The record · Transcript
Council Session — 2025-10-12
Transcript from the session's official auto-captions (31,088 words), shown in readable case and split into speaker turns. Speakers are not yet identified (colors just separate consecutive turns). Auto-captions can contain errors — check the recording for anything that matters.
Session summaryEditor-reviewed
On October 22, 2025, the Portland City Council held a work session (misidentified in the transcript as both October 12 and October 22) covering the Fall Technical Adjustment Ordinance (TAO) and the 2026-27 budget process. City finance staff presented details on ending fund balance calculations, encumbrance carryovers, general fund contingency options, and a shortfall tied to business license tax revenue coming in below forecast. Extensive discussion addressed the distinction between technical adjustments and policy-driven decisions, with multiple requests for written follow-up on items including Prosper Portland encumbrances, Portland Solutions shelter carryovers, compensation set-aside usage, and comprehensive fund balance data across all city funds, not just the general fund. A city economist presented on revenue trends, including business license tax volatility and transient lodging tax outlook. Staff also proposed a revised 2026-27 budget calendar featuring earlier council engagement, a non-balanced informational report in February, and a Mayor's Proposed Budget targeted for April 20. Councilmembers raised numerous technical questions, requested clarifications on specific budget line items, and offered feedback on the proposed calendar and process changes. No votes were described as having occurred during this session; any formal actions would be reflected in the vote ledger.
AI-drafted from the session's auto-captions, reviewed by an editor — describes the discussion only; recorded votes live in the vote ledger. Captions contain errors.
0 Councilor. Clark.
1 Because I thought that my view was a minority.
2 Clark, can you hear us on the zoom? Thank you. No. Thank you.
3 Good afternoon. I am going to convene this work session. Can I wait? There's only. There's. Never mind. I'm not convening anything.
4 We have councilor Clark online.
5 Oh, there we go. I thought I there we go. Okay. I am convening this work session. There we go. Of the Portland city council. It is 131 on Wednesday, I think. Wednesday, October 22nd. We are having a work session that is listed as a fall technical adjustment ordinance preview. But I also want to draw our attention to the second half. The 2627 budget process discussion, because I know that our staff are hoping that that actually takes the bulk of our time today. I don't know that we have an agenda posted with times, but I think that we are hoping to spend the first 30 to 40 minutes on the tao, then talk a little bit about economic and revenue outlook, a conversation that we've previewed in other forums, talk about some of the key budget issues, and then move into a discussion about the budget process. Does that sound right?
6 Yes.
7 Okay. I am going to turn it over to our cfo to get us started.
8 Great. Thank you, council president. Thank you, councilors and apologies. The intended title is should have been fall tao and budget process discussion. I don't know how that didn't make it into the onto the formal agenda. And we will have a presentation here where we'll walk through quickly the agenda. For the record, jonas berry, the city chief financial officer and it's just good to see everybody's fed, hydrated and happy to be here so quickly walk through kind of the framework and expectations for what we're hoping to get through today for transparency to the public. The presentation that we'll have up here is also posted online on the council work session web page for today. And as we talk about the fall technical adjustment ordinance, or tao, those documents, the current version of those documents are also posted on the agenda web page for the October 20th finance committee, although we know we still have work to do on that. I'll also just express appreciation for council's interest in delving into the details and for making time. Today, we are working really hard to continue to evolve our processes and practices to provide transparency to the 12 of you and to all portlanders, and we look forward to sharing our information and hearing your thoughts today. If we can move to the next slides, I think we have a kind of a quick preview of the agenda, and these times are a little bit malleable. But really what's important is we wanted to cover four kind of key topics. I'll do this quick introduction. All of these four things are topics that council members have expressed high interest in learning more about. We expect that the current interest in the tao may be deeper than we had originally anticipated when we crafted this, and ultimately, it will look to your all's leadership about how to best use that time together and happy to adjust. The first topic is the fall tao. So city budget office director ruth levine will lead us in that discussion in advance of that ordinance. Formally coming to council for a vote. And we'll have a conversation about that timing that that timing might look like. We did have a conversation at finance committee on Monday. We're having this preview conversation prior to a potential first reading of of the of the fall tao ordinance at council. And we do have at least two, possibly three weeks before council is asked to take action on that. So we do have the luxury of a little bit of time to continue whatever information and dialog is requested and needed. I do want to recognize that I think there's really high value also in the remainder of the conversation and especially the process conversation. So for use of the next 30 to 40 minutes on the fall tao, one thing I might suggest is that if we could have the the grace of giving the presentation and then collecting kind of all of the questions, we can get those all out and on the table. We've heard many already and then we can, over the next week, provide a written response to council responding to those questions, recognizing we'll still have another week or probably two to continue that dialog. I think maybe a way to efficiently use our time today and make sure we can get to some of these other important and time sensitive topics. Also note we have folks in the room ready to to inventory those. Thank you, hailey and others for for writing down those questions and tracking the second topic. We'll hear from city economist peter holtzman, who will talk about our economic and revenue outlook and highlights in particular areas of concern and interest there. We might squish that time down a little bit compared to what's here on the agenda, but we can navigate that as we go. We'll come back to ruth to talk about some key anticipated budget issues, kind of the expense side of that anticipated forecast and expectation as we lead into 2627 budget development and recognize as well that the time we have sort of targeted for those two topics may not allow for maybe the optimally preferred depth of discussion, but we hope that council will be willing to kind of balance that with with getting to the to the budget process conversation, which is topic for all. Council's councilors have indicated that having this discussion on the budget process was a really high priority, and we do have some time sensitivity because we will need to launch into that process and budget development, do all the work behind the scenes. So really hope we can we can reserve ample time for that discussion today. My last introductory comment. I'll just acknowledge that due to staffing constraints, due to time limitations, due to competing priorities, some of the information that we have today is definitely not as robust as we might have originally envisioned, so we're doing our best. There's a lot to cover. We'll make the best use of the time that we have and see how it goes, and obviously stand ready to come, come back for additional conversations as frequently and in whatever forum council wishes. So we'll move to, if that all sounds okay, assuming it does, we'll move. We'll move to jump right into the fall. Tao, just a super quick introduction reminder. The the fall tao is a technical adjustment ordinance. So? So the city has a legal obligation to maintain a balanced budget where expenses are aligned to revenues. It's important that we be transparent to the public about budgetary changes that may need to occur mid-year, the fiscal year. As we've talked, I think in other forms, the fiscal year construct that the city has, where our fiscal year ends on June 30th and a new fiscal year starts on July 1st. That's the timing construct of the budget. The work that we do overlaps fiscal years. So a big reason for the fall tao is to kind of realign where we are at this point in, in the calendar year to the fiscal year budget for 2425. We've noted, as previously been noted, historically, the city has taken at least a couple, if not three moments throughout the year to make these kinds of adjustments. In prior years, it was called the bump budget monitoring process, now called technical adjustment ordinance. But same concept. We do recognize that we had a conversation at finance committee, I think very productively on Monday. We will need, I believe, to come back to finance committee with a final ordinance to pass that through and get it on the council agenda. There may be some dates that are reflected here elsewhere that aren't quite right based upon that that Monday action. So we'll need to to keep moving forward on that. It is going to be important that that occur fairly rapidly while we have maybe another week of flexibility if we if we don't get that through in November, we'll have to have some additional costs and complications that that will make things a little more challenging. So with that, ruth will kind of review the math within the ordinance itself, including non-discretionary adjustments and key decision items. And again, standing ready to inventory and collect questions as we go. Thank you.
9 Great. Thank you. And for the record, I'm ruth levine, I'm the budget director. So I'm going to jump in on the fall. Tao. So the supplemental budget, just a reminder, authorizes and adjusts budgets for the current fiscal year. It cannot adjust any prior or future fiscal years. There's one slight asterisk to that on the health fund that I will get to in the later in the presentation, but but we're thinking mainly about the current fiscal year and aligning between what in fact happened at the end of 2425 and what our budget, our adopted budget is currently for 2526. So making adjustments to that adopted budget to to align to those actuals. The primary adjustment and purpose of doing this in the fall is to true up what is called ending fund balance to what is called beginning fund balance. And I'm going to talk a little bit more about that. There are also a couple of limited sort of other technical adjustments or policy adjustments that happen in the fall. And as jonas noted, this sort of this moment used to be called the fall bump. There are a couple of reasons for making that change. One of them is to highlight that this is really mostly a technical ordinance. And as I will talk about in the next slides, we are not in the same kind of environment, unfortunately, that we have been in recent years. And so recognizing that the well, I'll call it the bump, it was not intended to be a process to increase budgets. And so that's that's part of the reason for making that change. So just really quickly on ending fund balance, I think of ending fund balance as sort of the bucket that catches all of the differences between what was budgeted and what actually happened at the end of the fiscal year. So we have our act for that. We we start to get information from those audited, ending expenses and revenues in about August or September. And then we go through the process to make those adjustments on the basis of those act for actuals in the fall. Tao. So. As I think you know, most most of you are aware and has been covered for the in the public sphere as well, is that we're normally in the fall. There's a bit of extra resources available, and the main reason for that is we we tend to forecast revenue conservatively. And then ideally revenue comes in above what we budgeted for the prior fiscal year. Unfortunately for this year because because largely because of blt, which peter's going to talk about in great depth later in the presentation, the revenues came in below what was forecast for 2425. So again, we're talking just about 2425 right now. Peter's going to talk more about what that means for 2526 and looking forward, but just trying to always remind ourselves which fiscal year we're talking about. Blt came in $12.7 million below forecast, which is essentially the reason why we are looking at instead of additional resources in this fall. Tao, we are looking at less resources than we than than ideally are needed. And I'm going to talk about kind of what what council's options are there. The other piece of ending fund balance, there's the revenue side and then there's the expenditure side. What was budgeted versus what in fact occurred. The sort of underspending at the end of the fiscal year. So so most of it you'll be aware of in the spring, we sort of pulled forward some carryovers. Right. So we said we know we're not going to do this next year. We're going to this year. So we would like to do it next year. So we've already sort of reduced the budget in the spring of a given fiscal year. So what ends up in ending fund balance is the difference between that adjusted budget in the spring and what the actuals are. Much of that difference is due to what are called encumbrances, which I'm going to go into depth on in, in a little bit, but just as a general picture, this slide gives you a sense of where we are compared to the last few years in terms of our general fund only underspending. So you can see that the you know, in the post pandemic years, there was a fair amount of one time funding available and people weren't really churning through that all the way. And so there was there were sort of elevated levels of underspending. So not only were we sort of did we have more revenue than anticipated in the fall of each year, we also had more underspending than, than was typical. And so this slide just gives you gives you a sense of that. One quick thing to note. There's a little bit of an uptick that's pretty minor this past year. That's in part due to a couple of things that were stood up in the last year that were brand new. So like the office of community based police accountability had some underspending that's just due to it, you know, not being fully stood up in the fiscal year. So what does this sort of amount to put together? This chart shows you the revenue and expenditures differences essentially between what was budgeted and what in fact happened. And so the yellow is the sort of at this same point we are in currently for each of the the past fiscal years, going back to 2021, the prior year's act for ending fund balance compared to what the budgeted beginning fund balance was and the budgeted beginning fund balance is essentially, what do we think we are going to have left over? And so we kind of pre-count some of that in the adopted budget. And the difference between those two bars is what we true up in the fall. And so you can see this year that both the total size of the fund balance is smaller. And the difference between those two bars is smaller. Okay. So now I'm going to get into more of the details of what we are actually what actually has to happen in the in the fall, tao and I will talk about what are the things where council doesn't really have much choice and then what are the things we're council has more latitude and decision making. So this first just starting from the beginning. And then there's that little tracker at the bottom that will aggregate the changes as we go and help you hopefully keep track. The the first thing is a must do. And that is basically just take out the budgeted beginning fund balance from the act for ending fund balance. That is just to because otherwise you would double count. So you have to subtract the the budgeted beginning fund balance. And so that leaves you with 15.7. That is just the the difference between those bars on the previous slide. And then this next slide is sort of the list of assorted technical corrections and other adjustments. The biggest one is the $8.1 million for the general fund reserve transfer, that this is essentially a transfer that should have happened in 24, 25. It's an amount it's it's to comply with our legally required amount of 10% of general fund being in reserve. And it's technically a fund transfer, meaning it comes out of the general fund and goes to the reserve fund. And that didn't get made in 2425. So essentially it just should have come out of ending fund balance. Ending fund balance should have been $8.1 million lower. If that cash transfer had been executed properly. And and so that's it wasn't executed properly unfortunately. Which means we have to do it now. And so it just reduces the amount of available fund balance by $8.1 million. The other items on this list, the next one, they're each a little bit unique. The next one is by resolution. That was adopted by council in 2015. By design has us calculate the difference between forecasted short term rental revenue and actual short term rental revenue, and send that difference from the general fund where it is collected into the housing investment fund. And so that's by resolution that was designed that way. So that's that one. And then the rest are kind of more minor. There was a budgeting error in in arts. And then a couple of true ups for professional development contracts. The dt one dt 17 one is actually similar to the short term rental. One is like designed to be that way, that it's designed to be done in the fall. So that's that's the changes on that slide. Which brings us to encumbrance carryovers, which are sort of the biggest bucket of adjustments that need to be made in the fall tor. And I'm going to talk about these in a little bit more detail. So encumbrance carryovers are underspending amounts that are due to either incomplete contracts or purchase orders that were opened in the prior fiscal year. This focuses on encumbrances in the general fund, but obviously the similar similar things happen in every fund in the city and within the general fund. Our office. Cbo reviews all of the encumbrance carryover requests. So essentially these are amounts that were tied up in an encumbrance in the prior fiscal year, meaning somebody said they had a contract to buy something and they encumbered it, meaning they literally couldn't spend over that amount. In 2425. We we can't move that money in the 2425 because it has to stay with the encumbrance, because you might get a bill at the very end of the year. And so the money stays there. And then at the end of the fiscal year, it falls to ending fund balance. But these are encumbrances that the bureaus still are doing work on. Or in some cases, they may have completed work. And there's an outstanding bill. And so the and then there are a couple of asterisks. The prosper Portland one is a little bit unique. So the they we go through a process where we say, you know, they essentially request the encumbrances on which they still have outstanding bills and outstanding work to do. And our office reviews those to make sure that the purchase order was open in the prior fiscal year, that it's that the bureau's underspending actually corresponds to what they say they was left on the encumbrance so that they, in fact, had the underspending available, and that the carryover supports the same work as it as the the what the purchase order was for. They can't they can't decide to do something different with it. And one thing I'll also note here that's a bit confusing. So definitionally encumbrance carryovers have underspending associated with them, because that that's one of the checks that we do. Right. The and so it looks like these send us into the red and they, they do sort of send us into the red because of the order in which we've looked at these things. The reason we don't have the revenues available now to cover these is because our revenues came in below forecast for last fiscal year. So. So it's not the case that these are sort of unfunded. They were funded. I mean, I think you could think of it as if you set contingency aside and pretended we didn't have it. We would not have been able to afford to pay all of these out last fiscal year. Now, that's not a really realistic hypothetical, but that's that's kind of the way to think about it. Just because our revenues came in below forecast. So. I'm going to kind of go through these a little bit in more detail. But for the sake of time, there's also the the decision packages in exhibit six list. Each of these including the purchase orders. I know there's also been folks asking for the list of purchase orders, which we have and can send to all of council that that these are tied to because each each line here corresponds in most cases to multiple purchase orders. And then there was also the memo and exhibit seven that had a bit more detail on each of these. But I'll just talk really quickly about some of the bigger ones. And the the slide here only includes the the biggest ones. The first one is prosper Portland. This is really due to a very convoluted