The record · Transcript
Council session — 2026-06-09
Transcript from the session's official auto-captions (12,044 words), shown in readable case and split into speaker turns. Speakers are AI-suggested and editor-reviewed (low confidence — auto-captions garble names); each color marks a speaker.
I call to order the annual city of Portland budget hearing. I am matt donahue, chair of the tax supervising and conservation commission, and I welcome you all to this hearing. The sec is a community oversight commission established by the Oregon legislature over 100 years ago. The commission oversees the budgets of all tsc member taxing districts, and annually conducts a thorough budget review and certification process for these districts. Additionally, the tsc holds public budget hearings to engage with district leadership and provide additional opportunity for public comment before budget adoption. I will now ask my fellow commissioners and the staff to introduce themselves and state if they have any business relations with the city that could be perceived as a conflict of interest. Todd, you go ahead.
Good morning. My name is todd burton. This is my third year on tsc and my prior life I was a finance officer as well as a budget officer for a number of local jurisdictions in the region, including a couple of postings with the city of Portland. And I have no business or conflicts with the city.
Good morning. Pleased to be here. Eric karsten, a retired city manager. I have no conflicts with the city. Thank you.
Aye, Morillo will terry, longtime academic and you owe professor, most recently a economic consultant. And I have no con no conflicts.
My name is rita moore, I. This is my second year on tsc. I'm a former policy analyst, a former member of the Portland school board, and I have no conflicts.
Thank you. And again, I'm matt donahue, a fifth year on tsc serving as chair. My day job is as a municipal bond investment banker or financial advisor, and I have no current relationships with the cities. That would be a conflict. So I take just a moment. We'd like to acknowledge the. Well, first, let's get to city representatives and introductions, and then I guess we'll start over with the mayor. Come back around this way.
Good morning and welcome, mayor keith wilson.
Good morning everyone. City administrator raymond lee.
Good morning, Candace Avalos, district one city councilor.
Good morning, Loretta Smith, district one city councilor.
Good morning, Sameer Kanal, city councilor, district two.
Thank you all for being here. My name is Elana pirtle-guiney. I represent district two as well.
Good morning. Good to see everyone. Commissioner. Sorry. Councilor Dan Ryan, district two.
Jamie Dunphy: Hey, I'm councilor Jamie Dunphy. I represent district one, and I'm the current council president.
Olivia Clark: Good morning. Great to see you. I'm Olivia Clark, I'm a councilor from district four and I'm the council vice president.
Councilor Tiffany Koyama Lane, district three.
Councilor angelito Morillo, district three as well.
Good morning, Steve Novick councilor, district three.
Eric Zimmerman: I'm Eric Zimmerman, district four city councilor.
Mitch Green: Good morning. I'm Mitch Green, district four city councilor.
Thank you. And I the staff want to introduce themselves. Okay. We have allegra willey, executive director, and brittany abaya, who's her associate. Thank you. Yeah. Thank you. We would also like to acknowledge the district's or the city's receipt of the distinguished budget presentation award for the fiscal year 2025 adopted budget book. Congratulations. Next, we will hear public comment. Then we will ask questions and discuss the budget with you. We are looking forward to a robust, robust conversation. As a reminder, we only have a short time here today to discuss a lot of topics, so we encourage you to speak directly and openly and limit any written comments to be brief, to allow more back and forth discussions, please. So I will now call any members of the public who would like to speak. Each person is limited to three minutes of public comment, and we will let you know when you're nearing the end of your time. Diego, do we have members of the public signed up to testify?
We have three members signed up. First, is brett born marco pino? Ben segal.
Good morning council. My name is brett, born. I'm a cannabis business owner, a long standing member of cpot. And this year, the chair of cpot. My cannabis dispensary is located in the neighborhood. And I'm here to talk about measure 110 program and the cannabis tax dollars allocated to that program. I'm passionate about this topic. After being burglarized and robbed at gunpoint six times over the last eight years. However, I believe these crimes are a symptom of a bigger problem. As we know, 2025 report highlighted the fact that the program had serious challenges. The key challenges highlighted in a report were oversight data reporting systems, data integration across agencies, performance measures for providers, and the lack of geographic allocation based on the concentration of harm. I think we can all agree. Portland, Multnomah Multnomah county have experienced the same programing challenges over the years, and we are all well aware of the hundreds of millions of dollars pumped into the program. But addiction, overdose, homelessness remain visible and urgent issues in Portland and Multnomah county. What makes measure $110 unique is they are voter approved dollars and are governed by law. As stewards of the cannabis tax revenue, we need to stop and ask ourselves our addiction service dollars distributed proportionately to where measurable harm is concentrated. If we were being transparent, we have to say no. The current grant fund allocation model does not work as it transitions to a formal advisory body. We aim to challenge ourselves with higher level policy recommendations this year. Measure 110 tax allocation transparency is a recommendation. Our purpose is to improve transparency within the data so we can better understand where harm is concentrated, where services are currently located, and where those 2nd may not yet align geographically. Lastly, I want to encourage you to be mindful when allocating measure 110 funds in this year's budget. Please remember these are voter approved funds, and with those funds comes accountability to our voters. This week, we will be meeting with Multnomah county's bhr to learn more about the measure 110 program. And I invite all of you to join the meeting to learn more about the program yourselves. I look forward to working with you over the years as we let data become our friend, and we modernize our allocation methodologies to become a leader in the reallocation of cannabis tax dollars. Appreciate your time today. Lastly, I just want to say I, I don't say this, I'm the guy that sued the state over measure 119 and so I'm passionate about these laws and the money going where it says it's going to go. And I'm passionate about staying in addiction services. But word on the street in cannabis and with business owners is if it's not being allocated appropriately, they'd like to see it overturned and put back into cannabis investments. And I don't want to see that happen. So I encourage you to just really look at measure 110 funds in a serious way and see pod is working on an allocation model that is formulaic based on geographic allocation. So that's what I have today. I appreciate your time. Last thing is I appreciate everything you guys do. You're in positions of scrutiny doing tough work and it does make a difference. So thanks.
Thank you. Could you please repeat your name? I didn't hear it.
Excuse me. My name is brett bourne.
Thank you.
Marco pino. Checking once more for ben seagal. That concludes testimony.
Thank you. Well, dig into our questions. I have the first one here. And this cycle marks your second budget process with the new form of government. And we know there were multiple process adjustments this year. So we'd just like to hear about what worked well this time.
