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Monday, September 16, 2013

Charlie Hales' Ingenious Plan for City's New Surplus: Make Money by Paying Bills

Posted by Denis C. Theriault on Mon, Sep 16, 2013 at 2:29 PM

Portlands brightening revenue picture.
  • Portland's brightening revenue picture.
Now that good news is public—Portland, as the Mercury first reported, is sitting on an $8-$11 million surplus—Mayor Charlie Hales' office this morning has laid out a surprisingly interesting suggestion for how that sudden bounty of one-time cash ought to spent.

At its simplest, Hales' plan would pay off a couple of the city's longtime bills—something that might, on its face, sound disappointing to various interest groups and unions hoping for an immediate infusion of city money after a particularly rough budget year.

Specifically, he wants to knock out the $4.5 million or so left to pay on the 1996-98 renovation of city hall and the $3.3 million or so left on the city's new 911 computer-assisted dispatch system. By policy, it's the right thing to do with one-time money—don't seed programs that would need to be propped up every year.

"If you've got a bunch of new money at home, would you price jacuzzis?" asks Hales' spokesman, Dana Haynes. "Or would go and pay off the second mortgage and the Visa card? He thinks taking a chunk of money and paying down that debt would be a smart way to go."

But as sober-minded as the plan sounds, it actually comes with a pretty brilliant upside—in that, despite being fiscally responsible, it will still let the city spend millions on new programs or restoring some of what was cut this spring.

By getting those debt payments off the books earlier than anticipated, the city would free up close to $3.5 million in each of the next two fiscal years and a bit more than $1 million in the fiscal year after that.
And that money, because it's from the city's ongoing revenues, could be spent on whatever the council wants. As in, cops, parks, firefighters, social services providers, etc.

"That's where the mayor is leaning," Haynes says.

Hales' office has the quiet support of city commissioners, sources say—even though his approach is a departure from the council's historic approach to surpluses: spending it almost immediately, often on worthy and popular programs, while hoping the ongoing revenue needed to keep supporting those programs would show up down the line.

The surplus, and Hales' plans for it, also could help the mayor thread a difficult needle next month when the council takes up the first of the fiscal year's quarterly budget updates.

He's asked Commissioner Dan Saltzman to come up with $1.7 million in one-time money for housing programs—the kinder, gentler flipside of Hales' police crackdown on homeless campers. There had been questions about the source of all that money.

At the same time, the council was due, as part of an agreement inserted into this year's budget, to weigh ideas on how to increase a business license tax deduction granted to business owners. That proposal, to bring the owners compensation deduction up to $100,000 in income, would cost the city $800,000 to $1 million a year. And it, too, came with questions about a funding source.

Now, instead of a fight, you can imagine a win-win-win scenario emerging in the council chambers next month. Hales can continue to tout fiscal responsibility and avoid asking taxpayers for new money—letting interest groups know they can lobby for new money next spring, during the usual budget process. Hales' and Saltzman's critics get to claim a victory on social services funding and reframing the recent debate over homelessness. And the business community, which often feels neglected by the city's focus on its less fortunate (boo hoo), gets something very dear its heart for its own troubles.

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