and technical set of issues that unfolded over two fiscal years. I'm going to we based on the questions that we got on Monday, we are we have almost final memo that I think is is easiest for the sake of time to send to everybody and happy to do follow up briefings on that. If that still doesn't answer all the questions, but just because it is so convoluted, I, I think that makes more sense than than trying to explain it right here, right now. On the Portland solutions I just wanted to clarify one thing, which is that there's that line is just for the shelter within Portland solutions. There's a separate carryover line that didn't make it onto the slide by accident. That is another $2.4 million for pmo and irp. And so that's I believe. And so that's also in the memo that you can see the full detail on what those are as well. The park's line is also a little bit unique because of the way parks budgets, their levy resources. They essentially spend their general fund first. So while there there is general fund underspending. But it is this is kind of their total open encumbrance amount, because this was sort of part of the understanding from the 2020 parks levy about how we about allocating general fund underspending back to parks within parks, and then. The other ones. Portland police bureau has a pretty significant one on the red light cameras. Again, this is all in the memo. The public safety dca office is primarily for cease fire and ovp grants out to the community. So those are not they're not purchasing something in the same way. So those are those are some of the biggest ones there. And then on the policy carryover side, these are also carryovers. But they're not encumbrance carryovers. And there are there's policies that dictate that we need to sort of allocate that carryover back to those bureaus. So you can read more about what the procurement cleaner construction amount is. And then the fire wellness fund is a collective bargaining agreement for fire. Okay. And then this is a there's one policy set aside request that is for the $2.2 million that was set aside per Green 13, in the adopted budget. And that was set aside. So so essentially this is a request for contingency resources. But it was already sort of the resources are there for this purpose. The budget note directed the dca of public safety to come back to council. And and come forward with a plan to use those resources. And so this slide outlines essentially what that plan is. And I believe you all received briefings on that before this. Okay. So the next section of adjustments in the fall tore is sort of other general fund decision points. There are a couple of returns. So that's good news for the general fund. Error in the PBOT cash transfer means that they are that money is coming back to the general fund from PBOT. And then there was a return from the state of prior previously paid tax penalties due to the some of the sap payroll system errors that occurred a couple of years ago. And so we're just getting that money back from the state. So those are kind of on the plus side, on the negative, on the on the other side of increased expense, there's the disparity study in procurement. That's kind of a new need that has arisen in the last couple of months. There's the insurance and claims fund reimbursement from the general fund. Essentially, the settlement was paid out of insurance and claims that can't be run through that model. So it has to be reimbursed by the general fund. And then there's that last line is some draws from the state refund due to those same payroll system errors for payments that were made out of bhr and the fire bureau for essentially a collective bargaining agreement payment that was made. So that is kind of the last bucket of adjustments within the fall. Tore. And so taken all together, you can see that little tracker at the bottom that's been kind of tracking our adjustments as we go. Is that -$16.6 million. So that's a separate from the 2.2 million within the policy set aside. There is kind of a gap of 16.6 million. After you make all those adjustments in as in in the fall tore between the resources we would have available and the expenses that if if council were to approve all of those as filed, that's what the gap would be. And so what are the options to balance that. Essentially the that the recommendation in the fall tore is filed is to balance that with general fund contingency. And so this slide shows you the top chart. There is all of the types of general fund contingency that exist as of right now in the adopted budget. So there's 17.7 million in in compensation set aside. There's the policy set aside. There's another one called general fund overhead set aside, which is mostly a technical bucket doing that's there because of how we budget overhead. And then there's the unrestricted contingency bucket that's there per financial policy. And so you can see the recommendation to about how to balance that. So the 2.2 would go towards the the Green 13 request. And then 2.2 would come out of the general fund overhead. Based on our updated calculations about how much is needed to keep overhead in balance, and then the remaining would come, the remainder would come out of compensation, set aside. And so you can see that bottom table shows you the amounts that are left. If you were to make those, that would be left if you were to make those adjustments. All right. Okay. So I've really mostly talked about the general fund and about kind of balancing the general fund. Up until now. The fall tore also includes other adjustments outside of the general fund and things that are kind of net zero, moving things from one place to another, or reducing both revenue and expense at the same time. And so this table highlights some of the some of the notable adjustments in that category. There are many more, but. The the memo walks through each of these adjustments. So the first is the shelter services budget adjustment which reduces both revenue and expenses by $11 million. So this is the $11 million that didn't come in from the state that was included in the adopted budget. We have to update the budget so that it reflects the reality that those didn't come in. And that is being balanced by reducing expenses by the same amount. So that package does not impact other funds in any way. It just is sort of self-contained. In addition, there are some opioid grant funding carryover. Those are for multi-year projects, and it's within the grants fund. There's money coming to the police bureau from TriMet for adding officers to transit police. And then there's a series of decision packages around communications enterprise efficiencies. So this is part of the implementation of the communications realignment. And I think, laura, laura is here and also sent out some information, I believe, this week on the the sort of broader look at what that what that is. And we have a slide on it. So this gives you a sense of overall what's happening here. I think the with the communications realignment, the I think the important thing to note with respect to the tor is that it doesn't. The tor itself is sort of only implementing a few pieces that have to be moved on a budgetary basis. There are other things that are happening in the comms realignment that are not reflected in the adjustments that are being made here. And so I just want to clarify that. And laura's here to to speak to questions on that. But that blue box gives you a highlight of kind of what the cost savings reductions are in those packages. Okay. And then this gives you an overview of all of the fte adjustments in the fall tor. As a quick reminder, the because the fall tor only acts on this fiscal year, it's not really a time in general and supplemental budgets. We don't do a lot of personnel. We're mostly adjusting for things that need to be cleaned up or, you know, the current year implementation of something like the comms realignment. We will also need to put that then in the 2627 budget in order to make it ongoing. So like those three three positions for the public safety set aside are limited term positions because it is just for this fiscal year. Okay. And then I think the last piece on the fall tor is the health fund. So you all received briefings on this, but the fall tor as filed includes an increase above status quo renewal for rebuilding the health fund reserve, which is currently sort of well below the target amount for the reserve for that fund, it's below by about $30 million. And so that we need to rebuild those reserves so that we can continue to pay health claims in our self-insured health fund. And the recommendation that's included in the tor is to do so over a three year period. And so that adds roughly $10 million a year for three years to the expenses to pay for that rebuilding of the reserve. And then this table is just it breaks out the general fund and non-general fund portion of that $10.4 million. And then it also shows you that it's in addition to the 15% increase that's assumed for 2627. On the basis of the budget note that was adopted up to protect workers from future health care increases. So this table just shows you the 2627 impact of that recommendation. And I said at the beginning, this is the one sort of caveat to the fall. Tor only focuses on the current fiscal year, because this is the one sort of forward looking piece. And the reason we do this in the fall is because the the fall tor is sort of the basis on which we begin to build our base budget for the next fiscal year. So we we have a snapshot in time of the budget as of the fall tor. And then we build the the we start building the 2627 budget from there. And in that we need to sort of the city budget office assumes baseline expenses. And we're going to talk about that later in the presentation as part of the current appropriation level. And the sort of we only make assumptions in there about inflation or things that council has approved. And since this is sort of in addition to inflation, we need council to tell us, yes, we approve this decision. Go ahead and assume that as part of the base budget for 2627, if council chooses not to do it in the tor, it will still have to become part of the budget. We just won't put it into the base budget. So that's kind of why this is here and why it's the one confusing outlier that's looking forward to next fiscal year and not just focused on this fiscal year. So I'm going to stop and take questions.
10 Councilors, who has questions about the tor. And I'll just note in terms of process we had a hearing and finance. We have this work session today will go back to finance to pass the tor to full council. And then we'll have a discussion at full council. But if there are any questions about the technical pieces and what's in there, let's try to get those out today and not wait until this is back for a vote. Councilor Avalos yeah.
11 Thank you. I figured I would ask a couple of questions to help me and my colleagues better understand what our authorities are in this process because as we know, this is a little bit new. And then also the way that we've changed the tor and I'm curious how it relates to the spring tor, etc. So why don't we start with, can you tell me what is the scope of council's authority in approving or modifying the tor? So are we expected to approve these adjustments as a package, or is council able to amend specific components like talk to me about what that has looked like in the past?
12 Council. I'll jump in. We'll immediately with the first question defy our recommendation of collecting questions. But that's a really good question that I want to make sure we address. I mean, ultimately, council is the decision making body. So what the ordinance that's presented currently is the recommendation from the city budget office about both how to manage the technical things that we we have less legal discretion over. Right. Like adjusting for the fund balance. We don't as a city. We don't really have discretion over that. There's discretion over do we choose to use to take the cbo's recommendation about encumbrances or otherwise, meaning we have to go back and explore what those tradeoffs mean. Does it mean we have bills that we now don't have money to pay, and we have to make other budget adjustments? We can have that discussion. Again, I think value and having this, you know, 2 or 3 weeks discussion. So. I guess I just I'm trying to balance between ultimately council has ultimate authority. You are the folks who decide what happens to the budget. But the fall tor because it is largely technical adjustments to true up to things that have already happened based upon prior council direction. It's tricky. Right. And so the recommendation package is in front of you is the cbo's. And I agree is the recommendation about how to best manage all of those complexities so that we can move forward and have the discussion about 2627 with a technically legally balanced budget that reflects our knowledge of existing council direction. But council can change that direction.
13 Can I just add two quick, two very quick things? One, it doesn't have to be a package. There are pieces you can pull apart absolutely to. We're here to help. The city budget office is here to help. So over the next 2 to 3 weeks happy to have one on one conversations about things if you want to change them and talk through if there is a legal requirement, why and and the like. So happy to help.
14 Thank you. Now you say that the tor is a mostly technical adjustment keyword mostly. So can you talk to us about how counselors can identify policy driven changes that might warrant separate discussion? Like what would that look like for us to engage in that level of discussion on an adjustment?
15 Yeah, I would start we can we can dive into more detail. I would start with the memo that exhibit seven memo. And we attempted to try to clarify what was sort of required in there and what is not required, but again, happy to answer specific questions about whether something's required.
16 Yeah. And would add that the way they're bucketed is somewhat by design. So the bucket that's I forget the language we use. But decision points or some language like that is sort of intended to focus attention on. Those are the things where there potentially is a little bit more discretion. I would add. Again, you know, our intent and belief is that those are things that have already been directed to occur. So I'll just pivot back to sort of my earlier comment that. You know, there it's always a little bit gray, I think sometimes. But but that's the intent is we're not we're making technical adjustments to sort of true up and not engaging in a, in a large budget adjustment process that would have the typical community engagement and, and other technical budget process requirements that we would expect in in the context of the larger budget.
17 I appreciate that. I will say, though, that I understand and agree that, you know, generally in one of the questions is like, how are these adjustments reconciled against our adopted council priorities? But before you answer that, I'll just note, sure, I think it is good that we you all are trying to adjust to what essentially we approved in the budget. But the reality is that there's dollars that didn't come through, right? There are costs that were more than we expected. And so I think what I'm struggling to understand is it's one thing to say, okay, yes, we voted for this and we wanted this x to happen. But in order to make x happen, we might need to take a little bit from y. We might need to cancel z. And to me those are still policy decisions. So I think that's what I'm trying to understand how we can weigh in. Because I don't consider those to be strictly technical because it's like, well, how are you deciding as the budget office that yes, we approved all x, y, z. But again, if x doesn't have enough dollars, then if we're taking from y and z, then that to me is a policy decision that we should be engaging in. So that's why I'm trying to figure out how do we weigh in on that front. But in general, can you talk to us about how you all are making those kind of discretionary decisions at the beginning?
18 So, yeah. And yes, reiterating what jonah said, you all are the decision makers on this. I mean, there are there are honestly are relatively few things that I'm like, well, you can't double count fund balance. That's that's a straightforward one. But but beyond that there are there is discretion in in a lot of the decisions. And it's just a sort of sliding scale of how much has been said by you or by prior councils about what should happen. Right. So. I yeah. So you are happy to weigh in, I think from the perspective of how does our office think about this. So on the encumbrance carryovers, I tried to list out what the lenses are that we use. And that's kind of based on practice and, and financial policy. Looking at you know, it was only was in the general fund. It was open last year. We can't use encumbrances from multiple years of purchase orders that you actually had the underspending and that you're still doing the same thing you were doing last year. That's our offices lens. That said, council can choose whether you change those like we're not we're not making a value judgment on the underlying expenses. We're just saying that that's the lens that we look at it with, you know, the, the, the as with everything, it's a what is the impact of that decision if you are to make it? In many cases, bureaus will say, well, that's the budget that we had for this thing. So we have to not do that thing. If we don't get that those resources appropriated for that encumbrance. And so that's that's the conversation. And, and likewise on on many of the other decisions, if you there are there are decisions that, you know, we attempted to outline in detail, but there's always more that we can give where, you know, council can can do a different thing. You know, I will say, you know, we reviewed this with the city administrator and with the mayor. So it's not like our office is just deciding. Right. So the so yeah that's I'll stop there.
19 Thank you I'll make one last little comment and then I'll have one more question for council president. So it would be helpful I think, if and I could talk offline about how to make this more visible. But for these memos to more explicitly flag that things that are policy relevant items versus like simple adjustments, I consider policy relevant things like shelter funding changes, bureau reorgs versus, you know, we have to pay this bill because we didn't pay it last year. We need to pay it this year. That to me is more technical. And I think that's the broader philosophical question I'm offering. And I'm asking my colleagues to think about with me in this. So then lastly, my question to council president, you know, given everything I'm asking and, you know, I'm signaling that I think that there are discussions we need to have that are policy related. Do you have an idea for what that process looks like for us? You know, right now I'm understanding. We've got this meeting, we've got the finance committee meeting, which I'm a part of, but not everybody is. And then it's going to come to a future council. Is there any are those the three, I guess opportunities for this discussion. And maybe I would suggest if those are the only three, maybe we should explore some other ways if we're needing to like introduce amendments or I don't know how to go about that. So what's your thoughts on the process.
20 So two pieces. The first is I absolutely hear you on wanting to have more of a hand in how some things are transferred. And I'll remind us that the mayor has the authority to make changes within any given fund. Right. And that's where we have to decide as we budget, how narrowly or broadly do we want to create those funds, and therefore, how much leeway do we want to give the mayor to be able to, on the one hand, make adjustments as conditions change and on the other hand, have the freedom to make adjustments as conditions change. For how specifically, those are the times that are set aside. We set this aside to make sure everybody had an opportunity to ask questions, understand what was happening, get those details. Request one on ones for more information so that folks have time to think through any changes they might want. And we actually intentionally delayed a vote in the finance committee to ensure that we could have this conversation before the finance committee passed anything to full council. So it will be coming back to another finance committee meeting.
21 Are you expecting do you think that people should come to finance committee to propose amendments? Or do you think that all of that would need to come just to council? Like how do you see the difference between the finance committee and the council? You know?
22 Well, as with any committee, I hope that we can do the bulk of the work in committee, and folks should feel comfortable coming to any of their colleagues committees to bring forward changes. I think with this fall, tao, because there is not money to be buying up new program ideas we really are talking about how do we make technical adjustments and how do we ensure that the budget continues to balance by making some some changes and some cuts so that we can get through the rest of the year? The idea that this is mainly technical is why it's going through a committee, as opposed to the budget process, where we did that work as a full council. I hear you wanting to possibly do more than just the technical adjustments.
