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Wednesday, October 5, 2011

Mayor Adams Addresses "Appropriately Grim" Call for Budget Cuts

Posted by Denis C. Theriault on Wed, Oct 5, 2011 at 2:59 PM

Citing a confidential draft memo—and comments uttered by Randy Leonard during council—we broke the news this morning about some potentially steep budget cuts facing Portland next year.

Mayor Sam Adams' office has just released the final versionof the budget memo. And during a break from today's long city council meeting, he agreed to answer a few questions on how exactly a relatively good budget scenario this spring wound up leading to worst-case number-crunching that the mayor even admits will be "appropriately grim."

In short? "It's all global, national issues," the mayor says—riffing on world-shaking financial problems in the European Union and Japan, but also on the increasing likelihood back home that the U.S. economy is poised to plunge back into recession.

And that's why, in keeping with what has long been his budgeting ethos—conservative revenue estimates and preemptive cutback plans—he's telling his fellow commissioners to start plotting for the worst RIGHT NOW. Every bureau, according to the memo, has been asked to plan for cuts in three tiers—4 percent, 6 percent, and 8 percent. In addition, funding for new programs will not be allowed without offsetting cuts.

"I have taken a dour assumption about revenues," Adams explains. "I don't want to take a chance and have to make cuts in the middle of next year's budget."

Even public safety bureaus—as in police and fire, the general fund's biggest takers—will likely take some kind of a hit.

If the overall general fund budget needs a 6 percent cut, under one scenario, then police and fire would take just 4 percent cuts while all other bureaus would then be asked to carve out 8 percent.

"It doesn't look today like we'll have the luxury of holding public safety harmless," the mayor says.

So much for the council's last five-year forecast, which showed a steady uptick in revenues. (One city hall staffer today actually was making copies of the last five years of forecasts just to see exactly how things had gotten so loused up in just a few months.) The draft memo, which went to commissioners' offices last night, had clues but no hard numbers: Business license tax revenue, which greatly fueled last year's surplus, is expected to go soft. Property tax revenues will weaken. And major state and federal cuts loom.

So what about Portland's rainy-day fund? And what about the city's reserves?

Adams says last year's decision to set aside $9 million for rainy day cash—above and beyond the city's required reserves—wasn't meant only to smooth out the next fiscal year's budget. Only $5 million will help 2012-13. It was meant to be spread out over the next few years. What's more, Adams says, some of the cuts he wants in next year's budget will go toward keeping a robust rainy day fund in place.

That gives the city the chance to continue paying for a whole slew of current programs—like extra money for small business assistance and for homelessness programs—that the city pays for every year but still always come out of so-called "one-time" money.

The mayor also said that even though he'd be permitted to do so, and even though many other cities have done so during the last recession, he still won't tap the city's $47 million fiscal reserve. Avoiding that kind of drastic action is good for the city's bond rating, among other things. He calls the reserve the city's "belt" and the rainy day fund the city's "suspenders."

The memo also includes some interesting cost-saving ideas—based on Adams' commitment to the Portland Plan—that make some sense but will be difficult to achieve.

He says he'll invite every transportation agency in Portland—the city's Bureau of Transportation, ODOT, TriMet, Multnomah County, etc.—to sit down and try to draw up a single budget that slices out redundant spending on things like maintenance. He's also proposing similar collaboration among the region's public safety agencies.

"This is radical common sense," he says.

More information will obviously come in over the next few months. Adams wouldn't say how likely the worst-case scenario is, but admitted it's possible "things could brighten. But at least we'll have the cut packages in front of us."

Also, asked at one point if Leonard jumped the gun a little bit, Adams smiled and said, "Yeah."

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