Jamie Dunphy: Thank you. Thank you, chair donahue. Thank you everybody. Thanks for the question. When as as I mentioned earlier, I'm Jamie Dunphy, I'm the council president. When I assumed this role back in January, former council president pirtle-guiney had already put together a budget process working group to consider lessons learned from the last cycles budget process and to consider changes. We also inherited a fairly complete budget calendar passed by council as a resolution in 2026. This collective memory and wisdom determined 90% of the changes to the process this year, and I'm very grateful for my colleagues for that work. My team worked hard from January through March to finalize details, culminating in a memo that my office released on March 30th that outlined the complete budget process, including both the schedule of hearings and all filing deadlines and engagement procedure. Through the end of the fiscal year. We worked carefully with council operations to originate the draft, and then finalized it in close collaboration with the city budget office, the chief financial officer, the city attorney, and the council vice president. I believe that having this roadmap was extremely beneficial to our process this year, back in last year, in 2025, the administration released the mayor's proposed budget on may 5th, but this year it was released on April 20th. This meant that council had and the public had two extra weeks to review the proposed budget. This was not easy on the executive and the administration, particularly in a hard cuts year. But the change from two weeks notice to four weeks notice was, I believe, transformative, transformative. That extra time allowed us to schedule significantly more public budget work sessions than last year. This year, we held ten work sessions between the proposed release and the adopted hearing, starting with the joint city county hearing and then working methodically through the city service areas. At the suggestion of councilor Zimmerman, we rescheduled regular council meetings so that the work sessions could have a predictable cadence of 930 to 1230 every Tuesday, Wednesday and Thursday last year. Some of that, some of the service area work on the budget, and the analysis was done in committee. And there was strong feedback that this was suboptimal to have work occur without all councilors present by shifting to work sessions, which are all council. We intended to fix that gap in information and participation, and I think it was by and large successful. We limited committee meetings during the work session period to an as needed basis with the intention of reducing non-critical business so that council could focus solely on the budget. We also asked the administration to delay any non-critical business until after the budget process had concluded. This was moderately successful, as there was still a crush of high profile legislation from the council and the administration alike. During budget hearings, mostly, but not only because of the deadlines related to the end of the fiscal year. I would recommend that the next council president start working to manage the flow of year end legislation even earlier next year. In last year's approved budget, the council filed offices, filed 170 budget notes and amendments, and the body ended up actually only voting on 41 of those. Prioritizing what would and wouldn't be taken up in the budget hearing was painful and in some cases, overshadowed the content of the legislation. And it was a goal for me to reduce the number of filed amendments to protect time during the approved hearing for motions that had to be heard there, and to provide a clear framework for how I would prioritize hearing and not hearing items due to limits if needed. We also wanted to avoid issues we saw last year where amendments were made orally, and the budgetary impact analysis, or just the basic math involved, was being developed at the same time that council was trying to debate the measures on its merits. To address this, we set an expectation that budget notes would be saved for the adopted hearing and council, and told council offices to not expect more than 3 or 4 motions per office to be able to be heard. We set up a deadline for pre filing for budget office feasibility review. We signaled to council that items that hadn't been reviewed for feasibility would not be prioritized. During the approved hearings, we determined to require any amendment made orally to be reduced to writing and reviewed by the budget office. Before being taken up, we created a confidential, attorney approved prioritization poll on prefiled amendments, where all offices were invited to identify their top scheduling priority and to otherwise rate items on a ten point scale to aid in ordering and prioritization as necessary, we grouped proposed ideas by subject area with larger ideas that would make the smaller proposals moot. Ordered. First, we spread the approved hearing across three days and held all of our testimony on one on the first day to simplify access for the public, allow breaks for rest and adjustment, and avoid burnout to the extent possible. I'm almost done, I promise one thing that did not work as planned. We had hoped that council would pre file amendments to cbo on a rolling basis throughout the work session weeks to avoid a work bottleneck at the end, and to allow councilors to make their amendments public if desired, further in advance. But basically everybody filed at the deadline. I don't know if there's a way to solve that. I think that next year, the right choice is to just be more realistic that if there's a deadline, 95% of the filings will come within the last hour of that deadline. This resulted in a few tight turnarounds over the weekend when amendments were due, and when council revises the budget schedule for the next cycle, it would be good to plan for a little extra time between when the final work session, the pre filing deadline and the first budget hearing in the big picture. I think that the main hurdle still ahead of us are about how information is shared with council and the public. In the proposed budget, there was not administrative capacity this cycle to build program offers for all bureaus, but those are desperately needed as a counselor. When I look at the administrative budget package decision decision packages, it's clear that the bureaus and the mayor have a massively higher degree of insight into the actual program workings in our government than is reflected in the budget book. That's a very clear, visible information gap where the legislative branch doesn't have equal access to information and can't do its job. But we will see some budget notes this cycle to try to fix some of those bottlenecks. But it's also clear that the administration needs capacity and time to overcome legacy practices and build resilient, fair systems for the budget process, and I hope we can work together to get there.
Thank you, and I thank you. I'm glad to hear it went more smoothly than the year before. So that's progress. And you touched on this somewhat, but do you have an idea of what a better, even more improved development budget development adoption process would look like? Are there different roles and responsibilities that should change? Not that I don't want to come here every year, but have you considered anything, maybe a biennial budget process?
I don't imagine we really would consider a biennial budget process
Because of how much goes on into this and how much change is year over year. I do think that we need to start earlier. I think we need to start earlier. And in all honesty, it is my intention to start an after action report almost immediately, as soon as we finish this budget and to start work with the full council and the administration to start the process of the next budget by this fall. There's a lot of big decisions. We know that this budget was the largest structural budget deficit. We've had to close as a body for many, many decades. Next year's not looking much better. And so we're going to need to get ahead of this process. And while I really think that this process was better, I think the earlier we can learn about these things, the more input we can give early in the process and the more we can build the systems around it, I think we'll have better outcomes. I think one of the challenges we have continually is getting information to sufficient information to every member of council. I think that we need to also have better abilities and more time to give information to the public. Those things are just about backwards looking time planning, and with a few extra weeks, I think this process would have been even more robust. And I look forward to starting a new process for whoever's going to be the next council president.