23 Yeah, I guess I'll just end by saying I suspect I know I do, and I suspect some of my colleagues might have some deeper policy questions that are coming out of what was proposed to us. And so I'm just trying to figure out how we have that discussion, because, as they said, ultimately it is our decision to make these adjustments. So I'm just trying to understand what the right process is. I hear you in that. The finance committee, right. Like given everything you described. And yet this is kind of one of those weird gray areas, especially as it relates to our budgetary powers, that it might we might need to be creative in how to make sure everybody feels like they're a part of the process. So I'm open to talk about it more, but just wanted to.
24 Try to get as much of that to committee as possible. I'm sure we can work with the chair of the finance committee to figure out a process for bringing in everybody's ideas that feels inclusive and still works within our structure. I'm looking to the chair and he's nodding. So I think.
25 I think it's I think it's I think you raise great questions. I think these are important. Right. As the budget committee, this is a budget committee action. I, I want to reiterate the the point that our budget director gave, which is her office is ready and willing to work on amendments and language. I think we've all gone through one big iteration of that and how that went. So that would be my encouragement is if if you've got something in the hopper that has legs already that you work with her office to, to put the real meat on that. And I would welcome its introduction at finance so that we can I look at the finance committee as having somewhat of a role in digging further into the details. And so I do think it would be appropriate that the amendments come through there. I am cautious about further delay past the 12th of November for our action as council. And so I would encourage everybody, if you have serious concerns, questions or changes you'd like addressed to get them on the table today, work on them, get them into finance on the third, because I think it would be we start to bump up against some problems if we go past council action on the 12th. So that would be my recommendation from the chair I'm sitting in.
26 Thank you both.
27 I'll just add to that. It sounds like there have been some conversations, and maybe you and a few others have had some ideas that have been bubbling up that you want to bring forward. Let's just even if today, because we do need to get to the other parts of the presentation to even if today it's just saying, hey, I want to work on x, or I want to make sure we have a discussion about why get the topics out there, right. We're going to be dealing with all of this in the next two and a half to three weeks. There's no need to hide anything that folks are concerned about. Let's make sure we all know what those concerns are so that our staff can get working on it and we can have it ready.
28 I appreciate that. And to my colleagues, I would say it'd be good for us to just talk through what we would consider technical versus not, because that, to me is the biggest thing that I'm grappling with. And I want to hear from you all how you're defining that. That would help me navigate what to do next. Thank you.
29 Councilor.
30 May I just make another? This is great conversation and appreciate it. Greatly appreciate the commentary about sort of there is risk of inaction and some cost and challenge associated with that. I do think that the the process is imperfect. We're hopefully going to talk about process broadly. We're still caught in this kind of middle moment between the way we've operated under the old form of government and transitioning the prior cycles into the new form of government. And so I appreciate there are process improvements that probably need to be explored, and happy to do that. More than happy to do that. I am cautious and would and would urge caution about doing things that have unintended consequences. I mean, I appreciate that and absolutely agree. I'm here cbo is here. If there's things that need to be further explored, amendments that are high value and high import, let's talk about those and see if we can implement them. But I would just just advise caution in tinkering too much until we can have that sort of comprehensive view of the process. Soup to nuts, which again, we're hoping to to start getting to today as we enter the next cycle. Thank you.
31 Thank you. Councilor councilor Morillo.
32 Thank you. I'll echo certainly what councilor Avalos said about defining what is a technical adjustment versus a policy change. I think that's an important question for us to ask. So I support us getting more information on that. I have a few more technical follow up questions. I, you know, going through this presentation, I have some concerns regarding the use of the compensation set aside as a way to balance the fall tower requests. And my concerns are related to the fact that the compensation set aside is needed for costs that are being incurred daily, and the fact that vacancy savings are otherwise needed to ensure that bureaus can meet enterprise efficiency cuts that have not yet been optimized. So with that in mind, can you tell me how much of the compensation set aside was needed in order to balance the budgets last year, to help us have a sense of how big of an issue this is that's being pushed off to next to our next discussion.
33 I don't have the number offhand, so that's a good one we'll follow up on.
34 Okay. Thank you. The second thing I wanted to discuss was that I keep hearing that our general fund encumbrance carryovers are backed by underspending, which makes sense from an appropriations point of view, but they are not backed by real dollars. So as you mentioned, that revenue was not realized. And if it was our process to disburse general fund dollars to bureaus in real time, many of these pos would not have been able to be created. So what analysis has the city budget office completed to identify where contracts and work can be paused in order to preserve compensation set aside for actual costs that are being incurred? Now, these are long questions. I can also email them.
35 Yeah, no, it's a great question. We will follow up more on that. I will say it, it would require doing a little more follow up compared to our normal process to say, what would the impacts be if to you bureaus if this work was stopped? Now there's some we could probably answer that are straightforward. There are some we can say for sure. Yes we this work has been completed or it happened between July and October 20th or whatever, because that's also a reality. Right. And so we would have to do some follow up and get that from bureaus. It's not data that we have at our fingertips as of right now, but it's possible.
36 Would it be possible to bring this back then if this goes back to finance committee for further discussion, to have that presented there?
37 I mean, yeah, ruth and team are going to do going to do the work. But yeah, I mean my intent with this is and absolutely can speak questions can email those as well if that's a more efficient, efficient way. My intent would be within a week is to try to get written responses to all of the questions, back to all council offices. And then we also have the opportunity at finance committee to to speak to those as well. And then, of course, we will also come back to council full once that ordinance passes through committee and pending agendas have opportunity for discussion at that moment as well.
38 Great. I appreciate that. And I'm, you know, actually at the housing committee a few weeks ago, we had the council president bring an amendment to one of my ordinances that's eventually going to come to full council. And I think that system worked out fine. So I'm happy to I think it's a good system to keep doing things in committee and then bringing it to full council. I think although many of us struggle to either get notified about what's coming up or sometimes we have other meetings in place because we're not sitting on that committee. And I personally sit on four committees. So if there's a way to sort of relay when there's going to be big budget discussions like the tao or anything else to full council so that we can go and engage, that'd be great. Thanks.
39 Thank you. Councilor. Counselor Green.
40 Thank you. Thank you, madam president. So, jonas, as I understand it, you would like us to sort of collect, help you collect the questions, and then you can give us the feedback so we can move through more efficiently.
41 Yeah. I mean, I think that would be ideal. Just recognizing. I know there's a limited amount of time today and we have other things I know folks do really want to talk about. So I don't want to I don't want to be, you know, a squisher of conversation. But I also want to provide pathways to, to accelerate the conversation, if that makes sense.
42 It does. And so just with that, what I'll do is I'll read my questions. But I think at some point I'll state my intent because I think what I'm also going to do here is signal a direction that I'm going to go with the towel. And I want you all to have as much advance notice as possible. But based upon the response to the questions that we get back, that will determine how I approach that. And I may not have to do anything at the end of the day. So I am curious. I would like to know more about that general reserve fund transfer correction from last year. I know that, you know, maybe mistakes happen, but I just want to know that that was a sort of oversight or a mistake and not a decision not to do it, to sort of mask other shortfalls elsewhere. That's what I'd like confirmation of. I'll be looking forward to seeing the prosper Portland encumbrance memo. I think there's still a lot of a lot of questions there. I have a number of questions about the Portland solutions carryovers. I'm just curious, like for any of the actually any of the encumbrance carryovers I'm going to want to see what is absolutely what absolutely must be approved to to not breach a contract. Because if because to me that's different than well, there was a sort of plan that didn't we didn't quite execute on relative to. Okay. Well, we actually some work was performed and we just didn't get the money out the door in the last fiscal year. To me, that's a different thing, because I share my colleague's concern about using the compensation set aside for this purpose in order to approve a towel that has a bunch of encumbrance carryovers, I'm going to really need to see that. Otherwise, I don't think it's fiscally prudent to do so. I'll want to know, are any of the Portland solutions carryovers funds that are intended to pay for the current fiscal year sheltering program? Because we we have budgeted money for the current fiscal year program. And so if so, if we're using funds from last year to also pick that up, that now that's that's an augmentation to the budget. In my view, there is a very specific thing on the decision packages for this page. 99 of that decision package is a technical adjustment that has it says realigns $200,000 from pmos m's budget to internal materials and services for interagency agreements with parks, for trees, maintenance related to lighting and PBOT for traffic barriers. I want to know what that is specifically and when, like, what is that work going to do? And when was that decision made? Because I want to know that's not if that's the money being used to do the northwest diverter thing. I'm not going to vote for that. Okay. So I'll just want a confirmation on that. Finally, just on shelter services budget amendments, I saw the memo, the $11 million shortfall the mayor's proposed. The city administrator has proposed absorbing that cut through efficiencies and also reductions to overnight shelters and also the alternative shelters. But there's there's also a line in there that says these reductions will happen in the day centers and the storage. And if that's the case, I'll kind of need to know more about that, because when we heard from our constituents when the overnight shelters went in, their biggest concern is what happens to folks after 6 a.m. When they go out. And so if we're cutting into day centers and we're cutting into their storage, that I think is the opposite of what we want to be doing. And so those are the general questions that I'll be looking forward to in that email. And that will then inform an amendment to the tor that I, that I would bring forward.
43 Sure. A couple of things. First of all, on the reserve general fund reserve transfer, I can assure you that that was very much an oversight. I very much wish that we had done it. And yeah, it was the issue in our office just not getting the the cash fund, the cash transfer done correctly.
44 So sorry. I would just add to that too, since it was stated in public. I mean, we, we don't take actions to mask things. We're specifically here to be transparent. So I want to be really mindful for the public listening that that is not the way that this budget office, the city financial office and the administration works. So I don't want any risk of folks watching online believing that that's a strategy or something that we undertake. So thank you for asking the question.
45 Thanks for confirming that.
46 Yep. And then I wonder if it's helpful to have I know guys here on to just come up on solutions real quick, since I suspect a few people might have questions.
47 And I'll just note, as guy is coming up, answer as much as you'd like right now. But also, we all understand if you want to get back to us on these as a full group so that we can get through everything.
48 Yeah. Thanks. Skyler, director, Portland solutions I can answer any questions kind of for you councilor for anybody and be part of that email exchange as well. I'll just say I'm also going to send out the presentation that we did to the homelessness and housing committee, because it really walks through a lot of those pieces, and I think would be really helpful for folks. It takes a step past kind of the memo and really dives in. So we appreciated that opportunity. And I will share those slides as well. And then we are happy to answer any questions that you have and work with ruth and her office as well. So we can do individual briefings as well. Thanks. Thanks.
49 Any further follow up for councilor Green? Okay. Councilor Green, anything further?
50 No, just in the interest of time. I'll just leave it there and I'll look forward to those follow up responses. Thank you.
51 Thank you, councilor Zimmerman.
52 Thanks. I just want to I'm recognizing a little bit of a moment here where, as it was noted, there is some past practice that hasn't, I think, been trued up as the best way to use that. I think that what I said at finance, and I'll say to this group is, I think that we owe a set of financial policies to the body in terms of how we approach ending fund balance, what the appropriate use of carryover is. I think that speaking just for councilor Smith and I, having come from a different government, I think in our mind we have an idea about what that looks like. And in the city I've learned, it seems to be much more of a hybrid approach. So. With respect, I say that because there will be some items who that I'll be supportive of here that perhaps I'm supportive of because of the moment that we're in and hopefully a better practice in the future. I'm generally comfortable with carryover money from a previous years underspend. If there's a describable reason, an objective that we're going at, you know, some some basic executive decision making about, okay, we get it. We couldn't execute in the given fiscal year, but the goal still remains. And we'd like to. But the point here is that that's addressed in the budget process. And the city has had a, I think, a a more flexible approach in past. And we didn't give any new guidance to any of the bureaus at the end of June or at the end of may or in the spring bump about that. So they were operating very much in the, I'll call it, the status quo. And so I understand that from them. There's also a couple of areas where, you know, in terms of looking at Portland solutions, but particularly in pmo, just going back to how we set up that organization, we essentially set up that organization on the back of one time, one time only money, because it was always a pilot for what has to get done today because of of the crisis on the ground. And so we've set that organization up over the years to use savings, use encumbrances, and still accomplish the next year's mission. And and I've recognized that that's been a. A less orthodox, I guess, funding model for some folks for, for any group. But it also makes a lot of sense to me, if you think about the origins from which pmo was created, can I guess as we as we go into this, I appreciate a lot. Councilor Avalos, questions about really being most clear about what is technical, meaning you're looking at us with the yearning that council make no changes to a certain list of things because it means someone's not getting paid that we already are in, in, in the work with and the others where that question exists. I think that is most basic in our expectations. And if we can get deeply into that in presentation form, it finance, that would be helpful because I think you will create five converts who can share that. It got more clear at the finance committee if we can do that. And I look forward to director brucker. Knapp's slides that will come through talking about those changes that councilor Green, because I think those are the main questions, as the finance chair that I've been getting from folks. My last question, I just want to make sure that I'm got some words correct in the way that the city of Portland is using encumbrance versus carryover versus accruals, and terms of previous work, excuse me, previous work that we haven't paid for yet, but now the bill is due in the new fiscal year. And how we approach those three terms, if we can clear that up for me, because I, I'm seeing some some use across the board and accruals carryover encumbrance.
53 Yeah, I can take a quick stab at that. And then we can we can follow up in more detail. So the carryover again the the distinction I mean we we use it in a couple of places. So understand the confusion. But the spring carryover is what we call programmatic carryover. So it's in the general fund. It is one time money that didn't get spent in that year. And they expect to spend in the next year. And so it is unencumbered money meaning it's just free. And so they say in the spring, hey, we don't think we're going to do this this year, but we expect to do it next year. We've we did a lot less of that this past spring than we have in, in, in recent history. But that is kind of what we call programmatic carryover. And then if an expense actually hit and was paid and maybe it didn't get into the accounting period, accounting periods one through 12, we can accrue it back in those extra accounting periods. And so that's the accrual requires that the expense was actually on our books. Like it actually got paid.
54 So so using normal person words is the job was done on June 27th. And the bill got to us on July 27th.
55 Yes. I think.
56 That balances or that that straddles the fiscal year.
57 Depends on the the cutoff.
58 Of the pay. It was.
59 It was in fact paid. There's a there's a, a cutoff date that accounting has every year to say, hey, we're in year end. This is the this is the cutoff date for your accruals.
60 Yeah. I mean it's it's essentially.
61 27th would have been a better date to say.
62 Essentially councilor You're correct. The dates are not.
63 It has to be close enough to the year end that they're still working on their acfr. And so like, now is too late. We can't go back and do it now to to 2425. We. Yeah by and large. So those are but but but you can think of it accrual is like a bill that has been paid. We're just getting it into the correct place on our books. And then the encumbrances are money that we held. Right. So we said you would you would literally hit a hard stop in our in our, in sap if you tried to spend over that limit. Because, because the bureau said, hey, we're going to use this for this very thing. And that's why we have had a practice of of waiting until the fall to go in and say, all right, how much was left on those purchase orders, how much wasn't spent? And then we pull it into the next year. I will flag for for council. As a general matter, governments do this differently. And so so you're right to to flag that there are there are choices. I think it's important to look holistically, not just at the encumbrance carryovers, but how do we treat money that crosses fiscal years as a general matter if we're going to look at that? But yes, we do have a practice of by and large, those are approved, have been approved by prior councils.
