Portland City Council tentatively approved a $7.1 billion budget for next year on Wednesday that sets the city on course for a coming remodel to the city’s government structure. The city spending plan also includes a last-minute plan to freeze or reduce planned increases to city utility bills and other fees — a proposal that divided City Council.
As Mayor Ted Wheeler pushed to rollback fees and utility costs in an attempt, he said, to keep people and businesses from leaving Portland, other commissioners argued the reductions would gravely undermine the city’s ability to provide basic services and lead to mass layoffs.
“None of these things that we implemented here are going to convince a single Portlander to stay in town,” Commissioner Mingus Mapps said Wednesday, before voting against the budget. “However the city that we all live in and will hand down to our children will be in much worse shape as a product of the budget that we passed today.”
Mapps was the sole commissioner to vote against what he called a “remarkably bad” budget. Commissioner Rene Gonzalez joined Mapps in opposing several of Wheeler’s budget amendments but ultimately approved the spending plan. Five days ago, Wheeler put forward a proposal to freeze a 40 cent-per-hour increase in parking meter costs. He argued that it would discourage people from parking and spending time in downtown Portland — although there are parking meters outside the downtown core. He also proposed reducing a planned utility rate hike for water and sewer services.
These eleventh-hour changes took both bureau leadership and city commissioners by surprise. According to the city budget office, withholding these fee increases would reduce Portland Bureau of Transportation’s budget by $8.3 million, Portland Water Bureau’s budget by $2.4 million and the Portland Bureau of Environmental Services by $8 million. That’s because those rate and fee increases were major assumptions as bureau finance teams wrote their fiscal year budgets.
At a Friday budget hearing, bureau directors detailed how these proposed cuts would impact their departments’ revenues.
Water Bureau Director Gabe Solmer said the rate freeze would threaten at least 17 staff positions and halt its contributions to the “Regulated Affordable Multifamily Assistance Program,” or RAMP, a new program slated to start offering reduced utility bills to low-income apartment complexes in July. The utility fee cuts would also keep the Bureau of Environmental Services from participating in the discount program.
Dawn Uchiyama, director of the Bureau of Environmental Services, said Friday the cut would halt plans to replace the 60-year-old Tryon Creek Wastewater Treatment Plant, and delay the bureau’s federally-mandated work to clean up polluted areas, like the Portland Harbor Superfund Site.
“The cost and legal risks associated with environmental remediation are not going to go away and will only grow larger,” Uchiyama said. “Addressing and preparing for these obligations now will help reduce large rate increases in the future.”
At that meeting, the Portland Bureau of Transportation estimated that a pause on its first parking meter fee increase since 2016 could lead to street maintenance delays, reductions in traffic safety programs, program cuts — like the city’s Safe Routes to Schools — and layoffs of up to 100 staff.
Portland City Hall, September, 2022.
MacGregor Campbell / OPB
City Council heard strong public opposition to the parking fee freeze Wednesday
“Absent this overdue increase in parking fees, (the Portland Bureau of Transportation) is basically going out of business,” said Chris Smith, a longtime transportation activist who previously served on the city’s citizen budget advisory committee. “I would urge you not to allow that to happen.”
The Portland Bureau of Transportation is in its third year of budget cuts, according to Mapps, who oversees the department. Much of that is due to reduced parking revenue since the start of the pandemic. This revenue crisis has already led to significant cuts in the bureau, draining its $60 million reserve fund. The issue inspired Mapps to float the idea of a new transportation fee earlier this month that would charge homeowners $96 per year, generating about $35 million each year to support the bureau.
On Wednesday, Mapps condemned Wheeler’s proposal, saying that the trade-off between saving 40 cents for hourly parking and spurring mass layoffs and delays to potentially life-saving road maintenance projects didn’t “pass the smell test.”
City commissioners voted against the proposed parking meter rate freeze, instead backing a proposal introduced by Mapps to lower that rate hike to 20 cents. Yet Mapps was clear that his proposal wouldn’t prevent the transportation bureau from further harm.
“I am not against belt tightening,” Mapps said. “But I guarantee you that this is going to undermine our ability to provide people with transportation services and there is going to be no area within the bureau which is not impacted by this.”
Both Mapps and Gonzalez voted against Wheeler’s budget amendments to change planned utility fee rates. Bureaus had initially proposed increasing a household’s combined water and sewer bills by $8.91 a month. Wheeler’s proposal reduces that monthly increase by $2.29. Mapps characterized the reduction as “pennies” in exchange for what could be serious impacts on the city’s sewer and water infrastructure.
