As Multnomah County braces for a fiscal shortfall, detailed forecasts paint a bleak picture of the coming years. The FY 2025-26 budget is expected to experience a $21 million deficit, with projections indicating a potential increase to $52.4 million by FY 2029-30, according to a report from Multnomah County budget office,
Jeff Renfro, the County economist, underscored the urgency of the situation. "To (balance the budget), we have to figure out how to solve the $21 million problem," Renfro stated, acknowledging the necessity for change to alter the county's financial trajectory. This shortfall arises from a deceleration in property tax revenue growth, which has traditionally been a staple for the County's discretionary funding, as obtained by Multnomah County.
The general fund, totaling $760 million, is just a fraction of the County's $4 billion budget. Unfortunately, alternate sources of revenue such as the Metro Supportive Housing Services, and Preschool for All taxes, along with federal and state contributions can only be allocated to specific services, leaving the general fund to grapple with the deficit.
Chair Jessica Vega Pederson has called this era a new chapter for the budget and has emphasized the importance of prioritization moving forward. The volatility of the commercial real estate market in Portland, which has had its top properties plummet in value, represents a significant challenge. The reduced valuation of these properties, in turn, leads to diminished property tax revenues, a trend expected to continue, at least in the short term.
In addition to market challenges, the County also faces rising personnel expenses, which constitute a significant portion of the overall budget. Already high inflation rates only compound the cost associated with cost-of-living adjustments imbedded in labor contracts, where just a single percentage increase in base pay means a $4.1 million jump in spending. The obligations tied to the Oregon Public Employees Retirement System (PERS) are similarly inflating, with each point of percentage increase translating to $2.9 million in County expenses.
Despite these economic pressures, there is some hopeful news. Renfro's presentation indicates that the Federal Reserve has managed to lower interest rates without triggering a recession, and national economic indicators are showing signs of growth. However, the end of federal COVID-19 relief funds from the American Rescue Plan marks the cessation of a pivotal support stream for the County.
Commissioner Julia Brim-Edwards highlighted the imperative of addressing local concerns regarding homelessness, behavioral health, and public safety to prevent an exodus of businesses and residents with the means to leave – further straining resources.
Looking ahead, the financial landscape poses a gauntlet for new commissioners Meghan Moyer, Shannon Singleton, and Vince Jones-Dixon, who will wield considerable influence over the County's fiscal decisions amid dwindling revenues and climbing costs. Renfro alluded to a structural deficit, a long-term challenge requiring strategic planning but also imminent decisions on resource allocation. Community engagement is on the horizon, as the public will have opportunities to participate in work sessions and hearings, with the budget approval process slated for June 2025.
Commissioner Lori Stegmann summed up the incoming board's future challenges. "We definitely have some hard times ahead of us," she admitted, acknowledging the daunting economic circumstances ahead, as per the Multnomah County.
