Nearly 60% of Oregon counties face program cuts as budget crisis grows

The Coos County Sheriff’s Office needed to take a drastic step.

Strapped for cash, officials had cut the county’s jail capacity in half, losing 49 beds. With no place to put people who had been convicted of crimes, jail staff opened the doors and released 30 inmates in December. Many faced misdemeanor charges. Others were accused of felony property crimes.

“We kept the rapists and the murderers and committers of the more serious crimes in jail,” Coos County Commissioner John Sweet said. “But there were a lot of people who had been judged guilty and were serving their punishment in jail that walked free.”

Like many rural Oregon communities, Coos County has struggled financially in recent years. The coastal county appealed to voters twice last year with levies meant to boost public safety funds. Each time, they failed.

“I sincerely hope there’s a light at the end of the tunnel, whether through a legislative fix or at the local level,” Coos County Sheriff Gabe Fabrizio said. “However, right now I don’t know what that would look like.”

The budget problems facing Coos County are not unusual. Local government agencies across the state are building their budgets for the upcoming fiscal year, and the outlook for many is grim.

At least 21 of Oregon’s 36 county governments, from the Portland metro area to rural southern Oregon, are facing deficits that could prompt cuts to public services, including law enforcement, road maintenance and health care, according to the Association of Oregon Counties.

In addition, more than a third of Oregon’s cities anticipated a shortfall as the 2024-2025 fiscal year comes to a close, according to 76 cities that responded to a 2023 survey by the League of Oregon Cities. Since then, many officials say the problem has only grown.

The budget woes come from a mix of problems, some recent and some simmering for decades.

Pandemic-era federal funds that buoyed local government services have largely dissipated. Government revenue, which primarily comes from property taxes, has not kept up with inflation and rising personnel costs. Meanwhile, federal funding – once a reliable source of money for Oregon governments – could see changes under the Trump administration.

Put simply, local governments are on track to spend more money than they have available if cuts don’t happen.

“When we see that imbalance, that’s why I think you see many jurisdictions in Oregon in this same trajectory,” said Twylla Miller, the chief financial officer for the city of Eugene, which faces a deficit of more than $11 million, despite having cut 12 jobs and more than $5.6 million from the public library and recreation in its last budget passed in 2023.

Budget gaps cross the state

The budget shortfalls have slammed some of Oregon’s most populous counties in the Willamette Valley.

In Washington County, a $20.5 million gap could spur longer wait times, slower responses, canceled programs or increased taxes and fees, a county administrator told local leaders in a recent meeting.

To address a deficit in Lane County, administrator Steve Mokrohisky said he plans to propose a budget with $3 million in cuts across multiple departments, including a $1.5 million reduction that could affect its facilities, technology, materials and training. He is also proposing cutting 60 jobs at county health clinics and in public health services.

In Multnomah County, the deficit is $15.5 million. Even if the county addresses that, officials expect the deficit to grow to $30 million by 2030.

The county’s Homeless Services Department, which is largely funded by an income tax, faces a $70 million deficit that has strained relations among the region’s top leaders. The budget gap could force shelters and services to shut down even as elected officials have promised quick results to address unsheltered homelessness.

“The issue is growing,” said Mallorie Roberts, the legislative affairs director for the Association of Oregon Counties.

The stakes of the budget troubles may be highest in rural Oregon, where local government agencies already run on slim margins and few employees. After cutting more than 200 positions over the past decade, Coos County’s gap has still expanded to $1.8 million for the coming fiscal year, prompting the county to once again weigh cuts to personnel, which make up about 85% of costs.

“It’s horrible. These are good people. We have good employees,” said Sweet, the Coos County commissioner. “I lie awake nights trying to figure out what to do. Brings tears to my eyes thinking that we have to lay off these people whose families are dependent upon their job with the county.”

Sheriff Fabrizio said the budget problems have prompted his agency to cut positions on patrol, animal control and contracting. In an email to OPB, he said, “the reduced patrol presence has also caused an environment that is less favorable to enforcing the law and keeping the peace.”