“The disproportionate impact on infrastructure is a concern for me,” Gonzalez added. “Infrastructure in this city has long been under-supported. These amendments do not represent fundamental reform.”
Gonzalez also raised concern with how quickly Wheeler’s plan had moved through City Hall, leaving his office just days to consider.
The proposed utility reductions garnered additional pushback from several union leaders who represent city staff.
“Short term cuts to maintenance budgets never save money; they only defer costs to a later date,” said Rachel Whiteside with PROTEC17, which represents 900 city employees. “This isn’t politics, this is just engineering. People of Portland do not want slower permitting and degraded infrastructure.”
Wheeler argued that pausing the rate increases could help alleviate the high cost of doing business in Portland, which has seen a steady increase in individual and business taxes over the past decade.
“I think people acknowledge that we’re at an inflection point in our city,” he said. “Studies show people are choosing not to stay here. I see this as a critical moment in the city’s history that we should respond to.”
While this didn’t convince all of his colleagues, Wheeler’s plan has the backing of local development and business groups.
“If we can’t break the habit of just demanding Portlanders pay more-and-more we now know a growing number will choose to move on to more affordable communities,” wrote Jon Isaacs, a spokesperson for Portland Business Alliance, in a May 10 letter to Portland City Council in support of the fee freeze.
Commissioners did unanimously support another amendment that would freeze increases to “system development charges” — fees largely paid by developers to offset the cost that new construction may have on certain city utility bureaus. Developers have long blamed system development charges, or SDCs, which the city levies to pay for new roads, parks and utility projects, for deterring residential construction and renovation in a city with a housing supply shortage.
This proposal was introduced by Commissioner Carmen Rubio, who oversees the city’s housing and development bureaus.
“Interest rates are the biggest barriers to housing production, but we don’t control that,” Rubio said Wednesday. “So I’m looking at the levers that we can pull. This is a unique time in history and we need more homes for Portlanders.”
Withholding these costs will also impact a number of city bureaus. According to the city, it will create a $1.4 million gap in the Portland Parks and Recreation budget, $400,000 reduction in the Portland Bureau of Transportation, and $1 million in budget cuts each to the Portland Water Bureau and Bureau of Environmental Services.
Yet commissioners agreed that these cuts were worth the potential of spurring new construction in Portland. Mapps said that waiving SDC fees would make it approximately $1,800 cheaper per unit to build a residential building in Portland, while it reduces costs for commercial construction by $2,400 per project.
“That trade off makes sense to me,” Mapps said.
Commissioners spent most of the Wednesday budget hearing debating the last-minute revenue changes, which only represents a slice of the city’s total budget.
The $7.1 billion city spending plan, which was initially introduced by Mayor Ted Wheeler on May 5, reflects a change in the city’s financial ecosystem. In the past two budget cycles, Portland’s budget ballooned with one-time funding from the federal American Rescue Plan Act and unexpectedly high tax revenue from businesses that thrived during the COVID-19 pandemic. Those temporary revenue streams have since dried up, limiting city commissioners from requesting money for new programs in the fiscal year, which begins on July 1.
The budget offers some wiggle room: Added revenue from the city’s business license tax and property taxes resulting from the termination of two urban renewal districts gave the mayor $27 million to fill budget shortfalls. That money will pay for 43 new police officers, smaller vehicles for the Portland Fire Bureau to respond to calls that don’t require a fire truck, and speed up plans to tow abandoned RVs across the city.
Council approved $2.5 million to hire staff and consultants to help the city transition to a new form of government and voting system by 2025. This overhaul, detailed in a charter amendment passed by voters last November, includes hiring a new city administrator, adopting a “ranked choice” style of voting and expanding the city council to 12 elected officials representing new geographic districts.
The city will spend more than $1 million to create and carry out a plan to ensure there’s enough space for the new city council offices and city administrator office.
The budget passed Wednesday also included an amendment jointly introduced by Rubio and Commissioner Dan Ryan that restores $250,000 in funding to fund grants through the Office of Community and Civic Life that help nonprofits run leadership development programs for communities of color, immigrants and refugees. Wheeler’s initial budget slashed this funding, spurring immediate pushback from Portlanders and nonprofits that rely on these programs.
Wheeler concluded the budget hearing with a commitment to swiftly address the multiple issues the meeting focused on — ranging from addressing the increasing tax and fee burden placed on Portlanders and a serious renovation to the Portland Transportation Bureau’s revenue structure.
“We have a lot of work cut out for us,” Wheeler said. “I will not turn [these problems] over to the next city council.”
Portland City Council is scheduled to take a final vote on the city budget in mid-June.