64 And so, for instance, federal grants are an example where where the work may be started in 1st may and it ends in the next may. Right. So it's gone across not just ours but also theirs. Fiscal years. I guess the question for me is much of that is dealt with in the budget process, and we see that very transparently. What causes an item to have to be dealt with in the fall versus having been dealt with in the June adopted budget for the current fiscal year?
65 It really is just it it ought to be either because something new came up. Right. So like the disparity study thing or because because it's an encumbrance. I mean, that is really the the main thing that we're doing other than ending fund balance. Right? Truing up to what in fact happened that has to be done in the fall because you don't know it in the spring. And then the encumbrances are the one thing that we actually look at after the fact, because we wait until the year closes to see, okay, how much was spent out on those, and also to, to, to, yeah, to kind of move that that authority into the next fiscal year. And the reason is just because we keep the budget authority with the contract authority. And so if you were to pick it up and move it in the spring, you wouldn't have the budget authority to spend against a contract that you, in theory, would have. I mean, you'd have to close. Essentially, the alternative is to close all of those purchase orders and reopen them in the next fiscal year. And so that's that's kind of a different approach.
66 Okay. Thanks.
67 Anything else? Counselor? Counselor Smith. And I'll remind folks that we may want to just get questions out rather than have them all answered right now.
68 Thank you, madam president. Counselor Zimmerman, I thought you were going to have some more questions.
69 I, I do have many. I actually value the budget conversation that we're coming up to even more so. So I'm holding a few.
70 So recognizing that we have limited time, I'd like to start by really understanding where we are with the beginning fund balance, because it appeared to me that we only got maybe a quarter of our job presented to us when I added up all the fund dollars that you gave us in that nice spreadsheet of the funds. It said that I added up 249,000,538, 317 and beginning fund balance. But you all gave us something that said, we have 57,000,915 639. So it seems to me that you all took some decisions away from us that we did not have an opportunity to. Did you go ahead?
71 No, sorry. Just to clarify so and just for everybody, the council had asked for beginning fund balances for all of the funds in the city. So that spreadsheet we gave you contained all of the funds. The the $57 million is just general fund. So that's why the spreadsheet we gave you is so much bigger, because it contains every single fund in the city.
72 And that's my point exactly. Most governments bring their entire beginning fund balance over, and then they'll have a little they'll have a little space that says, this is the general fund balance. This is the other. This is the federal or the ARPA to desegregate it. So I know that this was only general fund, but I don't have a clear picture of really how much money we have in general. You didn't desegregate any of the ARPA monies that are available for use as well for obligated for obligated purposes. So when I'm looking at this budget, you only give us. Excuse me? You only gave us something that said $57 million in in decisions. But we really have a whole lot more in decision packages that you didn't give to us. And so I would really like to have our full, you know, balance, even if it's restricted dollars, give us that amount. That's in the restricted funds, like the water funds that have $800 million in it, like the transportation fund, you put $52 million in the transportation fund and said that this is a decision that we have to make recommended adjustments. I want to know where that money came from. I want to know what is the entire balance of all the contingency funds for all the funds that you listed in the funded summaries? We didn't get that. I want to know, how much did we receive? Don't tell me we received $12 million less than what we got last year. Tell me, how much did we receive from the city this year for 2526? And what was it for 2425? So that I can see how much money we had in property taxes that is not desegregated anywhere. And then then I can determine what does it look like when where are we? I have no spreadsheet that says what was the forecasted number. So when you tell me 12.5 million was forecasted more, I don't know where the where the hole came from. If you don't tell me how much did we receive from the city, you'll do a graph and put it up there, but you won't put an actual number. I can't deal in graphs. I have to know the actual number of the monies that we have received in revenue that came through for 24, 25. And then what came after June 30th that we have to do technical adjustments to? It is great. These, these exhibits are amazing. They're amazing to look at. But it is really hard for me to detail what exactly happened. Like for example. What was the direction on where cbo included the ARPA funds in the towel and whether or not these were desegregated from our fund balances? And so I'm trying to understand, when were you going to give us those balances as it relates to the towel? Because maybe some of those expenses that you're saying that we need to pay for in this 18 million, maybe they could have been paid for with some of the obligated for the same services in the towel. And I don't have that. So I'm missing money right now just for full transparency. I looked back at the contingency fund in prosper Portland for 2425. They have $548 million in their contingency fund for 2425. They expect to go down to 345 million, give or take, for 25, 26. And so I'm going to bring forward a amendment that says, no, we're not paying for your bill that you haven't paid for for the last four years. I'm not spending that $4.2 million on that. Let them take it out. Why do we have to pay their bills, since they are so very insistent that we don't tell them what to do or manage their budget? They need to get their bills out of their contingency pot. And so I will be putting together a amendment that will say 4.2 million is taken out of your contingency fund, the 3.75 million that everybody keeps talking about these legal fees make prosper, pay that 3.75 million out of their contingency fund. They have well over 300 to $500 million in there. Let them pay that. The other issue that is really stressful to me to look at is when we talk about the fin. I don't have anything on any of your spreadsheets that tell me how much general fund discretionary money we actually have. Then I can tell you how much money because according to what you say. And I looked it up, it does say in the statement of funds that 10% in the general fund reserves have have to be put in that fund. Well, if I don't know how much money we have in general fund, I do know how to calculate what 10% is. I'm wondering if it's anywhere between 740 to 890, because we have $90 million in the general fund reserve. So I need a clear understanding how much do we have in general fund? And then I can tell you where I want other monies to come out. If we're going to meet that $12.5 million gap. The other is the tax increment financing fund, $12,718,039 were taken out and put into intergovernmental affairs. Can you explain to me what is governmental affairs and who is governmental affairs?
73 I'm sorry. Council will collect these questions I don't have.
74 Okay, so here's the next question. We have a fund called citywide obligations reserve fund, which is different from the reserve fund for the general fund. And it looks like we've added $7.76 million to the beginning fund balance of the citywide obligations, which they now have. 90. Well, actually, the general fund has $90 million, so they have 64 million. So wouldn't we take some money from those funds to actually make our $12.5 million pencil? That's a thought. Under the parks capital improvement program fund, it looks like 39,599,904 million was taken out of contingency, and then 34,000,795 and 62 was put into external materials and services. Can you also explain the purpose and the reasoning for this? In the spectator fund? I'm tracking that 1.369 million was moved out of contingency, and I want to know, it's okay, where will that money go and how will we be able to do that?
75 You guys are getting these all okay.
76 And I will email them to you. The environmental remediation fund. Why would we take the beginning balance to put into contingency. We move $15 million, 787, 557 out of the beginning fund balance and put it into contingency. Why? And one of the other bigger ones was the city fleet operating fund. It appears that we added another $19 million in materials and services. What are they expected to buy with this new $19 million? Why did they need this additional money? I will send you all of this because it's a lot. It is a lot. I will also send you a note that the 18,486,655 to answer councilor Avalos question. We don't have to pay for this. That's where you can you can also get $12 million from here. Because if I remember correctly, the mayor told all bureaus not to ask for any carryover money. He put a constraint on them back in February, so I'm not clear why all these encumbrances in exhibit six on decision package report from the city administrator. $4.9 million prosper Portland. No. Portland police bureau, all of these folks. We don't have to pay this. This is not something that we have to pay. They can absorb it in their current year budget. So we are not $12.5 million in the hole. We can clear this up right now, but I really want you to give me a full multi hundred million dollar beginning balance that includes everything.
77 Just a couple of quick clarifications. We will get back on the the long the list of questions. I hope every all the budgeting in the city were listening the a couple of things on the. Sorry I'll get back to you.
78 Okay perfect perfect. Thank you.
79 Thank you counselor. And I'll note that part of what I'm hearing is an interest in a more. Comprehensive. That's a great word. Thank you. Breakdown of the budget. If we get through all of these questions, we will have the opportunity to talk about next year's budget cycle and what the process is there. And that is a great place for us to talk about how we get more comprehensive data from the start in a way that works for all of us, because I know there were some concerns last year, and it's probably going to take a few years of iteration to get our budget process to align with the needs of our new form of government, but we might have time to get to some of that conversation today. We do still have, I believe, two more portions of the presentation. Councilor Kanal.
80 Thank you, madam president. I will start running through a bunch of questions, but I will also flag which ones are would ideally be now and which would be later. I just wanted to note, first off, do we know when the the budget to actual review memo is going to be coming out that wasn't here in new at noon today?
81 Yeah. Thank thank you for flagging that. Apologies. We just are low on capacity. We will get it to you before the tao ideally in the next week. Sorry for the delay on that.
82 Yeah. Not trying to put blame. Just want to make sure I can schedule because these are dense as you have known. So I want to make sure I'm deep into it. So as I'm going through this is $27.6 million of unused contingency funds for 2024 2025, a typical amount, is it higher or lower than usual, in your opinion? And if you have a quick answer, that's great. Otherwise I can wait on that one.
83 We'll get back to you.
84 Okay, I'm seeing $2.6 million, so let me step back for a second. I haven't done this process on the other side as a city employee for several years, have a general practice approach to this that is very supportive of encumbrance carryover, because if you are a city employee that's not in the finance world or in the procurement world or whatever, the the particular sort of functional support roles, you can be asking for something and for reasons completely outside of your control, it may not happen in the fiscal year that you intended it to. So I want to make sure that the things that we budgeted for, I guess the last council budgeted for in the fiscal year that's now over, are able to be implemented. And it's often that programmatic staff is trying, and it's often that the procurement or whoever is backlogged. So it's not necessarily anyone's fault. So my my default stance is to be supportive of it. And there are some exceptions. And unfortunately in this case the exceptions fall into the top two in terms of size of the encumbrance carryovers. I'm talking specifically about Portland solutions and prosper. So as I go through this, let me ask about the Portland solutions side. $2.6 million encumbrance carryover for shelter services. In other places. You've broken down the difference where what you've disaggregated that into the the overnight shelter program and the shelter, the sorry alternative shelters program. What part of the 2.6 million is in the is is going to the the overnight shelters program, and what part is going to the alternative slash pod shelters. I have a lot of detailed questions about the prosper stuff that I'll just probably email you, but I will say frankly, I can subsume it all under a lot of the concerns that I think councilor Smith has has raised. In particular, I believe it's 3.25 million, not 3.75, but that lawsuit. Because if if we're. So the the this is the amount for the albina settlement that was increased, of which half of it was previously borne by prosper and half of it by the city. And as it was increased, our expectation, although that has not been voted on in any place yet, has been that that would remain the ratio. So there's three point something million dollars that is currently not yet been paid by prosper. As part of that increase, I'll circle back with the detailed questions. As I was going through your memo. There's a level of detail in the. Bts bp, sorry, your planning and sustainability memo. That was really, really helpful. I would love the same level of information for the other encumbrance carryovers in particular prosper and police. It's broken down much more significantly for bts, and it's just hard for me to understand what exactly is going on there. I do have a specific question, which is why are red light cameras still here? If so many of them are PBOT, why is that a carryover? I understand that the the contract seems to have been initiated in 2023, so maybe that was before some policy changes. But I think that's something that we can fix. At the same time if it needs to be fixed. I know not all the camera work is under PBOT, some still is PPB, but I'm surprised to only see it under PPB. That's sort of the first category of of the actual technical side of it. I did want to switch gears to the decision points and ask as it relates to the Green 13 set aside and how that all works. First, I want to say I'm really grateful that there is a line separated out for the community safety group with under the deputy city administrator's office. That is super helpful and I appreciate it a lot. I did not see in the request anything from the office of violence prevention or ceasefire. So I saw how 1.1 million, roughly a little over, that's for police, 700,000 or whatever the amounts are for the others. I was surprised not to see anything for community safety in there other than $114,000, but none of it was earmarked for any of the programs I know to be under community safety. So ovp ceasefire or Portland street response? My understanding is that the $114,000 that is currently listed under that is in the memo we got said it was for for grants to build a public safety readiness program, which either seems to me to be a service area wide issue or a pbem specific issue. I don't know if that was a typo or why that's under listed under community safety. And I want to understand if the community safety division was able to request anything, because the list of requests I saw do not have anything related to those entities, because my understanding was our process as outlined in the budget note, was that there was going to be requests from all the subsidiary parts of the public safety service area. Then there would be a process which appears to have been followed to determine which of those would actually go into the $2.2 million request, and that would come to us at the tore. All those later steps seems to seem to have been followed, but I'm curious why there are no requests from any of the subsidiary entities there. Moving on, because I could go on that for a while. The wellness all that's great. Okay. And relatedly, the job readiness program it was I'm not sure if that was for community safety specifically or for the whole service area. And if so, we should write that down. I think there's $7,600 for psr in there in the in the Green 13 set aside as a whole. I don't know if that stayed in from the first version I saw till now, and I was concerned about that. Given how much recruitment is going into everywhere else and how there's 14 vacant positions, not to mention a vacant permanent manager position there. So just broadly, I wanted to have more information as to why that is, as well as if we need to allocate all $2.2 million of this in the towel, or if there is an ability to leave a little bit of that leftover, switching to the third and final category of the net zero fund decisions. Broadly, I'd like to know how a nearly $6 million reduction results in no substantial service reductions in the alternative shelter program. Those are from the same paragraph of the memo that there's going to be a $6 million reduction, but we don't anticipate any reductions. And then the other part of it is more for the mayor, I guess. But my understanding is that shelters and storage are component parts of the overnight shelter. Your plan that are critical to its success. And I'd like to understand the impacts better of what that would mean to lose those. From your perspective at some point. And then the last two pieces, the TriMet iga, there's a piece here where we're we're getting reimbursed for transit police services. That's great that we're getting full cost recovery, as well as a 5% administrative overhead fee in terms of how to do that. That's great. I am concerned about all the impacts of wellness when we have these additional hours, you know, used and what that means for our existing call volume. But my bigger question is I didn't. When is this the place where counsel is being brought in on the iga because as we have not voted on it in any way, it was not brought to the committee. And so what I've been led to understand in this type of setting, in the budget settings in the past, is effectively the mayor can do it on, on their own volition, but that if it crosses into another fiscal year, at some point council will vote on it through the budget process. I've said I don't think that's the ideal scenario because it becomes very gun to head in the in the context of those budget scenarios. But if that's the way we're doing it right now, then let's talk about that. Is the tao the moment where we are discussing the TriMet iga is my question, or is that something that is more a conversation for the full budget, and if so, why? That's my process question. Communications enterprise efficiencies. I wanted to understand why the decision was made to bring them all into central communications, instead of just moving them from the bureau to the service areas. I note that appendix three to the memo does not have anything regarding public safety communications, and I wanted to understand that. I think we've had several counselors from across the state, both literally and metaphorically, asking about the reduction in social media accounts so that there are fewer places, not necessarily one, but significantly fewer, to get information on social media. Most of that is in public safety, and I'm disappointed to not see it there. And then I want to just point out there is a proposal here to combine at the I can't remember. I think it's the service area level. The manager who does communications with engagement. And that to me is a is a ridiculously bad idea. The city does a very poor job currently of distinguishing between communications and engagement, often describing one way communication outward where the public simply absorbs it as engagement at various bureaus and in various programs. Having common managers will make this significantly worse, and I'm deeply concerned about that. If there is a need to have consolidation, I would strongly suggest combining policy development with engagement, because those two things are actually linked and ideally are part of a single exercise. So I just wanted to to raise that, I will happily circle back on all the the detailed questions on prosper later on, as well as I really appreciate councilor Green, I also had page 99 open for that exact reason, and I just want to take the opportunity to cosign if there's anything related to the diverters in there, I would be against that as well. One last thing. I would love an aggregated amount of money that's being moved out of personnel and into either ems or ims. I noticed we've had a lot of labor partners here over the course of the day, and I am concerned about anything that reduces our workforce and replaces them with contractors to accomplish the same thing. Thank you.
