Few agencies expect to be spared as general fund is trimmed
As Mayor Sam Adams drafts his proposed budget for the next fiscal year, he will be guided in part by the Portland Plan - a long-range planning document that has yet to be approved by the City Council.
The Portland Plan will guide policy and spending decisions for the next 25 years to achieve such goals as increasing livability, equity and jobs. It was approved by the Planning and Sustainability Commission in late January and will be presented to the council in April, around the time that Adams will release his proposed budget.
Adams is confident the council will adopt the Portland Plan before it approves the final version of the budget that takes effect on July 1.
'The mayor has that in his mind as he's putting together the proposed budget,' says Amy Ruiz, Adams' press aide.
It is easy to see why Adams is comfortable using the pre-approved Portland Plan to help shape his proposed budget. Much of it is based on policies and plans already approved by the council. An appendix lists 15 of them, ranging from the Bicycle Plan for 2030 to the Streetcar System Concept Plan and the East Portland Action Plan. They support such programs as expanding transit and bike and pedestrian links between neighborhoods.
Nothing in the Portland Plan has to be funded next year, which is a good thing because the city is facing a number of funding problems caused in part by the continuing poor economy. Adams has warned the council that next year's budget faces a potential $14 million to $28 million shortfall in discretionary spending - up to about 5 percent of the city's general fund budget. And the Portland Bureau of Transportation is facing a $17 million shortfall in dedicated funding sources, in part because of slower-than-expected growth in state gas tax proceeds.
Much of the Portland Plan was developed after thousands of Portlanders offered opinions on city priorities at forums that began in June 2011. Adams still wants people to attend two evening public forums in March to discuss priorities for next year's budget.
The first is at 6:30 p.m. on March 5 in the Montgomery Park Ballroom, 2701 N.W. Vaughn St. The second is at 6:30 p.m. on March 21 in the Cleveland High School Cafeteria, 3400 S.E. 26th Ave.
'Sam takes that public feedback into account when putting together his proposed budget,' Ruiz says. 'The reality is, he's making changes up to the day it's released.'
All the attention on the general fund might seem unusual. The total city budget this fiscal year is more than $3.5 billion, while the general fund portion is only about $500 million. Most of the non-general fund portion comes from dedicated sources that must be spent for specific purposes, including water and sewer rates that are limited to water and sewer projects. In contrast, the general fund includes non-dedicated property taxes and business license fees that support essential services such as police and fire protection.
'It's going to be awful,' Commissioner Amanda Fritz says of the potential general fund cuts, noting the council has cut discretionary spending for the past few years.
There is still a chance the general fund cuts will not be as deep as predicted. City finance officers will issue one last revenue forecast in April before the council has to approve the budget. Adams will base his proposed budget on it.
The last few forecasts have shown general fund revenue increases declining because of such factors as a slowdown in business license applications and property taxes that cannot be collected because of the state's complicated property tax limitation laws. Because the economy has shown signs of improving lately, the April forecast may be more optimistic, however.
Regardless, Adams has asked all city agencies to submit proposed budgets that include cuts of 4 percent, 6 percent and 8 percent of their general fund revenue. For agencies most dependent on general fund dollars, even the smallest proposed cuts are already controversial.
For example, the Portland Police Bureau proposed eliminating 56 sworn positions as part of its 4 percent cut. Portland Fire and Rescue proposed closing two fire stations.
City Hall veterans know the police and fire bureaus are likely to be spared such cuts, however. When the council has had to reduce general fund spending in the past, it has traditionally cut public safety agencies less than other bureaus. That could mean other bureaus take larger general fund cuts, however.
One of those could be the Bureau of Planning and Sustainability, which wrote the $2.5 million Portland Plan and is in charge of overseeing it. In its submission to Adams, the bureau said an 8 percent cut would require it to reduce the scope of the upcoming comprehensive land-use plan update required by state law. Ironically, the Portland Plan was prepared in part to guide the comprehensive plan update.
Some of the agencies with the largest budgets receive little general fund money. They include the water bureau, which is largely supported by water rates, and the Bureau of Environmental Services, which is largely supported by sewer rates and stormwater management charges.
Likewise, the Portland Bureau of Transportation receives most of its funding from dedicated sources, including federal transportation funds intended for specific projects, state gas tax revenue, transportation system development charges and parking revenue.
Work sessions planned
Despite efforts to involve the public in the drafting of both the Portland Plan and Adams' proposed budget for the next fiscal year, most Portlanders won't be able to closely follow the nuts-and-bolts work of writing the final version.
After the second evening forum, the council will have a series of work sessions on agency budgets from April 2 to 12 during the day at City Hall; these will be difficult for most people to attend.
A single public hearing is scheduled for May 17.
After that, the council is scheduled to adopt the budget for the next fiscal year in a two-step process on May 30 and June 21. In between, the Multnomah County Tax Supervising and Conservation Commission will conduct a hearing on the budget to make sure all the numbers add up.
More information on the budget process is available on the city's website at www.portlandonline.com/communitybudget .
Transit obligations strain city transportation budget
There are many reasons the Portland Bureau of Transportation has proposed deferring street maintenance in next year's budget.
Among them are the competing priorities approved by the City Council, including improving bicycle and pedestrian safety.
Another is the city's agreement to provide $95 million of its state gas tax revenue to two major regional transportation projects, the replacement Sellwood Bridge and the Portland-to-Milwaukie light-rail line.
Both projects need Portland's money to proceed and will benefit many city residents when completed. But the gas tax money spent on them cannot be used anywhere else in town. The city's total commitment to both projects is $130 million.
The aging Sellwood Bridge must be replaced because of increasing structural problems. The project is estimated at about $268.8 million. Portland's commitment is about $75 million from the city's share of state gas tax revenue. Other funding partners include the federal and state governments.
The Milwaukie MAX line is planned to extend service and serve the Oregon Health and Science University's South Waterfront satellite campus and inner Southeast Portland neighborhoods along McLoughlin Boulevard. The project is budgeted at about $1.5 billion. Portland's share is nearly $55 million, with up to $20 million coming from the city's share of state gas tax revenue.
Of the remaining money, $10 million is coming from the Portland Development Commission and $45 million from PBOT, including $3.7 million in parking revenue, a $5 million land donation, and more than $16 million in system development charges.
The city had originally pledged $100 million to the Sellwood Bridge project. Cost savings reduced that by $25 million. The city transferred $20 million of the money to the MAX project to help fill a funding gap after the federal government said it would only pay 50 percent of the project instead of the anticipated 60 percent.
Most of the city's commitment to both projects will be financed during the next 20 years. The financing cost in next year's budget will be around $5 million.