If I could just ask, it's more of a statement than a question, but we did receive. And thank you for your very comprehensive answer. We did receive some written testimony which will be shared with the city, concerns over the amendment process at the end of the end of the budget cycle that you mentioned. And there was concern that just too much, not enough time allowed for for public review of that, that part of the budget process.
Absolutely agree. I would love to have been able to find a way to get more time in there, but it has felt crushing. This, this, this schedule, the amount of time we've spent at this dais learning about the bleak situation. And we just simply ran out of time to be able to meaningfully get that done. So hopefully that will be improved next year.
I have a question about. At to what degree, if any, the current Oregon ethics rules around communication non outside of public venue impacted your ability to coordinate especially the amendment process.
Absolutely. I, I won't speak on behalf of my colleagues, but I will speak as honestly about this as I think. I think that the serial meetings law that the Oregon ethics commission has put in place is crippling this body, our inability to know if there is broad consensus among this legislative body before we are in the middle of a public process, is leading to moments of embarrassment. It's leading to moments of lost decorum and conflict that could have been avoided had we simply been able to have a collegial conversation with our colleagues. I think that I certainly understand not wanting to have secret backroom deals where we are as a group meeting in public or out of the public eye and making major decisions. But the inability for us to one on one connect as colleagues to say, this is an idea that I am working on, and I would love your support and to be able to hear back. I can't support it that way, but I could support it this way. We are missing an enormous step of the legislative process, and it is leading to really bad outcomes and waste of time, not only for the councilors here and the city staff, but for the public.
Rita, your next question.
Okay. Historically, the city budget office put together a budget review for every city bureau that outlined major fiscal and policy issues for the mayor and council to consider. Those reviews would presumably have identified the growing unappropriated fund balance in the housing bureau that has recently been in the news. Are those reviews still being done, and did they identify the issue? If they're not being done, when and why do they end? And how will you ensure that similar irregular budgeting practices will not happen again?
Thank you. Aye, Morillo councilor Avalos here. I will be taking that question on. So first on the cbo reviews, my understanding is that the city budget office did stop doing the detailed bureau level reviews during the charter transition. Over the past three budget development cycles, cbo has tried different approaches to adapting those bureau specific reviews for the new form of government. These new approaches recognize that cbo's role has changed. Now that it is no longer a formally independent office, and that bureaus develop their budgets with a more citywide approach. Under the new organizational structure. As cbo has shared, none of these approaches have fully landed on a permanent model yet, and they are continuing to work with the city administrator, the cfo and council leadership to determine what level of review and reporting will best meet the needs of council under this new form of government. That said, my understanding is that the reviews of the past may not have identified these housing funds because they were unbudgeted, excuse me, and therefore not reflected in the adopted budget documents being reviewed. So, second, on avoiding irregular budgeting practices moving forward, I think the most important takeaway here is ensuring that we have stronger processes and clearer expectations. So both council and the public have an accurate picture of available resources. There are likely multiple financial policy changes forthcoming in fy 267 to ensure we avoid similar issues in the future, and the change most directly connected to these previously unbudgeted housing funds is clarifying for budget managers citywide that all fund balances at the end of a fiscal year must be re budgeted in the fall of the following fiscal year, along with establishing a process and expectation that for ending fund balances are checked against adopted budgets for every city fund. Cbo instructed bureaus to do this work this spring after the issue was identified, and I understand additional guidance will be issued over the summer to ensure this process is consistent. Consistently followed during the fy 2627 fall tau. I support these efforts because regardless of how this issue occurred, we need financial systems that are transparent, consistent, and give policy makers the information they need to make informed decisions. Thank you.
Good morning. The budget we see fte moved away from bureaus into a centralized system for hr, it and other administrative functions. What improvements in organizational performance do you expect and what indicators will you use to evaluate the effectiveness of the change?
I will step in to try to address that question, and I'll turn it over to staff to elaborate more on kind of the realignment work that we've done as an organization. We anticipate that the realignment will improve our coordination as an organization, clarity around our responsibilities and create more consistent tools and processes and make it more straightforward for bureaus and employees to access support. It also will improve our ability to rebalance support across the organization and more accurately request resources. With an enterprise wide lens moving forward. Keep in mind, in our old form of government, we were very siloed. Every bureau had its own set of hr, it procurement, a lot of duplication of services. And with us moving towards this centralized model doesn't necessarily eliminate some of the duplication, but actually sometimes enhances our ability to be more responsive to not only internal customers, but also external customers. As an organization, you know, with these services and how we move forward with these services will be critical in how people gauge our success as a new form of government. And this is something that we're committed to as an organization to make sure that we're constantly looking at ways to improve our organization and how we deliver services across the board. Is it perfect? No. Nothing that we do within our organization will be perfection. But there is a commitment to excellence that we have as an organization. Commitment to continuously looking at how do we get better, how do we learn from our mistakes, and how do we grow stronger as an organization? And that's something that we're committed to, and we want to make sure that we're doing these things to help identify how do we develop key performance indicators as an organization? How do we develop our strategic direction as an organization? And what is that north star that we're leading to trying to achieve as an organization that makes this community a better community for all portlanders to be able to live, work and play in. And that's something that we're committed to as an organization. But I'll turn it over to our cfo biery to kind of elaborate if he has anything he wants to add, or our deputy city administrator, tracy warren, to elaborate on anything extra.
Thank you, city administrator. I have no elaboration. You did an excellent job. Thank you.
Mr. Berry. I believe it was in the April oversight meeting where you voiced some concern about having sufficient staffing, even to meet kind of best practices and budget and financing. Does do these moves help remedy that concern?
Yeah. Thank you, commissioner, for the question. For the record, jonas biery the city chief financial officer yes, you're correct. For the past couple of budget cycles, including this one, I have identified that underinvestment in budget and finance service staff presents a risk to the city's financial operations. The increased expectation from financial services post charter change has further exposed those deficiencies. And we've seen some of that a little bit publicly here over the last 18 months. I will continue advocating to council and to the mayor to support minimizing lower value efforts and uplifting the highest value financial priorities and process improvements, and will continue to recommend increased investments in these essential functions. The core services realignment project did not directly address budget and finance functions, largely due to insufficient bandwidth to maintain those core budget requirements, budget and financial requirements, and to simultaneously undertake a realignment effort. Additionally, the city administrator recognized that given those existing bandwidth challenges, realignment of those functions for savings was unlikely to achieve meaningful results. That being said, hopeful and optimistic that completing realignment of other functions will provide a little space for those budget and finance functions to breathe and may provide a template for future realignment of that work.