85 One very quick clarification on the comms realignments, the positions that are just being moved within a service area just don't show up in the budget adjustments. Right now. The but that that is happening separately. It's just not in the budget adjustments okay.
86 So that that table I think it's appendix six or exhibit six. It that's going to show between bureaus though. Right. So if if something's going from water to the public works service area wouldn't that show up.
87 No. So if it's within, if it's moving across like all the way across the city to a different service area, it shows up. If it's just going from water to public works, it is not showing up right now.
88 Okay.
89 And I think laura's separate. Yeah. Laura can follow up on the the full picture.
90 Okay. I think that I'll I'll follow up more on that okay.
91 Councilor Ryan.
92 Yes. Thank you. Vice president. Hi. By the way, it's really beautiful outside. Just thought you'd all turn around and take a moment to notice. It's a long meeting. Let me begin by saying I'm really focused on the challenges facing our cannabis industry. So because it's a part of the tao, I want to just ask some more questions about that they're already face, as you know, challenges that aren't because they aren't part of the fda system, right? So they they have challenges just based on that. As such, they're run by cash and face more public safety challenges than most. They're also double taxed locally. I don't know if people understand how what that's about. In other words, cannabis storefront here faces additional hits to their bottom line over their over their peers and other parts of our great state. So I just want to know more as after being around them and listening to their town halls and such, can you explain the nature of the payments that the city was to make to prosper? From general fund to the cannabis tax? And am I just supposed to reel out the questions? Is that what we're doing now? Okay.
93 Yeah, on that one. Not as much. That one. We'll get back to you. It's detailed in the follow up memo on that. Prosper.
94 We should have gone earlier. Yeah okay, I these are the rules. How can funding how much funding does the city provide prosper annually from the general fund for cannabis funding? What are the funds intended for? Why are we having to make the correction from prior year invoicing for this year? What benefit do our cannabis businesses receive from the recreational cannabis tax? I've been asked that several times and I don't give a very good answer. Okay. Moving on. I'll avoid that because there's enough on that topic. It's kind of an overarching comment, probably won't be popular, but it's okay. This is what we do up here is have dialog opening up our budget to policy changes. Midstream is difficult when you're running any organization, and I think it's confusing for stakeholders who include taxpayers. I think at the end of the first quarter, technical adjustments is a standard best practice for many reasons, and I caution that we go down a path as it causes additional uncertainty to our public servants who are trying to deliver these services for portlanders. So I just wanted to make that comment. As it feels as though we're getting well out of the Lane that that we usually are in what's called a technical adjustment. It's called bump whatever. It's it's. And as a former ceo, you did the same thing at the end of the first quarter. You made adjustments. So but you still had an operational plan that you had to be clear about that was set in stone earlier. So I just wanted to daylight that and I'm sure I'm in the minority opinion on that. That's okay. Used to it. Thanks.
95 Can I ask you a follow up, councilor.
96 You can ask me. You could ask the mayor. You could ask whoever you want. No, councilor.
97 I want to ask you. I want to ask you. Because genuinely, I want to know because I agree with you on that front about like, you know, we this is technical. And that's why I want to know what is technically technical versus what are other decisions that are getting made so that we can have them. But can you talk a little bit about your experience in previous trials, like did you encounter those similar problems or.
98 Like we did in the spring? It was tough to come up with. Basically, I was called the budget, the operational plan for the year. And then there were a few years where we had, how can I say this? The forecast went the way. That's a lot easier to digest. So we had, you know, tons of business tax money that we didn't know we'd have. Yes. That happened. And now we're experiencing the other direction. Not as much fun. So I think most of my experiences were on the other. And so it was just a very different experience. Was there challenges with people staying in the Lane and knowing that this rainy day might come? And was I kind of the boring fiscal conservative person at times saying, we should probably note that. But I've learned in this Lane that we like to spend money as quickly as possible, so that never really materialized. And I'm not I think everyone knows that. So I didn't say anything mind blowing. So I think it's just more challenging when you're in this frame of mind, which is why I think it's important that we dig through as much as possible for clarity to understand. But I did sense sometimes we were going into dialog that was getting too directional and operations. I'll probably have to rewatch this meeting to understand that more fully, but that's what I was starting to experience in the meeting at times.
99 I appreciate that, and I ask it, but you're right, I did forget that y'all had some nice, easy years.
100 Oh, it was so much more fun when the forecast went the other way. Right?
101 And so therefore, you know, that's why I'm asking and would love your guidance on what you think, how we can address the fact that if there are changes because we have to make cuts that do become policy changes. I think that's the big question I'm trying to figure out. So I'd appreciate your thoughts.
102 On that. Absolutely. I'm glad we had this dialog. Thank you, councilor Avalos. That's all I'll ask for now.
103 Thank you. Counselors. Counselor Smith thank.
104 I just have just two questions, and I think I don't want to wait until you guys send it back to me. Could you tell me what is the accrual date that y'all stopped at? What was the hard cutoff date that you stopped processing? 24, 25.
105 18 to 20?
106 We got an email.
107 Sorry, I don't have it with me right now. I'll have to get we'll have to get that back to you.
108 Okay. And can you also find out? Because I don't know if I was clear enough. Could you tell me how much money came in after the budget was, was approved that you have to put in the tap? Can you make that clear? When you give me my excel spreadsheet that shows what money came in.
109 Okay.
110 And the other last question was I was trying to figure out the money that came in to the. To the water fund, because you said this was all general fund money that you gave us in that in that table. And I was wondering, is that restricted general fund or does does the water bureau have any general fund or is everything in the water bureau restricted?
111 Correct. It's all restricted. The table I gave, the table I gave you by email was all funds, not just general fund.
112 Okay. So so we mixed general fund money in with restricted fund money in a report. And that's why I'm I think many of us are getting confused. I'm looking at all of these funds summaries and it has all this stuff that we need recommended adjustments. So we're adjusting more than just than just general fund money. We're adjusting actually restricted dollars too. That's that's why it's so important. Like if you would have had by that 21 million in that water fund, you would have said that's restricted. Then I would know where that money came from because I'm solving for general fund money right now. And so you have these two mixed in here. It would be great to have a spreadsheet. I don't want a memo. I want a spreadsheet. Just tell me how much money came in. What, pat, you know, before the the accrual date. And I don't know what that accrual date is and just show me the money. Show me all of the money from the that's the beginning fund balance in total, not the 57 million. That's what you all reduced us to $57 million worth of decisions. And I want to make all of the money decisions. Thank you.
113 Thank you. Councilor councilor Canal.
114 Thank you. I'll be brief. I always when we were rushed for time, it always gets a little hard to remember to say the good things too that we support. So first, I would love to have more time on this in the future as we go through these processes. And I think we'll be talking about the budget process in a minute. But I did want to say I really support the work you've done. On the technical side, it all seemed to make a lot of sense. The other, besides the ones I mentioned earlier, are the encumbrance carriers all made sense to, including the parks one. I also wanted to thank whoever in the bureaus as well. Focused. You can see wellness is a priority in at least three different parts of this of our public servants, in particular in the public safety space. And I wanted to highlight that before we wrapped up here as a really good thing. I know there's some places where we need to explore that as it relates to, for example, when we are doing, I don't know if it counts as secondary employment in the context of TriMet, but that sort of thing. Secondary employment for public safety, whether we're making sure that we have enough of a support system there. But I wanted to at least make sure that that as you're talking about what might need to change, that those things are protected because they are very good things.
115 Thanks.
116 Thank you. Councilor. Counselor Ryan, did you have something additional?
117 Yeah. I just want to add one more thing. Thank you. Council president, I think that we haven't had a chance to listen to color of money type conversations. Enough. So councilor Smith wisely brought up the restricted account and water and sewer. Another great example since I've been experiencing this of late is sdcs cannot be spent on deferred maintenance. Please media catch this sdcs cannot be spent on maintenance and deferred maintenance, and so we're forced to spend it on new things. Clearly, there's a lot of momentum. I see government relations here to keep making that a legislative priority so that we can change that state statute so we could spend sdcs in the future on deferred maintenance. That would be wonderful. But just know that's why that's happened in the past. And I think that's a fresh story to just explain the color of money challenges that are restricted, designated sometimes by state statute. So I think the more that we have that intelligence up here, the easier it is for us to work with your office. Thanks.
118 Councilor Green, are you in the queue?
119 Yeah. I just need to respond to the system development charge thing in the parks levy resolution. We did put in a clause that says the city of Portland, the city administrator, will explore and evaluate whether our internal policies are interpreting, maybe too conservatively, the use of those funds. So we're actually we're actually doing deferred maintenance in our cips with sdc funds right now.
120 I saw that, and I hope that we somehow decide that our read of the last couple of decades was wrong, and that this is the new interpretation, but currently that's not what we have. So I'm just dealing with the reality, that's all. Thanks.
121 We are through the queue of questions.
122 Great.
123 Congratulations.
124 Yeah. So I just thank you all. I want to sort of return to where we started a little bit. These are great questions. I greatly appreciate the deep, deep interest in in digging deep a couple maybe requests. One is we have folks in the room trying to assemble these questions. Some of the questions were very complex. So I know some of you noted you would send them an email I might request. If everyone could please send your questions in writing. So we make sure that we're responding to the correct questions and they're not subject to, you know, any unintentional misinterpretation that would be extremely valuable. Second request is I started by signaling we'd get a response in a week. I said that without awareness of the volume and depth of questions that we would receive, so we will still work to get a response within a week. I anticipate that it will be incomplete, and we'll need to do this in a couple of rounds. So I just want to set that expectation that. Many of these questions are going to take a significant amount of time to dig into, including interactivity with other bureau partners, etc. So we'll do our best. We'll get something out to you next week, and probably a fair to expect around two with the remainder of those questions. The last thing I would just flag before we move on to economic outlook, and I mean this with love and respect. This will take a lot of time over the next week or two, particularly for the budget, office and finance staff. There are many other priorities that have been identified to us that are in motion, and we're going to have to make a decision about responding to these important questions in this moment or doing that other work. So I'm just putting that on the table that if you have other things that are in motion, many of those will be delayed over the next couple of weeks. So please just be mindful and respectful of the fact that we have people busting their butts to do that work right now. We will reprioritize their work to respond to these questions, and there are trade offs to that. So so again, just just want to call that out transparently that, that that's going to be the reality here. Sorry. Did you have more to say.
125 One last thing before I give it to peter is this is the rest of this presentation is largely focused on the general fund. We'll like, hint at a couple of other funds. That is not because no other funds are important. They are important. Many of them are highly restricted. We just don't have time and bandwidth right now to cover all of them. And so one of the questions for you all in the process conversation is how do you want to get a fuller picture on some of those other funds. So just flagging that because because that just came up okay. Peter.