The issues in Coos County are emblematic of those throughout rural Oregon. Historically, many areas, from Lane to Grant counties, relied on the timber industry as an economic lifeline that generated revenue and supported local facilities, such as roads and public safety. Broadly, that helped keep tax rates low, but now many areas have struggled to rebound as the timber industry has contracted and produces fewer jobs.

“For us, having the additional piece of that falling timber revenue, it’s kind of like a perfect storm, but a perfect storm that I don’t think is going away,” said Tillamook County Commissioner Erin Skaar. “I don’t see inflation dropping to zero or negative that would give us any reason to see our cost drop. I don’t see that happening.”

The latest budget challenges come as the Trump administration seeks to dramatically downsize the federal government, attempting to fire thousands of employees and pausing programs to eliminate spending. The cuts, which are expected to impact communities across the state, have forced a broader debate over the efficiency of government and taxpayer support of public services.

Mokrohisky, the administrator of Lane County, said federal cuts — particularly any to Medicaid dollars that reimburse local governments providing health care — could deepen the problems in local government budgets.

“If the federal government makes significant changes on funding, the bottom will fall out,” Mokrohisky said. “The number of services and positions that will be impacted if a program like Medicaid goes away or significantly reduced is, for us, hundreds of positions, thousands of residents that will not receive service.”

Oregon Gov. Tina Kotek said within days of President Trump taking office that sharp cutoffs in national funding to the state would be nothing short of a “dereliction of the federal government’s duty to protect Americans.”

Appetite for taxes

Oregon’s budget woes long precede the Trump administration. Officials said revenue for local governments has become increasingly insufficient since the 1990s, when voters passed two constitutional amendments in an effort to rein in property taxes, which remain a primary source of county and city funding.

Measure 5, which was passed in 1990, set limits on the amount of property taxes that could be taken from each account: $10 per $1,000 real market value for general government taxes. Measure 50, which was passed in 1997, capped how quickly those taxes could increase, setting the limit at 3% annually.

Jenna Jones, a lobbyist for the League of Oregon Cities, argued that the 3% increase doesn’t cover market changes, growing communities and increased need for services, as well as the rising cost from employee wages, health care or inflation.

“A lot of our cities are coming up against the limits within Measure 5 and Measure 50,” she said.

Some local officials said Oregon needs to reform its property tax system and how revenue is shared.

“Is it time to look at that whole system? And is it time to say, ‘How do we better share the revenue to meet the needs of the people?‘” said Skaar, of Tillamook County. “I don’t think anybody wants to go without law enforcement, and if we don’t find a way to increase the property tax or otherwise share the revenue, that’s where we’re headed.”

Not all local government leaders agree.

“I don’t trust the Oregon state Legislature to reform anything with the property tax evaluation,” Lake County Commissioner James Williams said. “If anything, I would want to see more economic development, and I want to see deregulation, honestly, to let the world know that Oregon is open for business.”

Lobbyists also doubt that reforming Oregon’s property tax system is a possibility in the near future. “I don’t have the sense that there is energy or appetite to do that this session,” said Roberts, of the counties’ association.

Legislative proposals

County officials are looking for less sweeping fixes as they try to plug budget holes that loom in the coming year. One is House Bill 2056, which asks the legislature for $64.8 million from the general fund for community mental health programs.

Another is House Bill 3518, which has the backing of dozens of county officials from across Oregon. It would create a stable and modern funding mechanism for county assessment and taxation functions, which are supported in part by a state program that also faces a funding shortfall.

The bill asks the Legislature for $10 million from the state general fund per biennium for county taxing programs. It would also nearly double county clerk filing fees for real estate, index those fees to inflation and change how local taxing districts pay into the state program.

“I think we will hit a pressure point where something has to be done, and I think we’re very close to hitting it,” said Jones, the cities lobbyist. “I don’t know how long we’ll have to wait for it to get scary or super doomsday, but I think we’re teetering on that edge.”

Correction: A previous version of this story misspelled Tillamook County Commissioner Erin Skaar’s last name. OPB regrets the error.