Thank you.
Yeah, thank you, city administrator lee, I just had one question follow up. And that is with the and being working in some large organizations myself, I know how difficult it is to break down those silos. So best of luck on that. But I did want to ask, do you find some relief to the general fund for the general fund funded departments or bureaus once you bring more under centralized control?
I believe. So that's our intent as we look at how do we improve our operations to be more efficient, effective and economical in the services that we're providing? I think as we go through the course of the year, some of my intentions will be trying to set up a team to kind of evaluate these cost savings that we're predicting as an organization and really look at how do we move this forward. I think we're going to be in the next, you know, several years. We're going to be in this constant evolution as an organization of how do we improve service delivery? How do we improve our customer experience? How do we improve our responsiveness as an organization? And some of that will probably be cost effective, but some of those things may add some cost to us once we realize it's not having the intended results that we were looking for. Overall, as an organization, our intent is always to be as efficient, effective, and economical as positive. But we want to also listen to our customers, our community members, our businesses to truly see if we're hitting that mark. Are we cutting our nose to spite our face and some of these reductions that we're making as an organization? The key thing is how do we enhance the quality of life for people within this community and making sure that we're developing services and programs that enhance that for our community overall. Hopefully, that does that in a cost effective way, but we have to be evaluating that and monitoring that throughout this year in the years to come.
And can you anticipate the same kind of analysis or similar analysis for the utilities, since they're supported by rates and charges that might provide some relief to to ratepayers as well?
Most definitely. We will be going through a whole facility and rate study as we continue to kind of look at what's happening. What you have seen over time is for this city is this deferred maintenance conversation we have done. We haven't done ourselves any favors in deferring maintenance over the last decades. So you're starting to see now those those costs are starting to rear their ugly heads. Now as it relates to how do we maintain an infrastructure system that has aged with not a lot of maintenance provided to those systems, but we're dedicated to that as we look at pulling on an asset manager for our organization to really look at how do we build a capital improvement program for our organization, and really looking at how do we prioritize those things to truly move our city forward in a productive manner, but also taking into consideration the cost associated with this to our customers. So we want to make sure that we're doing this in a manner that is one effective in ensuring that we can maintain our infrastructure, but two, not not putting our portlanders in a situation where they can't afford to live in our city anymore. So that's a balancing act that we have to continue to work not only as administration, but also along with our city council and mayor to make sure that we're hitting that mark.
Thank you. We'll before, while we have cfo and deputy city manager, I'd like to take advantage and follow up on something that councilor Avalos mentioned, which I don't know if everyone knows about. And that's the fall toe process. So would you mind just explaining what that what that is?
Sure, chair, thank you for the question. So the fall. Toe technical adjustment ordinance is essentially a moment in typically late October, early November, where two primary things happen. One is aligning actual budgeted fund balance to the ending fund balance with the benefit of having that work done. So the fiscal year ending on June 30th, then aligning our budget to what those actual end of year fund balances are. And then it's a moment in in the year to make mid-year adjustments for things that are changing cost relationships that we know are changing movement between funds. So those are the primary purpose of that, that fall toe to toe technical adjustment ordinance also typically have a similar adjustment, a little different in purpose, but a kind of a bigger moment of budget adjustment in the spring as well.
Thank you. As budget people will tell you, it's always budget season.
The 18 month annual budget.
Process.
Thank you very much. In a similar vein, how would you all respond to feedback that the new new structure, the new org chart is management heavy? This might be. There's a second question here that might be particularly apt for administrator lee. In a comparative perspective, how does portland's current span of control compare to similarly sized cities?
When you look at our structure overall, compared to governments that are similar to our scope and size in the amount of services we provide and our overall budget, we're in line from a structure standpoint of having a city administrator, deputy city administrator, bureau heads and some deputy bureau heads there to ensure that we have succession within our organization as a whole. We have to keep in mind, though, we are building this plane and flying it at the same time. We're correcting some things that didn't work well for our organization while still trying to provide services to the whole city, and sometimes individuals that are in our metro area as well. So we have duplicate things happening at the same time. As an organization, we're maintaining our day to day operations and services, but we're also trying to look at how do we improve and get better as an organization and really trying to create the space and the time to be strategic about how we move things forward as an organization, we'll be looking at kind of our management structure as we go through the next year of ensuring that we have the proper span of control, our dca. Tracy warren has done a fabulous job with our human resources bureau to kind of develop a report and provide that information to council, to kind of break out where we are from a span of control. Are there are certain areas that have areas in room for improvement? Yes. But for the most part, we're pretty structured in a good way. When you're looking at how are we moving as an organization? And I would challenge anyone, and as they look through this, most organizations, when they're going through the amount of transformation that we're going through as an organization, sometimes you see this expansion in the organization to go right back down and get back down to a normal size, because we're truly making sure that nothing is falling between the cracks as it relates to this transformation that we have as a government, but also that we are moving this organization forward in a strategic manner. And I think that's the key thing that I'm focusing in on is ensuring that we're not letting anything fall to the wayside, and that we're not forgetting about how do we strategically create an organization that's not just sustainable for the next year or two to come, but we're building a strong foundation that we can build upon this for decades to come as an organization. But we're always evaluating our staffing structure and our model to ensure that it is producing the results that we're looking for out of organization, and that we're just not having bloat in the organization overall.
I'm very sympathetic to the idea of constructing the plane while you're flying. I wonder, are there any concrete benchmarks or timelines that you're looking towards to?
Yes, we have some key positions that I'm looking to add within the organization next year. One of the challenging things that we've seen through our realignment work and just in this transformation that we're making as an organization is we haven't been great at change management just in strategy and how we move things forward as an organization. Hopefully, with the approved and adopted budget of the city council, it provides the opportunity to fill that role for the organization, and that new role will really be looking at how do we move our organization forward. I commend our staff that has been working through this transition. Even before I arrived within this organization, I think almost now, 5 or 6 months now. What time has flown? But we can't ask them to continue to do their day to day operations and look at how do we make this organization even more efficient, effective and economical. That's a full time job to itself. When you look at the size and the scope of the services and operations that we have as an organization, so we have to be thoughtful and intentional about how we move forward and looking at our structure as an organization to ensure that it's meeting the needs and the priorities that the mayor and this city council has of this organization.
