The city's fiscal crisis, hellish enough in fall, became even hotter in December when the black robes at the Oregon Supreme Court curtailed a key method used to fund big urban projects. The state's top tribunal ruled that the bonds used to finance urban renewal districts fall under the property tax cap established by 1990's Measure 5.
As a result, local officials now say they may not be able propose planned tax levies this year--at least not for the amounts they wanted--to fund services such as parks and libraries. "It's between a tough and a crippling blow," says City Commissioner Erik Sten.
But even before the Supreme Court ruling, things were looking grim at the city. In November, it was forced to cut $4 million from its current budget; this month, it will cut another $3 million. Interviews with council members last week revealed that the following moves are being considered as Katz tries to slice at least $14.4 million from the 2002-2003 budget.
* Pools & Playgrounds: Even with a possible parks levy in May, the city will have to chop at least $2.2 million from the bureau's $30 million general fund budget, says City Commissioner Jim Francesconi. That means two community swimming pools will close, 19 summer playgrounds will be shuttered and employees will get laid off, he says. He declined to name specific pools or playgrounds.
* Housing & Neighborhood Offices: The Bureau of Housing and Community Development will face unspecified cuts, although programs for the homeless will be left intact. Similarly, the Office of Neighborhood Involvement will face deep cuts to its approximately $3 million of administrative functions, while money for neighborhood coalitions is left untouched. "I welcome scrutiny of any bureau's budget," says City Commissioner Dan Saltzman, who oversees ONI. "I hope the feelings are reciprocal when I raise questions about other bureaus."
* Cops & Firefighters: Katz promised last spring that the police and fire bureaus would be held "harmless" in any future budget cuts. But she's "reversed" that pledge, given the huge shortfall, and both bureaus' operating budgets (police, $108 million; fire, $61 million) will get a close look. Katz declined to point to specific cuts, a sure sign that she wants her council votes in a row before unleashing a firestorm. One likely approach, however, is closing fire stations, a move Fire Commissioner Francesconi pledges to oppose.
* Arts: The approximately $800,000 a year that the city gives to Oregon Ballet Theatre, Portland Opera, Oregon Symphony and Portland Center Stage will probably be eliminated, says Katz.
* County Bailout: The $1 million a year which the city pledged to Multnomah County to cover a reduction in property-tax revenues in the Interstate urban renewal district will be a tempting target.
* North Macadam: For years the city has pinned its economic hopes on the North Macadam urban renewal district, an expanse of industrial land south of the Marquam Bridge. To go from hope to reality, the city needs to build streets and sewers to persuade Oregon Health & Science University to expand its facilities there. But if the Supreme Court ruling is interpreted as expected, Katz says, North Macadam could be chopped in size from $25 million to approximately $15 million over the next five years.
What's next? Katz and the rest of council will spend two months wrangling over budget cuts before the mayor unveils her preliminary budget. That's when all hell will break loose.