City warned about budget cuts
$17.4 million must be trimmed from next year's spending, report says
Mayor Sam Adams was scheduled to present a report to the City Council on Wednesday saying it needs to find $17.4 million in ongoing cuts to balance the budget during the next five years.
That could require 4.7 percent cuts in general fund spending, according to the report, which was prepared by the Office of Management and Finance.
The report says that a large share of the cuts are required by decreasing property tax collections caused by falling property values and exacerbating the Oregon's complex property tax limitation system. National and even international economic conditions are also worrisome.
'Given the high level of uncertainty surrounding the current economic environment - local housing market, Euro instability, federal government policy - this forecast assumes at least some of the downside risks are realized,' according to the report.
The report pointed out that greater cuts will be required if Multnomah County voters approve the creation of a new library district in the May 2012 election. In that case, the general funding spending would need to be cut up to 6.5 percent because of how different levies relate to one another under the state property tax limitation system.
The Multnomah County Commission has not yet decided whether to put a measure creating the district on ballot or ask voters to continue the existing levy, which would not reduce city property tax collections. The city fiscal year begins on July 1.
According to the report, while the city should know the details of any proposal in the next couple of months, we will not know the results from the subsequent election until May, after much of the budget process has been completed.
The report also noted that one-time funds traditionally used for safety net programs could be reduced. Next year's budget says there should be $11.6 million available. compared to $22.5 million in this year's budget.
Despite the cuts required to balance the budget during the next five years, general fund revenue will actually increase. According to the report, available general fund resources are expected to grow from $396 million in the 2012-13 fiscal year to $457 million in 2016-17.
City Economist Josh Harwood says costs are projected to increase even more than available revenue, however, requiring ongoing cuts to balance the budgets.
Harwood says costs are expected to grow because of such things as inflation and expected increases in Public Employee Retirement System increases.
The council is not required to take any action on the report at the meeting.