And then, if I can, I'd like to add a little additional detail related to some of the findings of the span of control report. So for the record, deputy city administrator tracy warren for city operations, when assessing the city as a whole, supervisory positions comprise about 15% of the total workforce, while non-supervisory positions comprise 85%. Supervisory positions have grown faster than non-supervisory positions in recent years. Since 2020, positions required to supervise increased by approximately 16%, while non-supervisory positions increased by approximately 5%. Given that supervisory classifications are a small share of the total workforce, the increase reflects a modest change in the greater position landscape. More telling is how the organization performs against its own standards. The city's current standard is 1 to 4 span of control, meaning that for every one supervisor, we require four direct reports. The city's current average span of control is 7.7 direct reports per supervising. Among regular and limited term positions, which is up from 6.5 citywide since the 1994 study that was done at the city, and only about 8% of the required supervisory positions fall below the four minimum requirement for direct report minimum requirement. Available literature on span of control, including the city's prior studies, consistently indicates that there's no single target for span of control appropriate for all situations and functions that are complex, high risk, or under significant public scrutiny. More supervision supports consistency and accountability, and these are legitimate reasons for a smaller span of control than any efficiencies to be eliminated. Separately, the growth in positions that may optionally supervise has let bureaus stand up small, specialized teams to lead specific programs, which supports flexibility, professional development, and organizational depth. The c a, d, c a management structure is similar to local government structures. As city administrator just talked about. However, research to date indicates portland's span of control is comparable to other local government entities. The state of Oregon statutory target is 1 to 11, but the most recent period reported for quarter three of fiscal year 2026 shows actual ratios ranging from 1 to 6 to 1 to 11, showing that there is variety there. Multnomah county released a report of span of control in December of 2025, in which they reported exceeding their target ratio of 1 to 7, with a county wide average of 1 to 9 among regular and limited duration employees in 2024. A report by Oregon metro's office of the auditor metro's average ratio were found to range from 1 to 5 to 1 to 7.
Dc horne. I'm thank you very much. I have a clarifying question. Did I hear you say that the the target was span of control ratio of 1 to 4?
It's not necessarily our target. That's our minimum requirement. Saying as a baseline, no one should be considered as supervising in these specific management structure and supervisory positions without meeting a 1 to 4 requirement.
Thank you. Given the structural deficit in the general fund, and I will say, if it's any comfort, we see this in a lot of the jurisdictions we are visiting this this season. And this is something we talked with the city last year as well. We know that the mayor and council face a tough balancing act between protecting immediate programs versus preserving long term financial stability by funding reserves and contingencies. At what point do you begin to risk the city's general fund credit rating? Have you modeled where this threshold may lie?
Yeah, commissioner. I'll take that question again. Cfo jonas biery, we closely monitor the city's financial condition, and we have professional experience staff assigned to do that work related to bond issuance in the city's bond ratings, in particular, myself as cfo, city treasurer, and the city's debt manager and team. And we have support from an independent registered municipal advisor, as well as other market experts. While some additional one time reserves and amounts are being deployed to meet the current moment of fiscal crisis, we believe that the mayor's proposed and the council approved budget remains within expectations to maintain the city's current general fund obligation bond rating. However, that flexibility is likely waning and financial decision making will need to reverse course to maintain financial stabilization. For example, we know that our total general fund reserve and contingency levels using the calculations performed by standard and poor's, have dropped from over 20% in fiscal 23 to around 15% in recent fiscal years, and will be closer to 11 to 12% as projected for fiscal 2027 as of the approved budget. That being said, we are taking actions to help shore that up and prepare. There's a budget note directing reestablishment of reserve specific to the volatile business license tax revenue stream, and we anticipate additional reserve and other financial policy related improvements to come forward. Prior to the fiscal 2728 budget. Additionally, we've assembled a work group co-led by myself as cfo and co-led by councilors Green and Zimmerman with a number of community representatives, to develop a financial stabilization and recovery plan for presentation to council. Hopefully in September, we expect that will provide recommendations for potential actions and priorities to ensure continued fiscal responsibility and alignment with the city's core values.
So I want to drill down a little bit more regarding one of the city's adopted financial policies, and that's the use of one time revenues to fund ongoing programs. I believe it's finance 2.0 for. Yet it appears that this practice has become more common in recent years. What proportions of the program's funding funded by this budget, this approved budget depend in whole or in part on one time funding? And how does that compare with trends over recent years?
Sure. I'll take that for the record. Ruth levine, I'm the city's budget director. So it is true that there has been an increased reliance on one time funding to support what end up being ongoing programs in recent years. The issue certainly predates the pandemic that happened, but I think it was a bit more isolated since the pandemic, sort of the the practice has been, I think, exacerbated a bit by the combination of one time American rescue plan dollars coming in. We had over $300 million between cares and American rescue plan come into the city in 2020 and 2021, and business license taxes coming in above forecast in the immediate post pandemic time when inflation was was rising rapidly. The combination of those two things, plus the obvious crisis from due to COVID and the closures, resulted in quite a bit of one time funding. Some of it was used for much of it, in fact, was used for truly one time things. Things like rent supports that have since dropped off and the like. And I will also note that Portland is definitely not alone here. Local governments across the country have seen have saw quite a bit of reliance on one time sources. I think the blt aspect is a bit unique to to this region, but the arp certainly, you know, some governments used it to fund to fund fire prevention and the like. So we are not at all alone. That doesn't make the problem any better. So in the there's a graph I can send that we used in a powerpoint in the fall, but I'll send it as a follow up. That kind of shows what the the curve looks like, but we basically built up up a cliff that was at its peak in 2022, 23 of one time funding. And we have been stepping down the cliff since then. This the 2627 budget sort of continues to step down the cliff. So last year we were estimating the the what I'll shorthand call the fiscal cliff at about $100 million for going into 2728. Essentially, we're estimating it at about $75 million. So, you know, so the peak was was about $220 million in 2223. So that gives you a general sense of what the the practices have looked like. And, and I think the this ties in with the financial stabilization work that cfo biery was talking about in terms of, you know, getting us back to, you know, hewing as closely as possible to that financial policy that you mentioned of using one time things, you know, just really quickly, I think the best practices for one time dollars are things like capital projects, which obviously we, you know, there's been a lot of talk about deferred maintenance at the city and then other things like pilot projects where there's, you know, a specific intention to stand up a program or to evaluate a specific policy or program that requires some one time funding. And so obviously, we've kind of lost opportunities to invest in deferred maintenance by using this one time funding for other programs. And, and, and we have quite a, quite a bit of sort of liability moving forward that we need to work our way out of.
