Peace has largely reigned over Portland's budget process this year. Despite filling a $21.5 million budget gap, Mayor Charlie Hales has tried to deliver what good news he could to safety net advocates and parks boosters and others, even as he's proposed big cuts to the police and fire bureaus.

And there has been curiously little public pushback against those public safety cuts. Neither residents nor groups like the Portland Business Alliance have lined up to decry the pending loss of 50-plus sworn police positions and 26 firefighters. 38 fire bureau workers, including 26 from the bureau's battalions.

Behind the scenes, that's not quite the case—especially when it comes to the fire bureau. A memo (pdf) obtained by the Mercury—essentially a script for Hales to follow during a meeting Tuesday morning with the Portland Fire Fighters Association—reveals intense deliberations in private over the best way to meet Hales' goal of saving money without maybe having to lay off so many firefighters.

The memo also expands on simmering discontent with managing another of Hales' main goals: swapping in two-person rapid response vehicles, designed to handle medical calls, in place of four-person fire engines and ladder trucks. PFFA President Alan Ferschweiler wrote a stinging op-ed in the Oregonian on Monday criticizing the mayor's initial attempt at the change. Later that day, Fire Chief Erin Janssens leaked to the O a plan that would ameliorate some of the fire union's concerns, something that came up in the meeting.

I've left a message for Ferschweiler, and I'll update with his comments when they come.

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Portland's still closing a $21.5 million budget hole. But Mayor Charlie Hales has found a way to take the sting out of some of the more unpopular cuts he'd put on the table when he unveiled his budget late last month.

Under a revised plan previewed for a "scrum" of reporters and city hall staffers this afternoon, Hales announced he'd be keeping around a smaller police Mounted Patrol Unit, using unspent levy money to keep alive Buckman Pool and the Sellwood Community Center, partially funding human trafficking and youth shelter services, and finding new money for parks maintenance. He's also keeping tree planting inside the Bureau of Environmental Services, a nod to environmentalists worried BES was backtracking into a mere sewers bureau.

Hales said he's been listening at public hearings, where residents have lined up to demand reprieves for their favored programs. He's taking advantage of new money scared up after the city won a lawsuit over its landline phone tax last year and new savings captured from state pension reform and a reduction in planned raises for some city employees. And, also important, he's relying on heavy offers of community donations and reserves from funds outside the city's operating budget.

"Public hearings matter," Hales said. "And when people show up in the city of Portland and have something to say about the community, this city council listens. And we endeavor to take that into account."

Hales has been entertaining a series of changes in the days before his revised proposal becomes official. He struck a deal with Multnomah County Chairman Jeff Cogen last Thursday that preserves other safety net programs meant for the chopping block, including the county's Crisis Assessment and Treatment Center.

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In a move that bodes well for future working ties between the leaders of the region's two most important governing bodies, Mayor Charlie Hales and Multnomah County Chairman Jeff Cogen this afternoon set aside differences that had flared in recent weeks and unveiled a budget agreement meant to preserve a handful of endangered social services programs.

The deal reportedly came together quite rapidly—and after a great deal of pushing by city and county commissioners who had been concerned by what loomed as an awkward standoff. Some staffers hadn't even heard all the details when reached by the Mercury. It was also something of a surprise to commissioners.

"I went out for Thai food and when I came back, they had an agreement," Commissioner Steve Novick says. "I should go out for Thai food more often."

In a year that saw the two governments trade places, with the city making deep cuts (to solve a $21.5 million deficit) and the county holding its own (thanks to last fall's library district vote), the two leaders had been attempting to take tough stands in the name of principle.

"Both of us appreciate the collaborative spirit of our discussions to help the city deal with the budget shortfall it faces this year," Hales and Cogen said in a joint statement first revealed by Cogen's office on Twitter. "We are optimistic this spirit will be a model for our future discussions. The good news today is that we have reached an agreement that will benefit our entire community."

