PORTLAND, Ore. — As twelve new city councilors and a first-time mayor take charge of a transfigured city of Portland government in January, they'll immediately face a problem that's been growing for years — a budget in big trouble. And in some cases, layoffs may be the only way to solve it.
The Story's Pat Dooris recently sat down with Michael Jordan, interim city administrator for the city of Portland. Jordan has been in charge of transitioning the government over to what it will be come January, which is no small feat. That includes breaking down the city's siloed bureaus, trying to figure out where everything is and what it costs, and then building it back up under an administrator-led structure.
Layoffs, Jordan said, are a last resort. But he's also being frank that Portland may need to go there.
"We'll look at, you know, materials and services budgets. We'll look at 'Can we do business more efficiently in other ways?' Vacancies — we have a significant number at any given moment," Jordan said.
Of the city's 7,000 or so positions, Jordan said that about 5-6% are vacant. Not all of those can just be cut — it depends on the position, the department and the reason why it's vacant. But generally speaking, vacant positions will be the first to go.
Layoffs don't happen often at the city of Portland, but last year was a prelude to this coming budget crisis. Mayor Ted Wheeler asked the commissioners to cut 5% from their bureaus. Most of it was accomplished without major cuts to service or layoffs, but there may have been some of that as well.
"Last year was the first time in my nine years that we had to cut budget as guidance, to build a budget with cuts," Jordan said. "And I don't know exactly, I'd have to go back and look, but I would not be surprised if there were some layoffs last year. Not many, but some. There may be more this year — and this constraint is going to go on for, I would say a few years."
The "constraint," Jordan added, is different for the various parts of city government. But for now, he said it's inescapable. And that's largely because the city has been taking on more expensive problems with less tax revenue.
"The General Fund has two problems," he explained. "One, we are running a number of very expensive programs that ... didn't even exist four years ago. The shelters, 1,000 shelter beds that have to be around the city, all of the street coordination that goes on, the people that go out and meet with homeless people and navigation. We're paying for an office that does that.
"The (Impact Reduction Program), which are the ones that clear up camps, clean up litter, take care of all those issues. We're spending, I would say, well north of $100 million on that, that didn't exist five years ago in the fund."
That's the first problem: the expenses. The second problem is revenue — half the money that comes to the city is from property taxes. And because so many of the big office buildings downtown are vacant, property values have gone down. And with lower property values come lower taxes.
"Property taxes are allowed to grow about 3% per year, and then if there is new construction, you can add to that a little bit," Jordan explained. "So, our property tax revenue has grown from 3-5% per year, depending on the amount of new growth, new development. This year, we're anticipating that property taxes will grow less than 1% ... that is primarily because of the shrinking value of downtown property.
"So, it is now gone below assessed value — real market value has now gone below assessed value and is now actually constraining the amount of property taxes that are collected on downtown, to the point that our total property tax is now dropped below 1%."
So, however you feel about downtown or the viability of office work in this day and age, those downtown vacancies have become a real drain on the city budget — and thus far, that trend has not shown any signs of reversing.
Why the shelter business?
With Portland in danger of going off a budget cliff, Dooris asked Jordan why the city has shouldered so much in terms of homelessness. Historically, Multnomah County has been the primary entity responsible for social services in Portland, although the city took point on providing services for single homeless adults prior to the creation of the Joint Office of Homeless Services in 2016.
The county heads the joint office, which the city pays into, and it receives funds from the Metro Supportive Housing Services tax that Portland does not. The county has started sending the majority of Portland's funding back, about $21 million, for it to operate shelter sites.
But for a few reasons, Portland picked up more and more slack during the pandemic, Jordan explained.
"I think the reason we are in the sheltering business at all, which is the biggest part of that amount, is because the county was not in that business ... and I think Mayor Wheeler a few years back just decided we're not going to be able to get the county to do this," Jordan said. "And we believe this can be a good way to approach the homeless problem. And so, we just started doing it and it has grown."
A county spokesperson pointed out that they are very much in the shelter business, and they've supported the opening of 17 shelters to the city of Portland's nine since 2020. They were a founding partner on two of those shelters, the QA Village and the BIPOC Village. A spokesperson for Jordan's office acknowledged that he was "perhaps painting with too broad a brush" with that statement.
Portland got the ball rolling on Safe Rest Villages in 2021, and the first village opened in 2022. The city now supports multiple villages, RV park sites and mass outdoor shelter sites. The focus has been on sites that can house greater numbers of people, particularly the chronically homeless.
"And to be fair, in 2020 and 2021, we got quite a bit of federal money through the (American Rescue Plan) program, but that was one-time money," Jordan added during his interview with Dooris. "And so, we actually built that program with one-time — much of it, not all, but much of it — one-time federal (funding).
"And to, I think, Mayor Wheeler's great credit ... he couldn't even get anybody to stand next to him at a podium when he announced this program four years ago. Now, the county is helping to pay for some of that program through the intergovernmental agreement that you've heard a lot about lately. That we are still in that agreement really transitions those shelters to the county and they will pay for them in the future."
Jordan said he can't be sure how quickly that transition will happen. Right now, Portland has a three-year agreement with Multnomah County, and they're hoping the transition will happen next year. But not only is the process complicated, there's a chance that the agreement doesn't survive the year.