Could you just maybe touch upon what would be the negative effects of a ratings downgrade of the city?
Yeah. Thank you. Chair, it's a good question. We've done some rough assessment. I think, as you know, and other members up here know, it's difficult to do right, because that's a projection based upon both uncertainties in the market and volume of issuance of debt. But I would describe it as having three primary impacts. Let's imagine a one notch downgrade from from triple-a to the next double-a level. First, we know that any issuance of future debt will be more expensive. I think our current estimate is between 5 to 15 basis points, depending on the type of credit, depending on the moment in the market, based upon the current outstanding debt portfolio, we've estimated that could be as much as a couple million a year in direct cost increase spread out across the city every year, forever, until that rating should ever be restored. Additionally, we know that our debts typically issue over 20 to 30 years, and so that would have a direct cost impact. We estimate of somewhere between 40 and 100 million direct impact of that downgrade. Additionally, we know that folks like insurance agencies, other perhaps large contractors, large partners use our credit rating as an indicator of their willingness to do business with us and the fees that they charge us. And so we know that would be impact, unpredictable impact. And then lastly, we know that there's sort of a reputational benefit that we get from that triple-a rating businesses, small and large nonprofits who are looking to do their own, whether it's coming into Portland, staying in Portland, paying their insurance costs, getting loans, etc. That providing being able to say that they are located in a triple-a city provides them a benefit as well. And so that's another indirect cost that I would be fearful of should that outcome occur.
Thank you. People are often surprised when I tell them the city of Portland is triple a rated, but it's definitely something that is a good surprise when they learn that. So moving on, looking across the entire budget, we see that closing the structural deficit required reductions across public safety functions. Some of these cuts are added back in the approved budget using reserve funds or repurposed dollars. But we wonder about next year. How do you reassure the public that you are taking a strategic and thoughtful approach to cuts or renewed funding using reserves in these areas?
Steve Novick councilor, district three. First of all, with due respect to the city administrator's metaphor, I think what we're doing is closer to riding a horse while retaining it. I'm concerned about our use of reserves, in particular the drawdown of 2.5 billion from the business license tax reserve, which was intended to guard against a downturn in that volatile tax. I actually did not think that was a thoughtful decision. I think the mayor's approach to public safety cuts, not laying off sworn officers, not closing fire stations, was geared toward life safety. Although I am concerned about the cuts in hours of the medical rescue vehicles, which do respond to life saving emergencies.
And what would be your message to the community members who are worried that these combined reductions will noticeably degrade the city's responsiveness?
I would say that there is a concern that the cuts that could affect response to life threatening crises are the cuts to the fire bureau, rescue vehicles, the respond to medical calls. I know there will be efforts to restore those in the adopted budget. However, those efforts will largely rely on one time funds, which, as we've been discussing, poses financial risk. I do have a proposal to restore one rescue using an ongoing funding source reduction in council office budgets. But all the other. The for the other rescues and the other proposals, it's all one time funding.
Thank you.
Can I ask. Is there a plan to follow through on on the idea that Portland street response would become a 24 over seven operation.
I think that that is the ultimate goal. One thing that we have been trying to do, and stephanie howard of the city has been involved in this, and councilor Kanal and I have been involved in this, is trying to get medicaid to pay a bunch of the cost of psr. And we actually consulted with bruce goldberg, the former head of oha, who told us that he thought that oha could, just by tweaking a few codes, enable us to start doing that, we'd have to figure out a billing system, whether it was our own or going through the county. But my hope is that we can get to 24 over seven, largely by getting psr work reimbursed by medicaid.
Does that apply to chat as well?
That's yes, we would we would try to get this get the same funding for chat.
And how about in the fire department, their ambulance service, their paramedic service?
You know, to be bluntly honest, I had not thought of that. I mean, they're providing medical care to. So I don't know if any other jurisdiction has tried to get medicaid funding just for the fire bureaus general medical response to medical calls, but sounds like a damn good idea to explore.
Let's throw in the county at the same time.
We have a legal.
We have a legal requirement to pay pension obligations for public safety. Retirees under the fire and police disability and retirement system, otherwise known as fpd are. We also have an obligation to ensure that the city and other jurisdictions have resources sufficient to serve younger generations. Are there any efforts planned or underway to get updated analyzes of the fpd system? Its long term fiscal impact, and explore ways to mitigate it?
Thank you for the question. Sameer Kanal district two. This is an issue which has been heading our way since long before this council took office. Given our local property tax structure and the tax liability that fpd r represents, the funding source is not working. We agree we need to find a way to fix the way we pay for it. But what that fix is, is where it gets tricky to find a new funding source model that can defray property taxes. There's differences of opinion on what might be the most successful path forward. For example, the administration believes, quote, it's unlikely that a meaningful alternative could be put in place prior to the naturally occurring stabilization of the annual levy requirement and natural future decline in the levy rate, end quote. It should be noted that about 40% of portland's local property taxes will go to fpdr at that time, and that council has not actually discussed this matter. But an initial discussion of fpdr will be on the committee. The whole agenda in 2026 without another approach, which could include investment funding. We perpetuate intergenerational inequities because we continue to saddle the newer generations with the financial burdens and decisions that were made by older generations before those young folks could vote, or even before they were born.
Is there are there plans afoot to do new analyzes? Is, as I understand it, the last time this was looked at in terms of analyzing impact was 2013.
So there was a large scale review in 2013. And you're correct. I believe there is a I think it's every two years there is a review and the last one was in came out in June 2024. So I believe it's actually next month or this this month or next month that there will be another analysis we contract out to, I want to say milliman for that.
Okay.
Fpdrs5 member appointed volunteer board of trustees has the authority to increase property tax rates to cover annual costs, as well as to grant colas to members without ever returning to city council or to voters for approval. The open ended authority to raise taxes is unique within Oregon. Does fpds governance structure raise any concerns?
