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The city of Portland faces a $13.6 million budget shortfall in the current fiscal year, a number likely to grow as staff gets a clearer picture of overspending by city bureaus.
The Portland City Council must decide in coming months how to close that gap, which is primarily due to projected tax revenues built into the budget last year that have not materialized. The deficit comes just four months after the council filled an $11.4 million budget deficit in the fall for the same fiscal year.
City budget director Ruth Levine told the council she did not yet know how much the $13.6 million gap might grow in the next few months. “I really want to vet that data to make sure what we’re seeing is accurate before I report that out,” Levine explained to the council during a Jan. 22 work session.
Options to close the deficit presented to councilors include: using a small portion of available reserve funds, tapping unrestricted contingency dollars from the general fund, asking top leaders to reduce travel expenses and use of their city-issued purchasing cards, and cutting overtime expenses. More drastic options—which budget staff told the council it would not necessarily recommend—included furloughs, truncating contracts or ending unnecessary ones, equipment replacement, interfund loans, and service cuts.
“This is neither an exhaustive nor a final list,” Levine said. “The numbers will change, and we may add things to this list.”
It was not immediately clear, even after councilors asked questions of staff, how much of the $13.6 million gap could or would be closed by administrative changes between now and the spring technical adjustment ordinance, when council is expected to rebalance the budget before the end of the fiscal year on June 30. Former City Administrator Mike Jordan had set a goal last year of decreasing major areas of internal services, including communications and technology, by 20% by the start of the next fiscal year, but the city has fallen short of that goal—meaning that it’s seeing fewer savings than it had projected.
“Should we wait and see if enough cost savings can be realized through administrative actions?” Councilor Elana Pirtle-Guiney asked. “And if not, when and where are we going to have the conversation about what cuts we need to be looking at so we’re not waiting until May with two months left in the fiscal year to realize the cost savings we need to end the year in balance?”
Pirtle-Guiney did not receive a clear answer. Nor did Councilor Candace Avalos when she asked staff which cuts would be at the discretion of the council and which would be selected by City Administrator Raymond Lee.
Lee instead said his team would be happy to make a fact sheet breaking down what might be a legislative, administrative and executive decision. Who can make what changes at the city has been a broad point of contention, confusion and frustration for both the council and the administration.
The council also received a glimpse into what is expected to be a bruising budget year in fiscal 2026–27. The most recent projections by staff warn of a $53 million general fund gap next year (which does not include nongeneral fund gaps). Chief financial officer Jonas Biery advised the council to strap up.
“I expect the city to be in a financial crisis for the next 18 to 36 months,” Biery said. “It’s critically important to be transparent and clear-eyed about the reality we face.”