According to data provided by Hales' office, both governments agreed to split the cost of three county SUN schools the city had been paying for, but wanted to stop funding. The county is picking up a needle exchange program, senior recreation services, and helping to pay for the regions' one-stop domestic violence shelter. It's also paying the city for the city's efforts collecting business income taxes.

The city, in turn, will continue to pay $634,000 for the next year to fund its share of operating costs for the Crisis Assessment and Treatment Center—something that emerged as a lightning rod in the burgeoning budget debate, especially after Cogen fired some harsh barbs at Hales over his decision to pull funding.

The city appears to be agreeing to spend a bit more than Hales had initially proposed when he unveiled his budget last month. The two governments aren't trading money so much as they're picking up programs both prized but that had been zeroed out. Advocates for many of those programs were expected to crowd a budget forum tonight at city hall.

The City:
· Funds CATC one-time ($634,107 cost)
· Funds half of the SUN Schools pass-through (adding back 1.5 schools for $136,000 cost)
· Further reduces senior center pass-through ($141,454 savings)
· Gets County agreement for additional BIT collection ($200,000 savings)

The County:
· Funds the remaining SUN pass-through ($135,000)
· Funds the domestic violence cuts ($64,300 plus $77,000 for victim’s advocate position that was previously one-time funded, total of $141,300)
· Funds needle exchange ($65,000)
· Funds some of the senior center pass-through that was cut, but not all (about $282k

City and county relations have been hot and cold in recent years, but mostly cold. Cogen and former Mayor Sam Adams were known to have a contentious relationship, even as individual commissioners and bureaucrats got along well. The county has long kvetched about Portland's penchant for passing urban renewal districts, which wall off property tax dollars that otherwise would fill the county coffers in the short term, under the promise that improved neighborhoods will one day pay dividends.

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Budget negotiations are well underway in Portland City Hall—although, by most accounts, with less intrigue and cloak-and-dagger than in previous years. That's because Mayor Charlie Hales made a lot of people happy with his budget plan, announced April 30—cutting public safety bureaus to pay for safety net programs and front-end services like parks (except for Buckman Pool). That reveal came after he involved city commissioners in his work to an unprecedented degree. Thusly, for a lot of observers, there's not much to fundamentally quibble with.

But not much is not the same as nothing. Hales thought he'd deliver on campaign rhetoric—and please activists and business interests—by lowering planned increases in the city's water, sewers, and stormwater rates. The mayor did that partly by cutting money for needs like watershed management and then shifting the work from the Bureau of Environmental Services back to bureaus by the city's general fund.

That gesture, it turns out, has pleased few people. Water rate activists wonder why Hales didn't cut rates instead of reducing increases. And today, in city council, environmentalists accused the mayor of stripping away environmental work that brought United Nations' laurels to Portland earlier this year. (They echoed some of the concerns Commissioner Amanda Fritz raised when I spoke to her just hours after Hales unveiled his budget.)

"We believe this budget takes us back 25 years—both in substance and in philosophy," said Bob Sallinger, conservation director of the Audubon Society of Portland, "back to the time when the city had a sewer agency and the the city didn't have an environmental agency."

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What gives, you might ask? Then maybe you've forgotten Charlie Hales and his wife, Nancy, were supposed to be entrants in a local charity version of Dancing With the Stars. Nancy Hales is particularly on point—loose enough to twirl while also getting into character. The mayor has a natty outfit and isn't so awful himself.

Hales' spokesman, Dana Haynes, says his boss took a lot of tango lessons. He hadn't seen the video either.

"Dude, he’s good. I just watched it for the first time and have aspirated coffee all over my keyboard."

Legal challenges and other problems besieging the arts tax enthusiastically approved by voters last fall have cast a cloud over the program's signature promise: millions to help local school districts staff up with arts teachers.

Treading lightly in the face of lawsuits calling the $35 tax an unconstitutional head tax, Mayor Charlie Hales announced this year he wouldn't be handing out any of the money promised to schools or arts organizations. Hales fretted over the nightmare of having to refund taxpayers in case the city loses—even though some districts, like Portland Public Schools, had already built the expected revenue into their upcoming budgets.