So federal law requires tax qualified pension plan funds to be held in a legally separate trust, overseen by one or more trustees with strict fiduciary responsibilities? The size of and composition of fpd are specific. Board are dictated by city charter. Three of the board's five trustees are appointed by the mayor. That includes the board chair and two citizen trustees. They're confirmed by city council. They must be residents of Portland and have relevant experience in pension or disability matters. The other two trustees are elected by the active, sworn membership of the police and fire bureaus, respectively. While the board does approve the fpdr budget, city council approves levying the property tax required to fund that budget. City council has not yet discussed evaluating how fpdr governance guarantees portlanders a voice on the largest portion of their local property taxes, or what room there might be to improve the. This is vital because it's. The board is the place the public weighs in right now. The public was asked to weigh in on the parks levy, which went up from $0.80 per $1000 to $1.40 per $1,000 as a 60 cent increase, and the public does not directly weigh in on the fpdr levy, which is $3.19 per $1,000. This means that our structure creates a very high bar for the f, p, d r board to meet not only on stewardship, but also on ensuring public participation in this process. And I appreciate that follow up question, too. And we're looking forward to more robust council discussions on that topic in the future.
Utility rates are slated to increase in this year's budget, and we know there will be future increases as the city works to fund infrastructure projects such as bull run filtration project. Could you give us an update on the latest on that project and what the estimated total cost is, and general timeline?
Olivia Clark: Thank you for the question, Eric. I'm Olivia Clark from district four, and I'm going to go a little bit off script and provide you with additional context on this as well. This is, again, what you're hearing is another thing that this council inherited. And we are now tasked with oversight of the project. And hopefully we're going to work through the rate structure again in the future in my committee. The total cost of the project right now is the whole filtration project and the pipes that are associated with the filtration project is estimated at about 2.5 billion. Regarding the timeline for completion, we're currently at about 30% complete. And you know, because of the 16 month delay that we experienced, and I can talk more about that, the city has received an extension for the completion from the Oregon health authority. It's called the updated bilateral compliance agreement for the nerds out there that want to know what the agreement really is. But that deadline was extended to begin serving the filtered water until September 30th of 2029. Thank goodness. I want to just veer off my script here a little bit and just go into that 16 month delay. You know that the construction schedule was delayed by nine months during the when we were waiting for the land use permits from Multnomah county. And then there was a construction was underway. And then there was another delay because there was a land use appeal to to luba. And that took another seven months of delay, which you can imagine added to the costs of the project. But I want to back up just a minute because this is something that we inherited and with this project was first talked about in 2017. The cost was estimated at 500 million. And I think that's really a misinformation for the public because that cost was estimated without having the land purchased, without having a design completed. It was really an estimate. And since COVID costs have gone up significantly, and then you factor in that delay, that delay of 16 months costs us another $450 million. So just want to be clear about that. I think you also asked about rates, the estimated rate increase this year will be about $10.20 a month for a single family resident. That's about 120 a year. And as I mentioned earlier, the public works committee will be taking that up and looking at a rate structure overall. But that cost includes operations, maintenance, the filtration project, and then other capital projects to meet regulatory compliance and deliver essential services and paying debt service. Just one final note. I don't know if you were going to ask this as a follow up, but I'll just preempt you. The. It's important to note that our utility bureau's offer a variety of financial assistance programs. They're actually a model that we're looking at transferring to, to other, other issues, but that includes a bill discounts, crisis vouchers for some income qualified households, as well as flexible payment arrangements, monthly and other monthly billing options. There's a clean river rewards program, which also provides up to about a 35% stormwater discount. So those are all tools that help ensure that customers can maintain access to their essential water services. I think that does it for me.
Thank you much. Appreciate it. Thank you councilor.
Thank you for that answer. And I'm curious. I know ten, 15 years ago as the cso project, that combined sewer overflow project, when you're looking at rates and rate impacts to customers for the city's utilities, that would include water, sewer, swim or surface water management, and actually solid waste because they set the rates for solid waste recycling. Are you looking at it as a whole picture as opposed to these individual utility needs?
They're all combined, right?
Right. So is that $10 a month? Is that the.
Combined rate.
For water and sewer? Okay, great. Thank you.
As we all know, the city enjoyed. I'm sorry. Yeah, absolutely. Excuse me.
Sorry. I'm over here in siberia. So you mentioned that permitting was an issue with the delays.
Sorry, I didn't hear what you said.
You mentioned that some of the delays were caused by permitting issues with the county. We're hearing permitting a lot being an issue for, you know, the different districts we we talked to. Is there any any effort, any appetite among local jurisdictions to collaborate on reforming the permitting process? I think it would make life much easier for literally everyone and probably significantly cheaper. Is there any effort underway to even think about that?
Yes, I think there's a lot of discussion among the 12 people here on streamlining permitting. I think the issue at the county was on land use permits and some objections to those. So there's a whole nother process involved in land use permitting. But I think we would all agree with you that we need to streamline permitting.
For decades, the city enjoyed high job growth and investment. Now, lamentably, lamentably, it looks like it's on a sustained decline. What does the mayors and city council's vision to reverse the trend, and what do you see as the principal barriers?
Thank you. I will take this one. You know, I appreciate the opportunity to talk about our city's economy and high wage jobs within our economy as it relates to the budget this year. Last year, city council made a number of investments to support small businesses, including the addition of the storefront repair grants to the budget, which had been cut in the mayor's proposed. And this 2020 627 budget, we saw the mayor make a sustained investment in that work, renewing the storefront repair grant program and expanding its application to storefront renovations, specifically targeting new grocery stores and restaurants. Council has not only supported these investments, which remain in our budget, but has restored funds for workforce training and summer internship programs to ensure that we have a ready workforce. As new businesses come away and we have expanded support for events, arts and entertainment in our city, which drive our tourism economy. Where you may have seen some disagreement over investments in economic development last year, there has been unified support for these investments in this year's budget. Your question gets at a concern, though, that I believe is larger than just this budget, and I'd like to briefly address that. Restoring investment in our city will require a combination of small policies that show we are open for business, a clear commitment to addressing concerns around safety and foot traffic, that many businesses have raised a clear policy on the types of businesses we are willing to invest in and frankly, time to change our reputation. The council has clearly committed to the first of these with our sdc waiver last year, storefront repair grants, broader storefront support programs that we've supported unanimously, and other policies both within and outside of the budget. We've spent substantial time this budget looking for consensus on funding sources we could use to restore cuts to our public safety system. As my colleague detailed earlier in our conversation, and we have restored cuts to violence prevention programs, Portland street response, fire response, street medicine through the chat program, and access to police services at our police precincts. We've also invested in events that bring foot traffic to neighborhoods across the city, and especially to downtown. This work is often focused on entrepreneurial and small businesses within our city, and I'll note that we also need to focus on the high impact, high wage industries that create a significant number of jobs. The committee I chair, the city life committee, will be discussing a number of ways we can support the growth of high wage jobs in our community over the coming month, though that's not addressed in the budget before us, which focuses more on those events and entrepreneurial small businesses for the time being. The final factor I noted is time, and while we can't change time, we can continue to approach the work with a steady hand. I hope that you see in this budget another step in the right direction. We will continue to take those steps to get the city back on track.