126 Yeah, for the record, peter holtzman city economist. And in the interest of time, I'm going to jump ahead to slide 26 and I will I will both talk about the other slides. They'll be posted online and I'll talk about them in the memo. That will come out in December. So you will still hear about it. It's just I think we should skip to the main event, which is about revenues. And so this graph shows the largest five general fund revenue sources, discretionary revenue sources over the last 20 some years. And as you can see, dependance and dependance on property taxes and business license tax revenue has grown significantly in the past decade. I a simple just rule of thumb for figuring out how much revenue goes to the general fund from its main tax sources is roughly 50%. Is property taxes, roughly 30% is business license tax, and roughly 20% is everything else. And again, each year, those depending on the fiscal year, that might not line up perfectly. But that is the general rule of thumb. Next slide. And so this is the property taxes history and outlook. And we were fortunate enough to have the county assessor come and talk a lot about this last week. So I won't spend a whole lot of time on this. I just want to show this is the the three dotted lines. The red line is if we had historical assessed value, growth, historical compression and historical delinquency rates, that is roughly what our forecast would look like. The the bluish line that's below, that's slightly below the the yellow line is the preliminary forecast based on the assessor's report that was just released. And the conversations that are still evolving with the county assessor about the impact of big pink sale and what that will do to property tax growth going forward. And so it largely it's not that much different from the previous forecast. And again, it's not final. I we we typically meet with the county assessor after they release the data and talk it through a little bit more. And so I just wanted to show like relative scale. It's not changing a whole lot. Next slide. And so this this brings us to business license taxes which is again as a reminder this is the source of the shortfall for the technical adjustment ordinance. It was forecast to come in at $208.7 million. It came in at $196 million for fiscal year 2425. And so just a bit of background on what the business license tax is, because I do think there is a bit of confusion, at least in the media, because it is a very unique tax. It's a 2.6% tax on net income, which is basically profits. And this is based on business activity. So it's based on where a sale occurs, which is again it's very unique. I know the county has a very similar tax anywhere else in the nation. It's largely more tied to employment property that their their revenue structure is largely more tied to those sorts of things. It's either a sales tax or in the case of other business taxes, the way they source income or source their their tax payment is tied to employment and property directly. Ours is tied to sales. And so the way forecasting business license tax really gets broken down into is two components. One is trying to forecast the underlying tax liability. And this is basically what you think that the an industry or business or all the businesses together should be paying in a given fiscal a given year for a given tax year. The next part, and this is the much more volatile part, is taxpayer behavior. And there's lots of examples of how this can change over time. If there's an incoming federal administration that is anticipated to be light on corporate taxes, you can see large businesses moving money around and moving and changing their accounting such that they are paying more, like their tax liability is higher for the next year and lower for the current year to take advantage of anticipated lower tax rates. And that's just one example. I'll give two more specific examples and how it applies to the city of Portland in the next couple slides, but I just want to create that distinction between underlying tax liability and taxpayer behavior. And then the last piece is again the way we think about this tax. There's one there's quarterly estimated payments. And then we think it's everything's due by April 15th. That's the tax liability is is due. But the vast majority of the filers are large corporations and they file for extended taxes. And so really tax season is April through October. And those final returns aren't normally processed by the city until November December. And so I when determining that underlying tax liability that is the most important piece of data is those final returns. I will also just a final note on that because our fiscal year and I, I heard the phrase fiscal years are a construct. It happens to end in the middle of what I call tax season. So it ends between April and October. And there are oftentimes weird fluctuations that happen just when taxes come in. And again, it's largely related to what I would call taxpayer behavior. So next slide. This is just a snapshot of who who pays this tax. And again this is not something other jurisdictions normally see because other jurisdictions it's largely tied to what activity is taking place within the employees. The property that we how it's determined again is based on Portland consumption. And so not only are small businesses, small Portland businesses, partnerships, sole proprietorships paying this tax, but also the largest of the large. And they don't need any employees in the city of Portland to be paying a substantial tax. Because what how that profit is sourced to Portland is based on portland's consumption of that business's revenue. How many times we click on their ads, how many times we go to their website, so on and so forth. And so it's a very complicated system that's different for each business. All that is to say that some of the largest corporations in the world are our top payers, even if they don't have a presence within Portland. And so when we're predicting the the, you know, the underlying tax liability, one of the most useful things is to look at the performance of the companies and their profits. So back to the slide. What this says is I'm going to use tax year 2023 as an example. And let me go to my notes. And so to read this this is saying that the top ten firms, if you were to rank firms one through 50,000 plus it's 60,000 plus I think in tax year 2023, the top ten of those by how much they paid, paid 15% of the tax. The next 11 through 100, paid 22% of the tax. And so that means the top 100 firms combined paid 37% of the tax. You get to the top, you add in the next group, which is 101 to 1000. That's another 31%. We're at 70% for the top 1000 out of, again, over 60,000 businesses that are registered pay this tax. Of those top 1000, most are the are. Many of them are in the s&p 500. They're the among the largest corporations in the world. And just to kind of tie it to what this means. So the average top ten payer will pay about $4 million. That implies $150 million of profit in the city of Portland. The top 1000 payer will pay $150,000. That implies $5.5 million of profit, again not revenue, but profit in Portland. And so this tends to be paid by large businesses with big profit margins and large, large corporations, but not solely so. And there's a key distinction there that a lot of sole proprietorships and partnerships are real estate companies and financial firms, and they can pay also a significant amount. Next slide please. And so I'm going to give a brief oral history of the last few years of what has been going on with this tax. And I guess it's a little bit of a revisit to the good times. So fiscal year 20 2122, that was right after the pandemic. The forecast for that year was that the pandemic would bring down corporate profits, so on and so forth. That did not happen. And so in fiscal year 2122, what a few things went on. One, corporations had larger profit margins than they normally do. And this is this was a in many ways a timing thing. They were able to raise prices before their commensurate costs. Their biggest cost, which is labor, went up. And so for a short period of time they were getting profits above 13%, which, you know, the original the the long run average is closer to 12 and 1% makes a big difference when you're talking about trillions of dollars. The next thing that happened is capital markets and specifically housing in the stock market. And related activities also spiked in fiscal year 2122. And so we saw a record $206 million in business license tax revenue. It was anticipated that both of those things would subside. And so the forecast for the following year, I believe, is 178 million. But it was more than a 10% decline in business license taxes. As you can see on the graph, it basically remained flat. We collected $206 million that year as well. This is where I kind of make the distinction between taxpayer behavior and underlying tax liability, because the the taxes came in so far above forecast, I anticipated that we would see a large amount of refunds and or credit carryforwards that would eat up the liability for the next year. And so you see, there's a big drop in tax in fiscal year 23, 24 to $185 million. So that that we saw that 10% decline. This was anticipated. This did not create any huge budgetary problems because it was built into the forecast. And so what actually happened is that refunds more than double. They increased by over 30 million. We we submitted in fiscal year 2223. We had about $28 million of refunds. And fiscal year 2324, we had 59 million. And so what happened? Well, a lot of the firms based their tax year 2223 payment based solely on what they paid the prior year. It's just an automatic thing. And then when those extended returns were were received, it was refunded the difference. I will also just to again highlight the volatility and the sort of arbitrariness of fiscal years. The July of 20, it was July 2023. We got $9 million of refunds submitted. A normal July is about 2 million, and so that's $7 million more. If those had been filed and processed a couple weeks earlier, both fiscal year 2223 would have been $7 million lower and fiscal year 2324 would have been $7 million higher. That's a $14 million difference. And so there is a huge amount of volatility, and in some senses, it's increasing as we become more and more dependent on a smaller and smaller number of firms for large tax payments. All right. Next slide. Actually could you go back before I, I. Would the forecast for 2425 was it was basically anticipated that we would return to the normal underlying tax liability that has been estimated. And things were tracking that way and slightly. And so that that it was it was kind of in a range between 205 and $210 million. And things were tracking closer to about 208.7 million around February ish, when I updated the forecast. Then three weeks before releasing the April forecast, global trade order was kind of upended, and what was announced in early April is very, very different from what actually was implemented. But the main thing that happened was a great deal of uncertainty. Businesses did not know, they didn't know how much taxes they're going to pay and what and what businesses do. This is what economists call liquidity preference. But in simple terms, it's you keep cash when you don't know what's going like. If you don't know what's going on, you want cash. It's a form of security. It's also if an opportunity arises, you can utilize the cash. And so what ended up happening the the announced tariffs are drastically different than the tariffs that went into effect in June. I did not change my forecast because I had no idea what the tariffs were going to look like, how businesses were going to respond or any of that, and it seemed imprudent to drastically adjust an April forecast based off of speculation. And so businesses again, with that liquidity, if that the story I'm telling you is true as certainty is formed, businesses should be paying the tax. But when there's a great deal of uncertainty, they're more likely to, you know, not pay as much until they're certain they need to actually part with that money. And so again, what would you expect? You would expect that the end of the year tax receipts are lower, specifically like quarterly estimated payments, but that that money still comes in and it just comes in this, this fall. And so if you go to the next slide. You this is the quarterly estimate payments. So September, this past September we collected $37 million. That is $11 million more than last September. And you can see that June was we again built into the forecast was some growth from the prior year June. And instead we collected $6 million less. If you go to the next slide, I can kind of tie all this together. This graph shows. So it shows the the collection patterns for the last few years. And so the way to read this is week one through the fiscal year end is the is the x axis. And we start off with $0. And by the end we end up with 206 208. And a lot of that comes in in April. However, to look at how we're tracking, you can see that dashed line. And what that dashed line is, is if we're going to collect $220 million this year, which is what the budget is, how much should we be collecting at each point in time? And that is based on the past few years. It's a naive estimate. It's based on exactly how much collections, like the rate of collection for the last few years. And if you look at that dashed line and compare it to the actuals, which is that darker blue line, we're about $13 million above which, if you remember the deficit going in is about $13 million, I don't this is a very good sign. It is not. There's a lot of things that happen at end of year filing, and there's a lot of movement. And so beyond saying this is a good sign, I am not saying that revenues will be fine. And so I think to kind of nutshell what is going on with business license taxes. It's two main things. One, the large amount of uncertainty shifted tax payments from one fiscal year to the next, and then two, I think that there is going to be a reduction in the forecast and the overall business tax underlying tax liability is going to be reduced. It may not be massive, but it likely will be reduced. And one other insight there is that the state economist, he released his forecast in may and then updated in September. So he's had two forecast releases since mine, both of them in decreases to the corporate excise tax, which is the closest relation at the state level to this tax. Many of those corporations that pay, they pay oregon's corporate excise tax also pay this tax. And so again, not. Hopefully it shines some light on what is going on with business license taxes. And I think we can go to the next slide. And I will just briefly. This is the other 20%. The other few revenue streams. Most of these are not anticipated to grow very much, if at all. Most of the growth is going to be coming from property taxes, which again, our constitution, our state constitution limits, and then business license taxes. So the business license tax growth has historically been well above 5% over the past decade. I do not necessarily anticipate that in the near term, and it has been closer to flat the past few years, even netting out some of the underlying tax liability. And oh, and so I before I hand it back over to ruth, I'm going to pause for questions on this section.
127 There are a lot of questions. And I'm just going to note to folks that there is another section and a discussion. After this. We still need to talk about budget issues for 2627. But I know that this is a really important piece of understanding that work. Before we jump into questions on this section, councilor Morillo did you have okay, councilor Smith.
128 Thank you, madam president.
129 Thank you for for that explanation because I was looking at the Portland clean energy benefits fund. We have a total amount of 919, just under $1 billion. Right. So apparently $42 million was attached to our list of recommended adjustments in that. And it's probably because you talked about some of those bigger companies who are paying that PCEF tax. They probably paid in either the August or the September, the quarterly. And that's why this one hit so high after after June 30th. Do you think that that's the reason why we put additional $43 million. It could be.
130 It could be I think the we should get we should talk with the folks at PCEF and get the exact reason for that. But the that revenue actually came in below forecast last year, and that was largely due to how we how we do the accounting around credit. Carryforwards. It's different from the business license tax. It is tracking.
131 Above $42 million to the good right now. I mean, it's entire 962 million compared to the 919 that was adopted back in June. So they have a lot more money. And I do understand what you're talking about, because just a small business person for a small while, and some of my invoices came in for work that I did the previous year. And so I paid my mayor my my fourth quarter taxes for December. I paid them early. So I'm glad to say that I'm a part of that $11 million that we're ahead. So it does make sense, because you have to constantly be thinking of a year ahead. So it just gets kind of confusing on how much money we have for this particular year, or is it for next fiscal year. And so I, I got what you were saying in the last question is you said something about we took in 185 million in business licensing tax this year.
132 In fiscal year 23, 24.
133 23, 24.
134 We took 196 in. So it did grow by $11 million.
135 Yes. Okay. And that's what I'm saying. If we could have a just a spreadsheet to show us what we had the previous year so that we're not trying to predict, because a lot of us, we go out and talk to our constituents at town hall meetings. And when we hear you all say we're we're 10% down, we're thinking, oh my god, nobody's paying their business license. Licensing tax at the third quarter. But really we are up. And so I just want to be able to make the distinction. There's a difference between the forecasted amount and what actually came in. So thank you. Thank you for that.
136 Thank you. Counselor councilor Novick.
137 Thank you, madam president. First of all, I just want to thank you for your remarkably clear and helpful presentation on the blt, which is perhaps the most hastily named tax ever. You talked about how it's purely dependent on sales and profits within the city. A couple of months ago, I happened to find randomly, a press release in the metro chamber from a few years ago, praising the city and the county for changing the blt in a way that made it more dependent on sales and profits and less dependent on presence in the city. And they were really excited about that. Is that right? That that's the history that we now have a tax that the Portland chamber is much more excited about than they used to be.
138 That so Portland metro chamber advocated for us to align with the state on how we source. And it was largely anticipated not to change too much. But we do do a market based sourcing now. So yes, that is true.
139 Thank you.
140 Anything further? Councilor?
141 Nope. That's it.
142 Okay.
143 Councilor canal.
144 Thank you, madam president. Thank you for the presentation. Peter. So I have a couple quick questions, I hope. Do you have the graph that's on slide 26, inflation adjusted or in 2025 $26.20.
145 Is that slide 30. So yes I have presented that in the past. I've also done it on a per capita basis because I think that also tells a story. I can update that and get that to you.
146 Yeah, I think that's a good example of something to not make a high priority based on.
147 Yeah.
148 Various thing, but I just figured if you already had it for 28, is there a place in our code that you can direct us to of where the definition of where a sale is located occurs?
149 Yeah, it would be in the the revenue division post all the rules on how to pay the tax. It gets pretty in the weeds because there's so many different industry types and things like that. But I don't know off the top of my head, but that is something that is easily findable online.
150 Okay. Yeah. I guess I'm curious as to how how fungible that is, how we whether or not that's changeable and if so, by who, but also the sort of very easy question is if it's an item ordered from out of area but delivered to your home at the sale occurs here, right?
151 Yeah. The so I think one other way of thinking about this that is helpful to me is that they are paying the like again, think of a large corporation. They're paying the federal corporate tax, and they're following all the rules and regulations like that. And then they're paying the Oregon corporate excise tax and they're aligning with that. So it's the same formula now that we're doing to councilor Novick question, now that we're aligned with the state on the market based sourcing, it is the same formula top down basically. So I wouldn't expect any particular gaming for the city of Portland.
152 Got it.
153 For slide 29. Can we get this where it scales to dollars instead of percentages? And the reason I ask for this is it's hard to know if the reason that blue bar on the left went up is because it went up, or because the other three went down.
154 Let me say thank you for that question, because it gives me an opportunity to clarify something on this slide. So you'll notice that that's tax year 20 2024. We have not received all of the revenue for tax year 24. And also some of that will likely be applied to a future tax year. So that bar on the right the furthest right is likely to change significantly. Yeah I can get you the the data. It is two separate data sets. We and this is where the the world of business license tax gets very complicated is the revenue division receives a check and it gets deposited. And that's the thing that I'm forecasting. There's also the transactional data which is tied to the returns. And they don't line up 100%. And so the the total amounts for these will not line up to what we actually receive in a fiscal year. On top of the fact that tax years and fiscal years are different. And so I can get that to you, I just wanted to caveat that it will not line up to the the budget data.
155 Thanks. Yeah, I guess I'll hold off on further on that. And then I have two that might be a little bit more in depth and feel free to flag. If so, you didn't go through side 23. But I did want to ask if the the left graph on that is for commercial only, and if anyone had talked to milwaukee on the right graph. So just those are hopefully just the top line on those, I figure we could ask those quickly.
156 Real quick. Since you asked that is just commercial downtown market office space particularly that report were among the highest in the nation. I think we are at the highest for the whole years. Vacancy report that is backwards looking. It's a lagging indicator because it's based on leases. And leases expire on average after five years. And so that it doesn't tell you a whole lot going forward. I also I always flag on this that particular slide, that 15% is high. We started among the higher in the nation to begin with, in large part because we built up a whole bunch of office space before COVID. And so just two flags on that on the right that. Yes. And so. I think I will get back to you on that, because I did want to go a little bit more in depth on exactly what's making up that slide, because I think there are some interesting underlying components where Portland is largely lagging because of visitor traffic, not necessarily employee and residential traffic, but it's a lack of. So this was presented by northwest to the Portland metro chamber. And if you click on the link you can see the associated sub data. And it breaks it out by resident employee. And we're actually second, I mean an employee, we're basically with everyone else. But in residential traffic to downtown, we're we're doing pretty well again relative to our peer cities. It's really the visitor traffic that we're lagging behind.
157 I'm so glad you said that, because that queues up the actual the last question, which is on slide 34, you say that transit transient lodging taxes are flat and you do not have a I forget how you worded it, but not high hopes for the future on that. The outlook is relatively flat is how you put it. So those are related, right? Downtown traffic is related to visitors, is related to the hotel taxes that they pay. And so we need to be having at some place. And I guess I'd be looking to councilors Ryan and Green to, to as we talk about the arts economy committee, more conversations around tourism as well as the mayor, because I know the the sort of ambassadorial role of the city and, you know, bringing events here and stuff. So I just wanted to ask if there's more to that that you wanted to give us. That's that's kind of the one, like actually open ended question.
158 Yeah. And so the the answer is there is more I think the short answer for that is we actually have seen an uptick, a small uptick in occupancy rates year over year. The problem is they're not enough to drive up prices. And prices have actually been falling. And so if you look at what the tax is, it's occupants times how much they're paying times the tax. And so we're getting more occupants relatively. It's not a whole lot of growth. But we're not seeing because there just really isn't that we have a lot of supply. They're competing over getting people into their hotels. And so it's just really not growing as a revenue stream. And it is one of those it is one of those revenue streams where I may not forecast it. It can bounce back quickly because of that relationship between occupancy and price.
159 And by price you mean the average cost of the.
160 Average cost. Yes.
161 Yeah. Okay. I think one of the ways to to increase that demand is to to bring the events here that drive large scale, large numbers of people to book hotel rooms. Although staycation weekend helps too.
162 So you're looking at convention center data.
163 Yes. As a part of some committees, we actually send our convention data revenue back to help pay for the bonds as a prior agreement. But so it doesn't really inform the forecast, but. It it is expected to be a lot lower in because again, there's a there's a many year lag before conventions. And we're just right now in the middle of the the first kind of lull from five years ago.
164 So work sessions.
165 It was it was well timed and necessary.
166 Work sessions. I'm just used to them being looser. So thanks. Yeah.
167 Councilor Green.
168 I just have a quick technical question. So on the slide 29, which I also agree, I really appreciate the presentation of all this. It's similar to councilor Kanal request, but I guess off the top of your head, do you have a sense of the like the sort of count distribution like I, I this is, this is in terms of volume of dollars, I imagine, but. You know, I would imagine, I would assume that the vast majority of our business license taxpayers are actually pretty small entities.