But today, Hales responded to that pushback and announced a major compromise. Hales offered to distribute up to half of the estimated $6 million scheduled to be distributed this November—$3 million—"pending favorable rulings or settlements" on the two lawsuits challenging the tax.

To make that pencil out, if the city loses and has to hand back the money it's collected, he's putting the risk on three pots of money, grabbing $1 million each from (1) the $3 million contingency fund he's proposed for his next budget, (2) the city's future appropriations to the Regional Arts & Culture Council, and (3) a pot of reserve money put up by the six districts benefiting from the tax: PPS, Centennial, David Douglas, Parkrose, Reynolds, and Riverdale.

“The superintendents and I have been working to find a way to be true to the taxpayers, whose money this is, and to the voters, who approved the arts tax,” Hales said in a statement. “We think this does it.”

Hales' office notes that though districts like PPS had been planning to spend the money, others were banking it to see how the grappling over the tax shakes out.

“We are not in the business of telling superintendents how to run their districts,” Hales also said in a statement. “These decisions have been tough to reach, but it’s been a combined effort all along, and we’re grateful to the arts community and our school districts for working with us to find a practical solution. In the end, getting teachers in our classrooms will pay dividends for generations to come.”

Last week, Hales announced a change in the arts tax after the city attorney's office decided it wasn't allowed, after all, to tax Social Security and state pension income. That wasn't clear when the tax was proposed and approved. Previously, Hales asked council to approve a $1,000 income minimum. A review of changes, also commissioned by Hales, is due by July.

Anyone who makes $1,000 in private income a year, so long as their household is above the federal poverty line, is obligated to pay. The deadline is Wednesday—after it was extended from April 15.

Read the full release after the jump.

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Mayor Charlie Hales' bid to pull the city's share of funding for Multnomah County's Crisis Assessment and Treatment Center—a 16-bed facility billed as a resource for police officers—has clearly irked County Chairman Jeff Cogen and even raised questions from at least one city commissioner, Amanda Fritz.

The status of the CATC, as the Mercury first reported in January, has been something of a sore spot between Cogen's office and the city, which spends $600,000 a year to help operate the facility even though its officers have yet to directly drop anyone there in the nearly two years it's been open.

And while Cogen has vowed to lobby Hales to reverse the proposal—calling himself "shocked" and "stunned" and reminding everyone about the federal government's lawsuit against the police bureau over its rough treatment of the mentally ill—he may not get his wish.

An email sent to Hales' office this week reveals the mayor's staff is pushing ahead with other plans for a walk-in-style crisis center for people with mental illness that presumably would receive city funding instead. That email, sent by Jason Renaud of the Mental Health Association of Portland, goes so far as to counsel the mayor's office "no worries" over the pullback from the CATC.

"About the CATC. No worries from the mental health advocacy community on that one," Renaud wrote to Baruti Artharee, Hales' public safety director, in an email obtained through a public records request. "Telecare [the company that runs the CATC for the county] did nothing for us except cash your checks.
The place was clean and quiet and the patients there felt safe—but it was also empty a lot of the time and unresponsive to the initial needs of the community."

Further, an internal police memo (pdf) obtained by the Mercury—drafted in May 2012 by Captain Sara Westbrook, recently installed as head of the bureau's new behavioral health unit—shows that police bureau's complaints about the CATC's admissions rules had been known for months before our story revealed the dysfunction between the two agencies. That memo appears to be the source of a statement the bureau sent to the Mercury after our story ran.

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If Commissioner Steve Novick had his way, because he's such a kidder, Mayor Charlie Hales would start off his State of the City speech with a quip: "The city is in a state." Hales is good with a quote. But the mayor won't do that. His speech, as teased a bit by the Oregonian at 6 this morning, is expected to stick close to the staid and serious themes we've been hearing ever since Hales was on the stump.

Basic services. Police accountability. Fiscal discipline. Finding ways for Portland to shape the state's and metro area's schools budgets. Et cetera—and a lot of the ground covered in our oral history of the mayor's (almost) first 100 days. He's expected to tip his hand a bit on the his plan for a city budget, which he'll unveil on Tuesday—which is one reason why this year's speech is a bit later than some others.