Thank you. Councilor, you brought up something actually that occurred to me I hadn't thought about this year. I think it was two budget cycles ago. There was a moratorium on sdcs. I wonder what the status of that is. Is it set to sunset this year, and what impact has the removal of those been? Do you have any sense of how effective it's been?
You know, I'm going to forget the exact meeting date, but it was either late June or early July of 2025 that this council took action to suspend sdcs on most projects for a five year period of time. I would look to the administration to talk about the specific effects of that. We received an update a few months ago, but I don't want to to detail information that is now a few months old.
You can phone a friend if you want.
I city administrator lee, I'm not sure if you have somebody in the room with the most up to date information.
May not. We may have to follow up on that one for.
I can give some preliminary updates. So the first update that we got regarding the sdc waivers was that 1720 out of the 5000 eligible units had, I'll say, gotten into communication with us, gotten into the queue. We don't expect that all 1720 will take full advantage. But they initiated contact with the city to investigate if they would be eligible, if that would work for them, if it would make their unit financially feasible. From the from the first go of that, that also that report now is several months stale. And so the what that has turned into, we'll see. But over the three year period, 1720 units, 5000 eligible, that was those are the numbers in which the sdcs were, were targeted for.
I guess, while we're here. You know, as as we know, sdcs historically, when there was development were a primary funding source for for capital. And as we know, we have a huge capital backlog, right? So there's some trade off in suspending sdcs. How does anybody care to, to, to assess how well that trade off has been going?
There's no trade off if nothing's getting built. That's kind of the basic math of it. So for much of our city, the role that sdcs play. We're talking about, right. I represent the most urban core, right? So I don't need a bigger pipe, so to speak. But our growing cities and other parts of the state, this is huge because if you go from a few residences to to high rises, you certainly need a bigger pipe. So in our case, we had a couple of things that factor one, a significant portion of urban build out already. Two, nothing was being built. And so the. Yes, one sentence is you could be forgoing sdc funds. The other side of that is you weren't going to get them anyway. And that's the really challenging and frankly, first in a career that I that I experienced from a decision making perspective of, wow, I've never seen us actually not bring in anything because nothing was getting built. And that's, that's where you say, okay, we're willing to forego sdc in order to increase property taxes. And then I think that's also why everybody agreed that having either a sunset, but also a maximum units was important. So that was not seen as an in perpetuity because in perpetuity eventually just leads to a death of a city. And so that's certainly not what this is. This was a flash sale, so to speak, and it was about getting some inventory moving. And so I think those are really important balances. And you see that reflected in the way the policy was developed with what I call guardrails around it. And I think everybody who's trying to take advantage of it understands that. And that was targeted. We wanted people, if they were sitting on their heels or on their butt, to start moving. And that was that was the idea behind that is that if you have something that might be ready to go, get going.
I just like to ask a follow up question to your, your response. And that is besides the financial resources that the city can put forward to economic development, which are somewhat limited because you have a lot of other things to, to fund. Can you comment a little bit about what work you're doing with relationship building, with the business community, who can leverage a lot more investment in the community? And I know that's a big business community involved a lot of different groups, but how are you engaging them to help help them along to with their investment ambitions?
Certainly. And we're veering a bit away from the budget here, but I think it is an important question. And there's work happening both at the council level and also through our executive. The mayor has been convening a central city task force that has brought together a number of businesses. The mayor and a number of councilors together convened the grocery industry to look at how we can ensure we don't have food deserts across our city. That both helps to spur businesses coming into the city and the grocery industry, and also ensures that our community is a place that people continue to want to be, which helps with business growth. To have that that fantastic, well trained, interested in being here, a group of folks ready to work earlier this year at the the formation of our new committees, the city life committee brought in representatives of a number of different parts of our economy to have a broad conversation about level setting. Where where are we at in a number of different spaces that the committee will consider and will be following up with specific industries in in those broad conversations to ensure that that is helping to form the direction that the council is moving as a whole as well.
Well, that concludes our questions. Thank you so much for the conversation and your answers from council and from staff. I was remiss mentioning this earlier, but in addition to the public comment we had heard today, we also received written public comment from elizabeth luthy and ben siegel regarding the city's budget process. Commissioner burton mentioned the subject of that was generally around time for public opinion during the amendment process. So we appreciate you sharing your thoughts with us today. And at this point, I will close this hearing and open up a regular business meeting of the tscc hearing closed. Business meeting opened. May I ask executive director willhite to come forward and discuss certification and recommendations.
For the record, allegra willhite, executive director of tscc. First, I would like to give a public thank you to city staff for their partnership, not only through the budget process, but throughout the year. They work diligently and are thoughtful in their approach to the budget process, always looking for ways to improve transparency and the quality of budget documents. For the fiscal year 2627 budget, we, as staff found the estimates to be reasonable for the purposes stated and in substantial compliance with budget law. However, for the last three years, including this year, the city's published proposed budget has contained out of balance funds and actual or budgeted years as a result of errors in the published data to comply with Oregon local budget law, local jurisdictions should provide accurate actual revenues and expenditures and budget numbers that balance. While the city corrected these errors prior to final budget adoption and therefore stay largely in compliance, the reoccurring nature of these discrepancies leads us to provide a recommendation on this issue. We recommend that the city implement an enhanced internal quality control check to verify prior year actuals and other budget data before publishing future proposed budgets. Accurate data is critical for proper public and legislative evaluation as well for bill, as well as for building and maintaining public trust. T sec staff is available to provide pre-publication review to facilitate this process if desired.
Thank you. We're here to help. May I have a motion authorizing the commission to sign the certification letter as presented with the recommendation.
So move.
I will second.
Okay. All in favor? Aye aye aye. Okay. Unanimously authorized. Thank you so much. We'll adjourn the meeting.