169 Yes.
170 Like, do you have a sense of that proportionality, like in terms of these buckets, or is that a follow up?
171 I can get you more. And so one of the tricky things is that a lot of the, the people, a lot of the firms that will pay the tax will pay $0. They're just in the system. Yeah. And they may have paid a substantial amount last year. And again, you can think of an industry where the profits are very cyclical. And so just because they pay $0 doesn't mean they haven't paid a substantial amount the prior year. And so you're going to get many, many businesses that are paying very little tax one year. And then yeah, so I can I can get you more detail on that.
172 I appreciate that because where I'm going with this is trying to understand because I, you know, there will be a response based upon broader conditions of the decline in the volume of the receipts. But if we don't see a decline in the number of payers or filers, that's another piece of information I.
173 So some of that the reason I, I left at 50,000 plus is there's a lot of back end management that the revenue division does. And cleaning up the data that is not really meaningful in terms of predicting what's happening or telling and how many businesses are active in Portland and things along those lines. And so they'll have fluctuations that I don't know if is really telling. And so I just left it at 50,000 plus.
174 Sorry. Can I just interject and add for two, two, two sides of the same coin? There are rules and regulations around reporting on specific taxpayers. So I just want to be clear for folks we cannot report on, on specific individual taxpayers, we have data that might be able to put folks in buckets. But that's also, I think, hopefully comfort to folks who may be watching that. Also, we will not share your your specific data.
175 No, I appreciate that. Yeah. Just in the interest of the data driven approach, when we talk about like, why do people leave Portland just disaggregating between like dollar receipts versus number of entities, even if you have to mask who those entities are and bin them correctly, would be helpful because you mentioned liquidity preference, I have to just say that's we're all keynesians now. So quote nixon quoting milton friedman. Thanks.
176 I'm not sure what accusation you just launched at everybody here, but. There was a lot there. Very quick question. And if it's more than a 32nd answer, I'm happy to have it with the rest of the follow up. I am wondering what our collection rate actually is, how aggressive or not are we at pursuing owed tax revenue?
177 Yeah, it's a good question. We can work with revenue division to get a better answer. I'll just say it's it's most things are it's complicated because each payer has unique circumstance. And and collections takes resource. And we are a resource constrained entity. So we'll get you a more comprehensive answer. But that's my 32nd response.
178 Great.
179 Thank you. That clears the queue. So jonas, I believe we have a third section to this presentation.
180 We have we have a little bit more. I'm going to I'm going to try to keep this super brief. And then jonas is going to talk a little bit about budget process with the rest of our time this afternoon. So the reason I do want to cover this is because I think it's important and it can be confusing. So peter talked about revenues. Obviously the other side of the coin is expenditures. And what's happening with that. The kind of main point I want to drive home is sort of we in the city, we all forecast kind of what's going to happen with our expenditures, what would happen to just continue doing what we are doing today. When we think about that question, there's a couple of pieces. And in in the general fund, we have what's known as the current allocation level, and that is based solely on things that have already been approved in a budget or inflation, or those things that council tells us specifically to do, like the health fund reserve. So the that that is a little bit different than what would it cost to do exactly what we're doing today in five years from now. And there are a couple of reasons for that. So first, I wanted to kind of talk through a little bit of what's in inflation factors, like what do we assume about inflation and what does that what does that do to our finances. And then the other two are kind of the difference between the current allocation level. Like just if you grew our budget as of right now by inflation, our ongoing budget, what would happen? And so those two buckets are kind of what we call the fiscal cliff, or, you know, things that are ongoing in nature but supported by only one time revenues and then other cost increases above inflation. There are always cost increases above inflation. Labor contracts are a big one. Obviously health benefits we've seen, you know, grow above the kind of medical inflation rate, legal obligations that arise and other policy decisions that increase costs. So I do want to be clear that when we talk about the forecast and cal, we're talking about expenses just going growing with inflation. And that's a bit different from current service level. So looking just at inflation this is a wordy slide. So I won't I won't go into all of it. This is looking at for 2627 specifically for cal. What are the increases due to inflation that we're looking at. And so you can see the big ones are all related to personnel or cola health benefits and pers. And this is over the life. The expectation over the coming five years is what's on this slide. But there's lots of caveats in here about how this is just for ongoing expenses and just for cal. And then looking backwards here on the next slide. This is what if you just look at cola and pers what these inflation factors have been over the past five years. And then looking at cola for next year, I think the takeaway is from this slide is there's if just looking at cola and pers alone, it's an average increase of roughly 6% per year. So our revenues would have to grow by 6% per year just to make up for cola and pers alone. So that's not even touching health benefit increases. So I think that's just an important kind of thing to have in the back of your mind as you're thinking about kind of the budget and the fiscal outlook as a whole. This slide is theoretical. So sorry, but the I'm just trying to give a visual sense of what I'm talking about. This is if you add expenses above the what is already in the budget, so above the ongoing position costs and things that are already approved, ongoing in the budget, you would end up on this different trajectory. And so that's what that yellow dotted line is. The what comes out in peter's forecast is the blue line. And the Green line is what the revenue forecast is. So the other thing I want to highlight is peter can make a forecast about you know, for cola and pers. We don't have any control over those. We're just forecasting kind of conditions. And we can make that forecast. We don't forecast the yellow line, the yellow dotted line because we don't forecast policy decisions. But that doesn't that doesn't mean that there's not a real gap there. So there's this tricky communication that happens. And we can talk more about this in the process section about, you know, what's the difference between the blue and the Green line. In recent years, that has been kind of dwarfed by the difference between the yellow dotted line and and the Green line. So I'm going to talk really quickly about the fiscal cliff because it is important, but it's a little tricky. And I want to be very clear. And that this I am not trying to say, like, we have to come up with all of this money that's in that right hand bar. So this this graph just quickly shows you certain revenues. So to councilor Smith's point, this is not every revenue in the city. We're looking specifically at general fund one time and certain grant funding and which is one time in nature. And you can just see that kind of big bump up. This kind of follows the, the, the tables I was showing in the top section of the presentation. And we are coming down the cliff there. So that is good news. But you know, there are still over $100 million in that right hand bar. But again, I'm not trying to say that we have to find $100 million to do everything for a couple of reasons. One is that some things in there genuinely end or are solved for some other reason, and I'll talk about that in a second. And another is the the cost of those things is not would not be the same in 2627 as it was in 25, 26 for multiple different reasons. So this is just to give you a general sense of where we are compared to the past five years. And then this slide breaks down. I know it's hard to read the one time general fund only allocations in the current in the 2526 budget. You know, again, you can see some of these things like the flood safety benefit fee is funded by one time this year, but won't need to be funded by general fund next year. So this is kind of a demonstration of what is in the current fiscal year's budget. It's not it's and it's a signal about kind of some of the issues for 2627 that need to be solved for. But it there is a lot of conversation obviously, that needs to happen about what what this means. And with that keeping it really short. If there's any questions I can answer those and otherwise I'll pass it to jonas. On budget process.
181 We do have one question. Sure, councilor Smith, you did call her out on that slide.
182 Thank you. Could you also, when you're creating this, could you do a line that says debt service that drops off so I can see how much debt service is dropping off for 26, 27 instead of just baking it into, you know, the executive budget. I would like to have it disaggregated out so that we can see how much we're working with. Yeah, that's another decision package that has been done internally. But that's something actually we should be making a decision on.
183 Yeah. So a couple of things. Just yes, we can we can break it out for you. A lot of the debt service is paid by restricted funds, not by the general fund. This slide does call out that the pension obligation bonds will start to fall off, will fall off in 2930. So that is now in the five year forecast solidly. So that that is the main one in the that affects the general fund. Many of the other ones affect non-general fund revenues. But we can certainly provide the information.
184 Can you do do the, you know, restricted debt service drop off and actually just have a line in general when we're doing our when you're doing these reports, how much debt service we have that we're paying out of general fund so that we know because I've never been able to to to disaggregate that money.
185 Yeah.
186 Colleagues, any other questions before we move to the final presentation? Councilor canal.
187 Yeah, just a quick one.
188 Sorry. Go back a slide. I just wanted to highlight, actually, I can I can wait till we get to the next part to ask it because it'll it'll relate there too. Thanks.
189 Councilor. Ryan.
190 Thank you, madam president. I just want to go back to some of we don't have to go the slide, but when you were showing the revenues, you we didn't separate them to general fund and PCEF. Right. They were just the corporate taxes coming in. So as PCEF worked into that.
191 We didn't show any PCEF slides. No, no clean energy surcharge, except there's a slide in the deck.
192 When you have the top five. That's what made me probably think.
193 Because it's top five general fund revenues.
194 So it was just in general.
195 Just general fund.
196 Okay. Yeah. Thanks.
197 Okay. Thank you. Let's move to the final portion of the presentation.
198 Great. Thanks. And I appreciate there's a lot to talk about. And we're not going to get through probably all of the remainder of the presentation here. But we'll get through at least the first few slides and get through what we can. Was was hopeful that we'd have time for this to be a conversation rather than me just talking, but I think in the limited amount of time we'll get through what we can, so at least we can get some of the context on the table. So the topic here is pivoting to talk about the 2627 budget process. I greatly appreciate the kind of after action conversations that we've all had in July and August. Kind of debriefing on last year's budget process. That process takes a lot, a lot of work to get through. The comments been made, the 18 month annual budget process for many of us on on this side of the table, we never stop working on the budget, and it kind of has a blurred, somewhat blurred beginning and end. We do need to really accelerate those efforts to work on the 2627 budget in earnest, really right now. And so this was intended to be the moment to try to get some feedback. We'll look for more opportunities to continue to get that feedback. Do you want to at least give some of the context on what we've heard? Big picture, some of the some of the improvements we're hoping to make in this cycle and at least maybe get on the table a proposal for what a calendar might look like so we can begin that work citywide. So yeah, this will just be providing a little level setting and kind of recognizing that this won't be all of the things this will be multi-year improvement effort. But but what we're going to describe here is what we think is accomplishable with the staff and timeline that we have. Great. I think we're on the correct slide here. So the we we did attempt to implement a handful of significant improvements in last year's budget cycle, including many adjustments that we made in real time as we learned about the evolving expectations under the new council alignment. Some of those improvements, I believe, actually worked pretty well, and we all experience many that didn't work as well as we'd hoped and remain works in progress. In my earlier conversations with all of you and with some of your staff and others around the city, there's a few categories of things that were pretty much unanimous areas identified as as prioritizing for attention. And I'll note, while this says city council feedback, just note that I, the city budget office, the mayor, the city administrator, all are aligned and at least focusing on these areas. So the first box upstreaming conversations with the council and the community, we are in fact here today. Upstreaming that conversation, and I expect we'll have more conversation in the coming weeks. These are opportunities that we didn't have. We weren't able to have with council, with this council last year because we weren't aligned to have this conversation in October of last year. So we're starting that conversation today, and we'll continue to look for opportunities to continue that conversation. We we do intended to have maybe some conversation about community engagement. I'm not sure we're going to get there today, but in the packet, the presentation does have some some information around where we're looking to align with community engagement improvements. And we can come back and talk about that more, perhaps another day. Second bucket that we heard loud and clear and agree with is delivering the mayor's proposed earlier than may 5th, which is what it was last year. There's some constraints around that timeline that we'll talk about in a minute, but but we'll have a proposal to accelerate that that timeline. Third bucket was to rework this. What was last year, last budget cycle called the city administrator's preliminary budget recommendations. And so look to gain a little insight. But but maybe a proposal about how we can shift that document towards a shared shared target. Fourth bucket was improving budget 101 materials. We have gotten some positive input on some of the materials that we enhanced last year, and working currently to further enhance those materials and appreciate your engagement and feedback on what works and what doesn't. That really helps us make that that information better as we develop it. Also just flagging. As we're experiencing also in real time. And you have experience with here, the materials, the details, the processes are complex and not often intuitive. And so it is really difficult sometimes to distill those important facts into sort of bite size pieces. So we're working on that. We also feel like it's really important, as we have experienced last year, to to invest energy in producing those materials to in the name of limiting and maybe even completely avoiding, but at least limiting some of the misunderstandings and misinformation that can kind of bubble into the conversations and make it more complicated. So I appreciate that. That's an important place to put some energy. And then lastly, we don't want to lose sight of development and future backs. And I will I don't know if we'll have time to talk about that here today, but but I want to make sure that we keep that in mind as we move forward as well. All right. Next slide please. So for reference we wanted to show the calendar that the city utilized last year. So current fiscal year budget. But the cycle that we just completed this was a pivot away from the kind of legacy siloed, very bureau driven requested budgets that went kind of straight up. And this was an attempt to first attempt to to shift to an enterprise view, amalgamation, gathering of those bureau budgets, present them in February at an enterprise scale. And improve opportunities to have community input, including listening sessions and additional conversations, particularly in the spring at various committees and council. So an attempt was made. I'd highlight that that to some degree, those discussions and you can see it here. The fiscal outlook work session is something we have always done in October. So this at least that flavor, that piece of the conversation today is something that that we have always done. But as we all know, this sort of shift to a new council in January kind of had this really awkward dynamic that was created right in the midst of this fiscal year process. And and so that was a challenge. I don't know if this is good news or bad news, but guess what? We don't have that excuse this year because here we are. And so we're doing we're doing the work. Given the depth of the this afternoon's discussion just would note that as we think about the cycle and the calendar for next year, which I'll get into on the next slide, we probably want to start thinking about schedules. I'm sensing that we may be spending a lot of time together over the next few months, based upon just the conversation over the last 2.5 hours. So I'll look to guidance about how we navigate that. But but my sense is we probably want to start thinking about thinking about how we fold that into the process here. So we wanted to just show last year's schedule for a point of reference. And the next slide and apologies, I'm moving as quickly as I can here. But this is not a proposal necessarily. We know we'll come back to council for sort of formal adoption of a budget calendar. We're not asking for formal adoption today, but because we do need to begin starting to do the work, we wanted to at least put this in front of you as a potential calendar for for this current year, and certainly support whatever form of communication and adjustments that are recommended to the extent they're feasible administratively and of course, legally. I'll highlight a few of the key changes and questions that are embedded in this revised calendar, so you can see what's different from the from the prior. The first is in that December 2025 box, I'm sorry, in the January 2026 box, rather than submitting sort of a traditional base budget, which is just in the typical legacy, would just be a single scenario with funding whatever funding expectations are defined. So last year, for example, that was the I believe it was 8% cuts, general fund cuts that the mayor identified in the new potential path that bureaus would essentially submit kind of current service levels. So what would it cost if you just kept doing all the stuff you're doing right now? And so that's one path, one potential future. And then the flip side to that is producing one or more scenarios, one at least potentially more. That would include some kind of adjustment. And that could be either a blanket adjustment, as it was last year, 8% all over the place with whatever exceptions. Or it could be a more manicured scenario, but that way at least it gives all viewers council the mayor, the public both. What would it cost if we just kept doing all the things we're doing? Kind of the yellow line to some degree. And ruth's earlier, the yellow dotted line in earlier slide to what might it look like? And let's be real. And this cycle, it's probably going to be a little bit of a constrained scenario. So the objective would be to show both of those lenses, neither of which would be recommendations or or final answers, but different ways to sort of frame the conversation that would then occur throughout throughout the spring for consideration by by the community and council, etc. So that's the sort of change in the January bucket, the February bucket and the little, little open ended here. But the next major change would be to that city administrator document, whatever we would call it. I know there may be some differing opinions about whether there should be something in February or nothing in February, and happy to to hear feedback about that. Personally, I believe it's very important that we have something that's published in February that communicates to the world where we see things. And so I do believe it's really important to have what I would call sort of an assembly or a report of those scenarios so that we can give the community something to see and respond to, which is then opportunity for input, both to inform the mayor's proposed and ultimately to to inform what council approves and adopts in may and June. This would not be a budget. It is a report by state law. The mayor proposes the first balanced budget. So by law this will not be a balanced budget. It will not be a balanced report. It will be a presentation of those facts and scenarios. Lastly, I also know and appreciate there's some maybe difference of opinion about whether that report should end at the facts versus have some interpretation of those facts. And so we'll leave that as an open ended question. And just to be clear, I've heard from some folks that it should absolutely not include anything that feels like a recommendation. And I've heard from others that it absolutely should, that that is the city administrator's job and their role. So for right now, we'll leave that as a, as a to be determined. But I think at minimum, advising that we have some sort of report that that assembles and aggregates that information and can be a community available document available to the community as we enter those deliberations. The other sort of challenge that I want to highlight in getting to that February, I think it's a very important February point of having that information assembled and publicly available is that there does have to be some level of, I believe, some level of enterprise coordination. We've had this massive shift in government to not be in the old way of bureaus, just sort of submitting things up and not having that enterprise view. So again, I think just a another reason to make sure that we have some level of of coordinated view from, from sort of the city administrator seat, including deputies, bureau directors, etc. To make sure that we're kind of comparing notes and making sure that we're giving that best enterprise thinking to the community. The next major change in the in this potential calendar is the mayor's proposed. So I know we've had the conversation at finance committee. There's underappreciated volume of work that happens to get to the mayor's proposed sort of the technical work to get to the mayor's proposed. I will admit that even until a month or so ago, I wasn't fully aware of all of the detailed technical work that goes into that. So after some deep dive review of those process requirements, the the assessment is that April 20th would be about the earliest possible date to have the mayor's proposed, developed, vetted, technically correct and published. And while that's not as early as I might have ideally hoped, it still is two weeks earlier than it was. And we can talk about that a little bit more here in a second. The my suggestion would be that we set that as sort of the target date, so we can be driving for that. And keep in mind, we want to continuously improve. And so as we go through this cycle, continuing to look for opportunities to get that done even more earlier in the schedule in future future cycles. Additionally, and I'm getting near the end here of what I would like to at least get through. As I mentioned, I expect we'll collectively want to invest a significant amount of time into both council discussions and community discussions in that February, April time frame or earlier. Again, we're here. We don't have to wait till February if there's questions about existing budgets, if there's questions about existing policies and costs. Many of the things that were highlighted this morning in the fall town discussion, we have opportunities to talk about those between now and February, between now and April, between now and may and June when council votes. So we are here and ready to support those conversations. The last thing I note is that once the adopted budget is published, from that point forward, much of the calendar is actually driven by state law. And so we don't have a lot of flexibility in those those may and June dates. So I wanted to just acknowledge that too. The last point I'd make in this schedule, the goals being, you know, the kind of five boxes that we we teed up at the very beginning while getting the mayor's proposed published two weeks earlier than we're used to, doesn't feel like a big change. I believe that the the comprehensive body of these changes, the ability to have more robust, intentional, informed conversations now and leading into the mayor's proposed will help so help produce a document in April that feels like we've all had, including community participants, a lot more ability to to to see those details and contribute to that budget, which will then make the time between publication of the mayor's proposed and when council takes action in may feel a lot better than it did last time, because it won't feel like it just dropped out of the sky. And all of a sudden council has two weeks to respond to it. That is never really the case, but it felt like it this year and for good reason. It shouldn't feel like that this year, because we are here and we're committing to have those conversations now and not waiting until April. There will be things that we also do need to talk about specifically after that mayor's proposed, but my hope is that that does compress or relieve pressure on that. That sort of short window between mayor's proposed and the council approved on may 20th. So thank you for indulging me a few more minutes to get through at least this part of the presentation. I know there's more that we probably won't get to, but I also know we're pretty pretty tight on the end of our time here. So I'll look for direction about how we want to use our last few minutes.
