the city’s General Assistance budget due to the large number of asylum seekers arriving in Portland.

The General Assistance expenses will be reimbursed by the state and federal government this year, though part of the challenge with the coming year’s budget is that the federal reimbursement dollars, currently covering 30 percent of emergency housing costs, are scheduled to expire at the end of June.

GA BUDGET DRIVING INCREASES

“(The General Assistance budget) has been a significant driver in this budget process and one of the hurdles in addition to the 7 to 8 percent in inflation we’re facing at this time,” West said.

In a memo to the council sent ahead of Monday’s meeting, West said the city is currently providing shelter to 1,602 people on a nightly basis using its Oxford Street and family shelters and hotels in six communities. She said increases to the Department of Health and Human Services budget represent nearly 80 percent of the city’s total budget increase.

“It is currently projected that the annualized cost of providing overflow hotel rooms just to those who have already presented at Portland’s GA office will now exceed $45 million, more than doubling the city’s HHS budget in just a single year,” West wrote in the memo. “Of course, this figure does not account for future arrivals, and the city has been seeing nearly 100 individuals arriving per week during the last month, so the cost could continue to rise significantly in the coming months.”

On Monday, the city learned it will be eligible for a portion of $10 million in one-time state funding to address emergency housing for the homeless. Gov. Janet Mills also has included $22 million in her supplemental budget to create an emergency housing relief fund at MaineHousing to address homelessness.

West said there is more the state could have done to aid the city, particularly around General Assistance reimbursement rates, but the one-time funds and the $22 million for emergency housing should provide some relief.

“I know everybody, especially our legislative delegation, our lobbyists, staff and others worked very hard to try and get everything we could,” West said. “We just didn’t get everything we could so we have to try and find ways to move forward and address the gap that leaves for us. We will be doing that with the finance committee over the next few weeks.”

STAFFING CHALLENGES

The budget presented Monday includes no losses of full-time equivalent employees and West said she tried to be cognizant of the staffing challenges the city is facing. The city currently has close to 250 vacant positions out of a staff of 1,400, including the director of economic development, police chief and city manager.

“It was a priority of mine to try and find ways to retain employees,” West said, adding that she included cost-of-living increases ranging from 2 to 3 percent for both union and non-union employees.

The budget also includes funding for some of the council’s staffing priorities, including $150,000 for the creation of a Diversity, Equity and Inclusion Office and additions to staff in the Sustainability Office.

To help drive revenues and offset costs in other areas, the proposed budget includes increases to parking rates in the Old Port and Commercial Street areas, which would increase by $0.50 to $2.50 per hour, and a $0.50 increase to the cost of the purple Pay-As-You-Throw trash bags, which currently cost $1.50 for a 15-gallon bag or $3 for a 30-gallon bag.

Other items that will help offset costs include $5.5 million in American Rescue Plan Act funds being used for revenue replacement and an expected increase of $2 million in state revenue sharing.

The budget now heads to the council’s finance committee, where West said more work will be done to address the current challenges. “This was a very difficult and challenging process, but very rewarding and I appreciate all the work the city staff does on a daily basis,” she said.

Mayor Kate Snyder, who was not at Monday’s meeting, is expected to present comments on the budget at next week’s council meeting.

“We all know this is going to be a tough year,” Councilor Tae Chong said. “People need to understand inflation is 8.5 percent and we’re looking for an increase of 5.5 percent and a lot of that is, as the city manager said, we’re trying to keep people on our staff. … We’re trying to keep the city running, and running as well as it does.”

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