Transcript
Automatically generated transcript. It may contain errors and includes testimony in languages other than English that is not individually marked up for assistive technology.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Good afternoon.
I am now calling to order the 4th in a series of work sessions on the upcoming budget process.
This is our series of briefings prior to receiving the mayor's proposed budget.
Today we're going to be hearing about the Public Works Service Area and a discussion about process as well.
With that, I believe— oh, I'm introducing— let's see, who am I introducing?
4,410.
No one.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you, Council President, and good afternoon, councilors.
And City Administrator Lee.
For the record, my name is Priya Dhanapal, and I'm the Deputy City Administrator for Public Works Service Area.
I'm honored to be here on behalf of the Public Works and to be sharing our important work with all of you.
I'm joined by my colleagues Jeremy Patton to my right and Claudio Camposano, who are the budget and finance leads for the service area.
We're also joined by bureau directors and subject matter experts from the Public Works in the audience who are available to provide additional details as necessary.
Next slide, please.
We'll cover 4 areas at today's presentation at a very high level.
First, the budget context and the key pressures impacting public works.
And second, we will provide an overview of the service area and the scale of what we manage.
Third, we will go through the service level gaps and what is driving them across each bureau.
And finally, an overview of the budget reduction scenarios developed within each bureau.
Today's overview is meant— intended to be focused and high level, and we welcome your questions and feedback as we move through the presentation.
Next slide, please.
I want to start with an overview of the pressures shaping this year's budget conversation across Public Works.
And as you listen to today's presentation, you'll hear 3 consistent themes across all 4 bureaus.
First, Public Works manages large aging infrastructure systems, and the condition of those systems Thank you.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Thank you, Mayor.
The Portland Metro system is a complex and complex system.
It's a system that spans multiple agencies.
It's a system that spans multiple agencies.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Today reflects decades of investment decisions.
Second, these systems require consistent investment to remain safe and reliable, yet the cost of maintaining them is growing faster than the revenues that support them.
Several funding sources are also declining, which makes it even more challenging to keep pace with system needs and community expectations.
And third, this creates a structural gap between the service level expectations and the revenue available to support these services.
To address that gap, we are generally left with 2 primary paths.
We can either identify new or expanded revenue sources to support the current service levels, or we can adjust the service levels to match the revenues available.
And that will be the central policy questions before council for the Public Works this budget cycle.
And as staff develop the reduction scenarios, I ask them to follow 4 principles, which is to protect regulatory compliance and system reliability.
Preserve council and community priorities where possible, ensure the proposals were realistic and implementable, and be transparent about the impacts of the choices in front of you.
Our goal today is to give council a clear understanding of the choices, the trade-offs, and the decisions that will shape service delivery going forward.
Next slide, please.
Thank you.
Thank you, Deputy City Administrator.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Before we begin, I want to ground us in what Public Works actually is.
The Public Works service area delivers core services Portlanders rely on every day, and it is what makes the city function in every neighborhood, in every district, every day.
When you spend time in the park or participate in a recreation program, when you turn on the tap and have access to clean, safe drinking water, When you flush and it goes away, and when stormwater is safely managed through the system, protecting homes, streets, and our waterways, or when you travel safely across the city, you're experiencing Public Works.
Public Works is foundational to what makes Portland a great place to live, work, play, and visit, and to the safety, livability, and the economic vitality of not just our community, but the broader region.
Our systems are complicated, intricate, and sophisticated.
And the scale of operating the systems is massive.
Across the 4 public works bureaus, we manage an annual budget of approximately $4.7 billion, which is about half the city's total budget.
That supports about 31,000 full-time staff, representing about 40% of the city's workforce.
We also have about 1,000 seasonal employees.
That scale reflects the responsibility of what we are delivering every day.
1,000 years.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Our teams plan, design, build, operate, and maintain the systems that the city depends on 24 hours a day, 365 days a year.
And together they manage $77 billion in infrastructure assets, which roughly represents 96% of the city's total built assets.
Our assets include infrastructure systems that are long-lived and last 50 to 100 years.
And the condition of these assets today is a result of prior funding decisions made over many decades.
Thank you.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
For many years, the investment did not keep pace with what these systems require for maintenance and renewal, and that gap has grown to $14.2 billion in deferred maintenance across the entire service area.
When maintenance to a system is delayed, it does not go away.
It compounds.
Systems become more expensive to operate.
More expensive to repair, and more vulnerable to failure.
And that brings us back to the framework we previewed earlier.