READ MORE: Portland commissioners abandon push to end homeless services partnership with Multnomah County
And while Multnomah County currently gets many millions of dollars each year from the SHS tax through Metro — $140 million in the 2024 fiscal year — Jordan said that it could be up in the air as well.
"Metro is looking at potentially going back to voters with a restructured tax," Jordan said. "That might increase the (eligible) income, might lower the rate of the payment, might also carve off some of that money to go to actually building affordable housing ... Right now, it's restricted to only services that support the houseless effort.
"So, if the demand is constrained by changing the way the tax is collected, and you carve off a fairly substantial amount to actually build housing, that leaves a constrained amount to pay for services like sheltering. And so, it's a challenging environment and really complicated. And I don't want to over-complicate it, but I think it all adds up to a pretty challenging time for the next few years."
State of the transition
Jordan has been charged with taking on a temporary team of deputies and reorganizing the city bureaus, so they are (somewhat) plug-and-play when the new elected officials take office in January. Dooris asked him how that's going.
"I would say better than expected — as if we knew exactly what to expect, maybe we didn't. But I think ... every week, I'm in meetings with folks, and you literally are seeing the lights come on about in a new organization, how we can collaborate differently, and people actually literally saying, 'We can do that' (instead of) 'Yeah, we can't possibly do that,' Things like, sharing of staff, things like pulling people together on a project really quickly, and quicker turnover and quicker response times.
"And the deputies are the ones that are making that happen, and they're collaborating with each other for the different service areas, if you recall. ... I'm seeing glimmers of what you would hope the city would be like in the next year or two or three, so people are adjusting as humans do. They're highly adaptable, and you change the situation and their behavior changes pretty quickly. And don't get me wrong, there are still plenty of challenges that will take years for us to work out. Culture doesn't change overnight, but I'm encouraged. I'm encouraged by the progress so far."
Jordan acknowledged that there are still some stubborn parts of city government that resist change. Once upon a time, he said, someone who wanted to resist policy change could perhaps just wait it out — count on their bureau's commissioner to overlook the problem or wait for the next election. But now, there's a top-down structure for the whole of the city, led by the administrator.
But those elements are the exception, Jordan said, not the rule.
"We now have a program — you may have heard of it — that actually holds problem-solver meetings across the city (PEMO, the Public Environment Management Office) ... but they are really bringing to bear the power of a really large organization to — in real-time — solve problems in neighborhoods. And we're not talking about, you know, rebuilding a street. We're talking about graffiti on road signs. We're talking about garbage along the roadway. We're talking about a houseless camp that needs to be taken care of, about derelict RVs along the street.
"And I'm not here to say that it's perfect in every case, but that program now has the ability — because it is run out of the executive office; it was formerly run out of the mayor's office, but now, it reports to me as the administrator — and if we're having challenges with getting one, two, three or more bureaus engaged in solving a particular problem, there's somebody who can make that happen now very quickly. And so our ability to be responsive, I think, is enhanced by having not only that group of talks who are out in-neighborhood literally every week, all week and interfacing with the community. But on the backside of that, we have an ability now to bring the organization to bear on the problem, I think, much more expeditiously."
And problem-solving comes in many forms. Jordan said, for example, that the city is taking a hard look at all the vehicles it owns to see if it can save money by getting rid of some of them.
"One of the, I will say, 'cut concepts' that's come out of the city motor pool, the vehicle folks, is to do a much more in-depth examination of all the vehicles at the city," Jordan said. "You are absolutely correct that some bureaus do a wonderful job monitoring their vehicles, some not so much. And what we're finding is that there's at least a substantial number of vehicles that aren't being used as much as they could and perhaps shouldn't even be in the fleet anymore. And so, managing the size of the fleet and also managing how that fleet is taken care of, so we don't go beyond maintenance protocols and make sure that not only are the vehicles operational and safe, but also making sure our fleet is optimized and not bigger than it has to be, so we are looking at all those things."
Jordan has long been optimistic about the new city government structure, but it's not without its own complications. For instance, city councilors will soon be passing the ordinances that become city code. But they won't be running any of the city departments. So unless the code is hyper-specific, the mayor and city administrator will have a lot of leeway in operating everything not governed by the laws, essentially, passed by council.
"Because the executive mayor, within the constraint of the budget, really has the ability to say, 'We're not going to do that that way anymore; we're going to do it this way' and the administrator can carry that out," Jordan said. "So we are literally removing lots of things from code and putting them in administrative rule — that only the mayor will have the authority to change administrative rule, and the administrator.
"And so where's the edge of the authority for the executive and the legislative body ... (and if the) legislative body don't like the way the mayor is doing things, how would they voice that? In what way would they do that? And what's that interface? And can a new mayor, who maybe cares about a different way to do sheltering than what we have been doing — do they have the authority to just change all of that?"
The solution, Jordan thinks, has to be communication and cooperation between the mayor and the city council. They should be "overly communicative," he said, about what they want to accomplish and how to go about it.
"Even if the mayor has the authority to do it all by themselves — they don't have to ask council — they should still be consulting with council and talking with them about where they want to go, how are they going to get there," Jordan said. "It's the other reason that I think a strategic planning effort co-sponsored by the legislative and executive branch would be one of the best things they could do together."