Portland Confronts $67 Million Budget Shortfall for Next Year
Portland is preparing for a challenging fiscal year, facing a budget shortfall of approximately $67 million for the year starting July 1. This deficit is more than double the projected shortfall from last year. City economists attribute this financial strain to broader trends affecting many U.S. communities.
Economic Factors Behind the Shortfall
City Economist Peter Hulseman identified several contributing factors to Portland’s financial predicament. He emphasized that federal tax reductions, particularly from the “One Big Beautiful Bill,” significantly impacted the city’s revenue. The city expects a $20 million reduction in business taxes and an $8 million decrease in property taxes. Together, these taxes account for about 75% of the city’s general fund revenue.
Rising Expenses
In addition to declining revenues, the city’s expenses are expected to rise. Health insurance costs for city staff are projected to increase by 15% next year. Additionally, costs associated with software and risk insurance are also on the rise.
Previous Budget Challenges
This announcement comes on the heels of a tumultuous budget year marked by intense debates among newly elected officials. Last November, Hulseman anticipated a $27 million shortfall for the current fiscal year. However, by January, that figure had ballooned to $100 million due to unforeseen revenue declines and expenses.
- Significant layoffs occurred in major city bureaus.
- City leaders increased revenue from sources like parking and rideshare fees.
Future Projections
As Portland braces for another difficult budget season, the city budget office plans to release an updated economic forecast in February. Mayor Keith Wilson has already instructed city bureaus to develop multiple budget scenarios, one of which includes a 10% reduction in spending to mitigate the financial gap.
