Portland city manager’s budget proposal calls for 5% tax increase

Portland’s city manager is proposing a $277 million general fund budget that would increase the city’s tax rate by 4.9%.

City Manager Danielle West presented her budget Monday night to the City Council, which voted unanimously to refer it to the finance committee for further review. The proposed tax rate increase is likely to come as a relief to property owners after the city had warned in January that revenue losses could lead to a tax rate increase of close to 10%.

Portland City Manager Danielle West Ben McCanna/Staff Photographer

“When we looked back in January at the schools’ and our gaps, they were some of the biggest we’ve ever seen, especially on the school side,” West said in an interview prior to Monday’s meeting. “That was definitely a daunting place to start.”

West and Finance Director Brendan O’Connell said that since January, city officials, staff and the council have worked to arrive at a 4.9%, or $0.34, increase in the city side of the tax rate. The city budget makes up just under half of the tax levy, the rest of which would come from the school department.

The school board is expected to vote Tuesday on a $162.3 million school budget that includes a 6.6% increase in the school side of the tax rate. When combined with the city increase, the overall tax rate would increase by $0.84 to $15.25 per $1,000 valuation. The combined increase would be 5.8%, or about $315, on a $375,000 home.

The school district had expected a 6.85% increase based on its budget, but O’Connell said property valuations that were revised as of April 1 helped bring it down to 6.6%.

CLOSING THE GAP

O’Connell said the city was quickly able to close about $4 million of a $20 million budget gap by reviewing projected revenue increases and upping some city fees, including those for pay-as-you-throw trash bags and city-owned parking garages.

Pay-as-you-throw trash bags would increase to $1.90 per 15-gallon bag and $3.80 per 30-gallon bag from $1.75 and $3.50 respectively.

The city’s Spring Street and Elm Street parking garages would also see rate increases from $3 per hour to $4 per hour, and parking at the Ocean Gateway would increase from $20 per day to $25 per day, though that parking lot is expected to come offline when construction starts later this year on a new park.

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Some of the savings are coming from a reduced use of hotels as emergency shelters, $2.7 million, and by using $1.2 million in debt service reserves to cover pension obligations.

Portland also again expects to get additional one-time General Assistance funding from the state to offset social service costs. O’Connell and West said Monday they don’t expect the one-time funding to be as much as the $7.4 million from the state last year, but did not have a final number.

The Health and Human Services Department continues to be the biggest departmental budget in the city, though the proposed budget is down $2.3 million from the current $55.6 million. The department also makes up the bulk of new staff positions, accounting for 65 of 81 new positions, though many of those have already been added in response to items approved by the council this year.

The city has made a significant move away from using hotels as emergency shelter, which they did during the COVID-19 pandemic. But they have also increased capacity at the new Homeless Services Center and worked with private partners in December to open a new shelter in Riverside for single asylum seekers.

The council voted in February to extend a 50-bed increase in capacity at the Homeless Services Center through early June, and the city manager’s proposed budget includes funding to continue the extra beds through the coming fiscal year, which ends June 30, 2025.

“Addressing that cost (of hotels), starting the decommissioning process and developing those properties at the end of last year, that has really helped us to be able to address some things,” West said. “But it continues to be a difficult thing for the budget to sustain because we continue to increase services and shelter beds, and that has a cost that comes with it.

“It’s a reduced cost of hotels, but it’s still a cost we have to manage, including the addition of many employees as well as just the cost of managing all our various facilities.”

VACANCIES REMAIN A PROBLEM

The city also continues to struggle with about 200 unfilled positions, which adds to overtime costs and the use of more expensive external contractors.

West said the city has hired a recruiter who is focused on filling jobs in the four hardest hit areas of the city: the Barron Center nursing home, police department, dispatch and public works.

She said she hopes to also look at ways the city could restructure to help fill the openings.

“We’re going to look ahead and try to do a deep dive into those positions that remain vacant to see do we need that position? If we don’t, how can we address the need moving forward and really have departments decide what works best and what positions continue to be needed,” West said.

Other drivers increasing the budget include contractually obligated union wage increases, increases in health insurance costs, the expiration of one-time American Rescue Plan Act funds and a $5.7 million increase in debt service expenses.

Mayor Mark Dion made little comment on the budget – the charter requires comment from the mayor – but said he appreciated that most departments had a flat budget.

“I think she’s clearly heard from all of us that it has to be an affordable budget. I think that’s one theme that she took to heart,” he said.

He reiterated the need for the General Assistance funding from the state as the city continues to grapple with assisting asylum seekers and its homeless population. Dion and West are lobbying the state to provide supplemental funding this year and increase the state’s reimbursement rate from 70% to 90%.

“We’ve gone up there to try to fight for a restructuring, changing the rules and the process so we can rely on having this money available to the city every year without going through the lobbying process and all of the sausage-making that’s required to get this cemented into money,” he said.

The general fund budget, which is the basis for the tax levy, does not include another $77 million for self-funding enterprise accounts, such as the Portland International Jetport, and sewer and stormwater operations, which bring the proposal for total city spending to $353.9 million, not including school spending.

The finance committee will hold a public hearing and vote on the recommended school budget on April 25, and a public hearing and vote on the city budget on April 30. The full council will hold public hearings on both budgets May 6 and May 20, with votes expected May 20. The school budget will also go to referendum June 11.

HOUSING COMMITTEE DISSOLVED

Also on Monday, the council voted unanimously to dissolve a committee that was set up to protect tenants in the wake of the Noyes Street fire that killed six people, but that members say has been ineffective for years.

The Rental Housing Advisory Committee has struggled for years to find its place in city government, an effort that was complicated further in 2020 when city voters approved a rent control ordinance that established a similar volunteer board with more power. The rent board’s duties are specifically related to the rent control ordinance and its purview.

The committee had two broad duties: to provide the council with recommendations on rental issues; and to identify educational opportunities for landlords and tenants.

Councilor Regina Phillips lamented that more resources weren’t put into the committee at the outset and said that while the city has the rent board, the two don’t completely overlap.

“It’s really too bad that we had this committee and it didn’t work and we are now disbanding it and some of the things that it was charged with are going away,” she said.

Staff Writer Hannah LaClaire contributed to this report.