199 We do have a couple of folks with questions. I know we don't have time for the robust discussion you were hoping for today, but I want to make sure we at least get technical questions answered so that folks can follow up with you individually in the most effective way possible. I just checked in with diego to see if we can run maybe ten minutes over, but I know that some folks here have conflicts right at 430. So why don't we start with questions, see what we can get to councilor Kanal questions. Councilor Avalos.
200 It's a question slash comment. I think looking at this slide of the new calendar, I understand it. I'm glad that we have a few more weeks before the mayor's proposed. I still think that's late, but we could talk more about that. I think ultimately, though, what I just want to communicate is this kind of window between December to February. What I would love to see in there is what are the ways that we're building in. Let me say it a different way. I don't want to learn the things about the budget, the conditions, the strategies, the vision for the budgets. I don't want to learn that after the mayor gives me the budget, I want to know, how are you going to be giving us that information along the way? Because that, to me was the biggest thing was like, it's one thing to get the mayor's proposed budget, but if I don't have the information that he had to make the decisions that he made, then that's the disconnect that I was feeling and trying to make my decisions. So if you could just find ways to build in whether that's more work sessions, whether that's briefings, but I'd love to see us develop a curriculum that, you know, things that you're teaching. You're telling the mayor, right. Like, we need to talk about the budget and these things are happening. Are those things that we could just be part of those meetings so that we will just get all the information at once? So that's my only flag. But otherwise, I like the way you've structured this calendar, and I'm sure I'll have more to say on the finance committee about it.
201 Yeah, great. Thanks, councilor. And just very quickly, yeah. Happy to facilitate whatever discussions are valuable as that flag before, you know, we're happy to commit to do those. It's really difficult to do those 12 times. And so look for look for advice from this body about how we can create forums to share all that information most effectively.
202 And we can certainly councilor Make sure to have time scheduled both for the whole council in work sessions, or if there are more technical pieces in finance committee, perhaps, where we can make sure that other councilors know that it's happening, to have conversations as we wade further and further into the budget process. And, mr. Mayor, maybe we can even figure out a forum where you could share with us some of the priorities and direction that you're thinking about giving to those. Go right ahead.
203 Yeah, I plan on doing some similar to last year. We'll start with our three on threes, and then we'll move probably to one on ones. And you'll have access to the budget, the knowledge. And then each of you have your own Lane that you may want to have specific information. And then we can really talk and deep dive on what specific segments you want to address. So looking forward to it.
204 Thank you, mr. Mayor. Councilor Kanal were you staying in the queue after. Yeah, saying maybe not. Okay. Go right ahead.
205 So I had two questions.
206 First one is I think this is really a peter question. Is April 20th even realistic because it feels like we're putting in a lot on you.
207 So I think in the past, the answer I might have said something different. I honestly, I have not been changing the forecast in April, and if I wasn't going to do it last year with the tariffs, I probably will not do it significantly. I do not think the forecast itself is a barrier. And so that's the short answer.
208 Yeah. And I would add to that, I mean, this was one of the considerations that we had as as that April 20th date is a little tight to get some of that information. But forecasts are sort of guesses anyway. We know we'll have it updated by the time council gets to that adoption or approval approval moment. So that is one of the trade offs. The constraint is really more around the technical, you know, the work that the humans have to do behind the scenes to put the numbers in the right places, to publish the thing in a, in a comprehensive format.
209 Yeah. I just want to make sure that specific human is not going to.
210 Yeah it is. It is a trade off. It is a little bit of a trade off. And from a timing perspective.
211 The.
212 Other question I had is if you go back to the first slide in this, where you had the council feedback, things, you just passed it.
213 Sorry.
214 This one. Did anybody actually specifically say bureau budget advisory committees or is that just a habit because it's historically been called bureau budget?
215 No, that's a great flag. Yeah. I think the vision was that these would be service area budget advisory committees. So yeah. Yeah, I think that's just a that's a good catch.
216 Okay.
217 I have like 400 other notes that I will email. And I would love to have it. The one that I think is worth noting here, because it relates both to the content of this and the fact that I don't have 400 things is we we do need to build in more time for council to read things. We also actually need more time for council to discuss. So and that's this. That's the actual budget. That's everything. And moving it up will help with that to the degree that that's possible to do and that the information is accurate and comprehensive and all of that. But but ultimately we just we did not have enough time this this year and even this particular session right now that we're in is just insufficient for it. So I am hoping that that's something that we're daylighting as your part of it as, as part of building the calendar and of course, finance committee, everybody else.
218 If councilor If I can just I want to just if I may respond to that because I agree it is a lot to read. Often we're struggling to balance how do we deliver information kind of in real time because we've heard that expectation as well. And so just appreciate the question and look to to sort of advice and help in determining how do we balance providing information both as timely as possible, as soon as we know it, with providing additional space for for that review. So just appreciate any any advice about that.
219 Yeah.
220 I think to the degree that we can have a week, let's say to do something. Yes, it's better if that's two weeks. And that's for reading. That's for processing. That's all that. But then also within whatever amount of time, even if it remains a week, having two meetings of three hours each instead of one scheduled meeting for three hours, that is going to end up running nine would be helpful to. And I know this year we were navigating and you know, council president had to work with a lot of new and different constraints. And so but I just wanted to highlight that for the future that, you know, whoever is in the scheduling position on the council side and then the degree to which you can make it two weeks as part of the calendar is helpful. And I'll save my community engagement notes, which are copious, for later.
221 Thank you, councilor. Councilor Green.
222 Thank you, madam president. I just wanted to express my strong support for the flow chart, the process that you've outlined. I know that you heard from many of us, and sometimes those were at cross odds on priorities. But I think you landed at a place that's going to make me, me feel successful, like I've gotten the tools for success. I think the biggest thing that I wanted was that kind of clean. What are the just the facts, ma'am, you know, sort of report from the the city administrator that's unbalanced because then that gives me something in February to start my work. And, you know, colleagues, I'm always in budget season. So I'm in budget season right now. And so I think to the extent that we're using our our committees effectively, we should be have we should plan to use our committees between now and next may to daylight any conversations that we want to have that would then imply some trade offs and some structural adjustments to our budget. And I think we've got a lot of pieces of information well in advance of the formal stuff to get us 80 to 90% of the way there. So just really like I like the model that you've come up with, jonas and I understanding the constraints that you have on staff and also just the timing of our revenue. Like, I don't think that could have been pushed back any further. And given your guys's team space to do a good job. So appreciate what you've done with that. We will be. I'll be looking forward to to talking to everyone here about our priorities over the over the course of the year. Thanks.
223 Thank you, councilor. Counselor Smith.
224 Thank you, madam president. I do like the calendar that you released. That is a good timeline, but I'm more concerned about this shadow budget that's going to be released by the new administrator. I think it's confusing. I think it's it's not really wanted. And it's almost like you dip your toe in the, in the tub to see if it's hot or if it's cold by giving a this is just my impression and administrators budget, which the administrator budget is not going to be too much different from the mayor's budget. So if this is the opportunity for the mayor to be able to shop his ideas through that budget, I just think it's it's not needed. It just confusing. And depending on what is heard in the community sessions, then the mayor, I know he will get a chance to to change those things based on what he's hearing. But doing that budget, that's that, that is so confusing to people and to to legislators who have never seen that kind of thing before. You can actually put program offers in, but doing a whole complete report on how the dollars should be spent, even though it is not, even though it's not a balanced report, it it seems like it's just adding more stress and pressure to to respond to it, because now we're going to have to respond to the administrator's report that is going to be sent out widely to all the press, and they're going to be asking questions about that. And then we have shortly after that, a couple of months, we're going to have the mayor's in April. So and when those two conflict and maybe we identify other ways in which to do decision packages, it just causes confusion. So I would I would say I don't particularly care for that. But you all that is in your purview and what you want to do, just like it's in our purview to to fund what we want to fund. So thanks.
225 Thank you.
226 Councilor councilor Novick.
227 I just wanted to echo what councilor Green said. I thought that this was a great start and really appreciate it. And I, if I understand correctly, what you're planning to do with the administrator's budget, I think it could be very useful. We've talked before about how the administrator sort of semi budget last year was problematic because it was like, here are some things we could cut, but it's not enough. And then all we heard about in the community sessions was about the things that were supposed to be cut. And I think you've got a different idea here, and I, I hope I think it could be very useful depending on how it's fleshed out. Thank you.
228 Councilor Dunphy.
229 Yeah, thanks. Just adding to the list of things that I'm hoping to get help with the decision packages sort of framework. Broadly, I think we all have had some frustrations with it, if only because it doesn't give us a very good framing for what we're actually buying and where those dollars are going. Anything that we can do to shift the documents, we're getting more towards understanding, like how the costs of the programs that we are running are operating, rather than just sort of saying pools, you know, x million, million dollars trying to get down to what it is we're doing and where those dollars are going would be really helpful. And I think everybody is ready to move on from decision packages as a city.
230 Yeah, I mean, I think I agree and also just recognize that that there are some still a tale of the systems that may still require some decision packages. Absolutely. But but but certainly in improving the information that goes into those is something we can work on. I think that's ultimately structurally probably a multi-cycle adjustment, but some incremental improvements we can make and appreciate that.
231 Great. Thank you.
232 Thank you, councilor Councilor Kanal.
233 Thank you. I'd forgotten one thing and I'm glad I got commented on. I'm a big supporter of the city administrator's recommendations. I do think that councilor Novak's point is, is good that there are things we need to fix. Specifically, I would require that it cuts more than is necessary. So it ends up, let's say, $12 million over. Put that into some sort of set aside or something. And then maybe the mayor could talk to each of us if we have a great idea, each that maybe is worth about $1 million between the, the, the time and place that we got there. But I compared to what it used to be, those bureau requested budgets. It's such a huge improvement. Thanks.
234 Thank you councilor.
235 I wholeheartedly agree that it would be great to see a city administrator recommendation that creates some space for folks, including all of us and the mayor. That is the end of our queue, and we are one minute until I asked staff to run until. Thank you all, jonas, ruth, peter, for going through a significant amount of information in a short period of time. Councilors. We've had almost seven hours at the dais today. Thank you for bearing with us and for understanding that we needed to cut some things a little bit short. As a reminder, we started with the tao. We'll be getting information back from our staff as soon as we can, but that will be coming back to the finance committee very quickly. So if there are things that you would like to propose as amendments to the tao, please get those in as formal a form as you can as soon as possible, like in the next couple of days even. And we'll figure out working with staff to get it in the formal structure that's needed. But we need to let our finance chair know how much is coming so that he can plan that committee hearing on.
236 Logistics purposes. If a person cannot be there, I'm happy to, as chair, put something on a record, even if you can't be there, if you're able to file it. I don't want to do anything from the dais, but if you're able to file it, I'll make sure it gets discussed at finance.
237 Thank you chair.
238 Thank you councilor. And then on this latter piece, I know, jonas, you'll have continued conversations with all of us as you go through the planning process. We'll have more conversations as we move into the next steps of the budget process. I know that we always need more time on budget items than we think we do, so we'll try to make sure that we set aside some time in advance for that. And mr. Mayor, I appreciate hearing from you that you'll be working with us to make sure that we know what some of your priorities are. With that, I will close our work session.