Challenges keep mounting for the Portland City Council, exacerbated by its struggle to make the city’s new form of government work more efficiently. The most recent surprise is news that the annual budget adopted just three months ago is already facing a potential $16 million general fund shortfall – a potential crisis the council will begin addressing in October.
“Council passed this year’s budget within extremely tight margins. We face financial headwinds at exactly the time when Portlanders are rightfully demanding the best possible services… I will continue to ask Councilors to do the hard accountability work and engage Portlanders as we move toward an even more difficult budget next year,” Council President and District 2 Councilor Elana Pirtle-Guiney told the North Peninsula Review.
“Council, the City Administrator’s Office, and the Mayor must work collaboratively to prioritize our city’s most critical services,” she said.
The 12-member council that took office in January had a hard time adopting the $8.6 billion annual budget that took effect on July 1. Public testimony was cut short when meetings ran long as councilors clashed over how to allocate the $806 million in discretionary general fund spending that primarily supports police, fire, parks and homeless services. The preliminary vote took place on June 11, with just minutes to spare before the technical deadline for approving the legally required balanced fiscal year budget.
But on Sept. 17, City Administrator Michael Jordan revealed the budget was not balanced after all, which is mandated by state law. City budget officials are now projecting a $16 million general fund shortfall, mostly because business tax collections are falling short of previous estimates. Jordan ordered a reduction in overtime spending and a hiring freeze, excluding critical public safety positions, that could last until the June 30, 2026, end of the fiscal year. He hopes those steps will save $6 million.
District 2 Councilor Dan Ryan said he was not surprised by the potential deficit, citing Portland’s ongoing economic struggles.
“We have an economic crisis that has accelerated with record high vacancy rates on our commercial properties. Simply put, families and their businesses have moved to our neighboring counties, especially Clark County. The contrast between Multnomah and Clark County is unlike any other nexus in our country. For those paying attention and believing the objective data, this was expected,” Ryan told the North Peninsula Review.
“As such, we need to rethink our projections over the next couple of years because $12 million of the shortfall is from business tax [collections] coming in under projections. In addition, let’s not forget that voters chose to expand the political governance of our city with the charter change, and that is costing taxpayers $12.5 million more annually.”
Ryan also criticized the six self-declared progressive members of the council for not recognizing that the relatively high level of local taxes are contributing to the economic problems. The progressive wing includes District 2 Councilor Sameer Kanal; District 1 Councilors Candace Avalos and Janie Dunphy; District 3 Councilors Angelita Morillo and Tiffany Koyama Lane; and District 4 Councilor Mitch Green.
“Since I believe the data, I have been a broken record about this: Our tax base is shrinking with businesses closing and high-income earners leaving Portland because not only is there a sky-high tax burden, but because of not receiving adequate services from the city and county in exchange for the taxes that they pay. Complaints … have been overwhelming in the past eight months with our new City Council ignoring this reality.
The public is looking to the twelve councilors and the mayor to focus – they are not seeing results and are frustrated. The only solution coming from the socialist majority on the council is to pass legislation for additional targeted taxes at middle class homeowners. The data makes it clear that this socialist playbook will only accelerate the exodus. If your family leaves, your business goes with you. Portland, you have a revenue problem,” Ryan said.
Council still debating committees, meetings
District 2 Councilor Sameer Kanal’s office told the North Peninsula Review that he was still researching the potential deficit and had no comment about Ryan’s criticism of the progressive caucus.
At the very least, the combined shortfall may require the council to dig deeply into the city’s reserves and contingency funds to rebalance the budget. But the council might also need to reduce the level of services it just approved in June.
Updated financial projections are expected to be released by mid-October.
The council will deal with the issue during its annual Fall Budget Monitoring Process, commonly called BUMP. The council’s Finance Committee is scheduled to receive the most recent projections on Oct. 20. The full council will hold a work session on it on Oct. 22.
But the budget balancing process will unfold while the council is split over whether to continue the committee system, which was first adopted in January to serve the new 12-member council that was created by the City Charter reforms. The system consists of eight policy committees with five members each that meet every other week.
Their meetings have frequently run long, and some councilors are confused about their role and effectiveness. The council held four meetings over three weeks in late July and August to address these concerns, but made no decision about whether to continue, change, or abolish the committees before taking a two-week break.
District 2 Councilor Dan Ryan is now set to propose that the committees be suspended until Jan. 7, 2026, when the council is scheduled to elect a President for the next year. Ryan says the suspension is necessary to give the council time to approve priorities and a strategy for achieving them.
“Our city needs leadership, focus, and equal participation throughout this process from the full City Council, City Administrator, and the Mayor’s office,” reads Ryan’s proposal in part.
The council is also split over whether to continue holding work sessions, a tradition that carried over from the previous council. Work sessions are meetings of the entire council focused on single issues where no public testimony is allowed and no votes are taken. Some current councilors believe they should be replaced by what they are calling a “committee of the whole,” although the difference is not clear.
It is not yet known whether the council will continue, let alone complete, its deliberations over the committee system and work sessions before the BUMP process formally begins.
A previous story on the council’s procedural struggles can be found at northpeninsulareview.com/city-council-struggling-to-find-best-way-to-govern.