Of course, like all mayoral speeches, hosted by City Club at the Governor Hotel, Hales' appearance has attracted a packed house of politicians and bureaucrats and functionaries. They're all eating right now. He hasn't started talking yet. We'll be updating once he does! And follow @dirquez and @portlandmercury on Twitter.

Update 1:15 PM: Aaand he's done. And an ovation. And one "whoo!"

Update 1:14 PM: Should we save the police horses? Hales says he won't tip his hand but warned that in "some cases we'll have to stop doing things we like." Hales mentions the tradeoff for the police bureau if cops remain assigned to the mounted patrol.

Update 1:12 PM: And a very interesting question on homelessness and sidewalks. He's echoing the Portland Business Alliance. "We also have to have civility on the streets," Hales says. "We don't have that balance right yet. It's causing an economic problem and a livability problem." Hales also nodded to a street count showing 1,700 people on the streets and called that "unacceptable." Expect attention after the budget. BIG applause.

Update 1:11 PM: Is the greenway work in South Waterfront going to be done? Or is it just the ICE immigrant jail no one wanted. "The greenway will be built," Hales says, with one more grab at the "social contract." But he says it'll take development, which will serve as the engine to pay for that trail. The questioner didn't care for that.

Update 1:07 PM: Hales says it was great that hundreds of people came out to stump for priorities at budget hearings. But the city needs to do more to rethink it's advocacy and outreach to and with neighborhoods, something more formal: more young people, more recent arrivals, more nonprofits.

Update 1:05 PM: Talk now of Portland's "exotic businesses" and whether we lead the nation per capita. Member is asking Hales to discuss the city's approach to those businesses, to keep kids away, and to combat human trafficking" "Local governments are very limited in its ability" to crack down on adult businesses. He's using that to segue into a complaint that the Oregon Liquor Control Commission isn't letting Portland combat late hours for bar patios. (This may also apply to potential support for a bill that would get Portland back to its days of "sit-lie" rules.)

"There's an ongoing tension between the city and the Legislature," Hales says. "We will be advocating for more local control. We'll take the heat. Give us the tools to do our job and do it differently in Portland. Portland may be joined with Prineville in school funding, but we're very different places. We want that authority."

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Two seemingly minor and unconnected items on the upcoming Portland City Council agenda are worth noting this week, mostly because they concern subjects everyone has at least some kind of opinion about: Parking. And... shit.

First the parking! In the next step for Portland's ongoing plan to frustrate annoying/clever drivers who park in the Central Eastside Business District and hoof it over a bridge to beat downtown meter costs, the city is looking to raise the amount it charges for all-day permits (pdf) in the zone.

If approved, neighbors and businesses hoping to park all day at nearly 5,000 on-street spaces would pay $70 a year, up from $60. The $10 surcharge is a tiny one. sought by the neighborhood's business group, is meant to help fund an advisory committee charged with overseeing all other parking reforms in the zone, including new meters on MLK and Grand.

And now the poop! After years of tolerating scofflaws who let their idiot dogs run free at parks and terrorize people, as well as the countless oafs who can't be bothered to be pick up their dogs' stinky brown leavings, the city's parks bureau wants to give park rangers permission to punish the wicked with civil fines as big as $150 (pdf).

The city used to pay Multnomah County Animal Services $70,000 a year to help police poop-and-leash violators. But it stopped the contract because of budget cuts. Revenue from the fines is expected to help pay for four part-time rangers and someone to run the new enforcement program (a total of $100,000). Right now, rangers aren't allowed to write tickets—just issue exclusions. Leftover revenue would help fund regular parks programs.

And it's not like Portland, which touts its 32 off-leash areas in its parks system, is known for its unfriendliness to people who bring pets for parks.

"Despite these efforts, and the efforts of many dog owners to encourage respectful behavior," according to talking points on the ordinance provided by the bureau, "a culture of non-compliance with leash and scoop laws exists throughout Portland's park system."