Over time, addressing these challenges generally requires 2 pathways: either increasing the investment by identifying new or expanded revenue sources to support these systems, or to accept the increasing system risk and adjust the service levels and the community expectations to match the funding available.
And because these systems last for generations, the decision made in this budget cycle will shape asset condition, system reliability, and service delivery for decades.
Next slide, please.
I'm going to spend a little moment on this, a little more time on the slide, because I want to make sure this drives the important point that we're trying to communicate.
This slide highlights a few performance measures across the public works bureaus.
These measures show what the Portlanders experience every day and what it takes to deliver that level of service reliably.
On the top left, you see parks.
About 96% of Portlanders visited a park in the past year.
Parks also supports more than 1.3 million recreation program visits.
Each of those visits depend on something working.
A clean restroom, a maintained trail, a staffed program, a safe facility.
And that is what ongoing maintenance, staffing, and operations makes possible every day.
And then you have transportation.
19,000 Miles of streets were swept in the last fiscal year.
Council support in the '26 budget cycle will allow PBOT to increase its street sweeping and flushing by 46,000 miles per year and has already added leaf service, recruiting 7 new leaf districts.
Thank you.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
This improves street conditions and neighborhood cleanliness and also protects the stormwater system by keeping debris out of the drains.
And in the utility bureaus, our water system— here's a math problem for you all.
Our water system includes 22,050 miles of pipe, and today we replace about 5 miles per year.
Does anybody want to take— do the math to tell me how long it would take to replace the water system?
1,000 years.
1,000 Years.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
22,000— So 2,250 or 2,250 and 5 miles per year.
4,410.
4,410.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
About 400.
Yeah, I think, I think we are there.
So that the math shows that it's going to take about 400 years to replace the full water system, which— and our pipes are designed to last for 50 to 100 years.
And what that means is that Many pipes will reach the end of the lifespan before they can be replaced.
And that gap doesn't show up all at once.
It accumulates quietly over time.
BES reinvests just under 1% of the system's asset value every year based on available revenue.
At the same time, regulatory requirements and customer expectations remain unchanged.
Thank you.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
These systems must meet environmental and public health standards 365 days a year.
There is no flexibility in those outcomes.
Our teams continue to meet those standards while managing aging infrastructure and limited resources.
And across Public Works, these measures reflect the level of service required to operate critical infrastructure reliably every day.
And maintaining that level of service requires skilled staff, disciplined maintenance, and sustained investment the systems Portland depends on.
Next slide, please.
This chart shows program expenses by fund across the Public Works service area.
A few key things to notice over here.
First, the public work expenses largely reflect the cost of operating and maintaining major infrastructure and managing public programming across water, storm, sewer, transportation, and parks.
Second, the increase that you see in the last couple of years is primarily in the water fund.
That increase is significant, but it is driven by a specific capital investment, which is the Bull Run Filtration Project, a federally required investment to protect Portland's drinking water.
The expenses in the fund is expected to stabilize once that project is complete.
Thank you.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus.
As a result, operating costs are rising faster than many of our revenue sources.
So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day.
Next slide, please.
This slide provides an overview of revenue sources that support the Public Works Service Area.
The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total.
I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide.
The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources.
And the second important point is most of these funds are restricted to specific purposes.
As a result, there's limited flexibility to move these resources across systems or bureaus.
In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Next slide, please.
This slide shows the general fund discretionary support within the public works service area.
Our utility bureaus, water and BES, do not rely on the general fund.
These systems are funded through rates paid by customers.
For transportation, the general fund makes up less than 1% of the total budget.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
And that support has declined significantly over time, as you can see in the blue on the chart, and it's now minimal.
Parks relies on general fund more than the other public works bureaus.
About 45% of Parks funding comes from general fund, and that support is also declining over time.
As a result, general fund decisions have significant impact in addressing Parks' service level gap.
Next slide, please.
This slide shows the full-time equivalent staffing across Public Works service area.
Over the past 5 years, staffing level across Public Works have remained relatively flat and in some cases have slightly declined.
At the same time, service expectations and infrastructure demands continue to increase.
Public Works includes large, complex, highly regulated systems that require skilled staff to operate, maintain, and repair them.
And I want to acknowledge the many public works staff who are doing this important work every day and may be watching this live.
Their work is essential to the health, safety, and daily functioning of the city.
So the reality is that the needs of our aging system continue to grow, and the workforce responsible for the work has not.
This creates compounding operational risk over time.
At this point, further reductions to the workforce would directly impact the services that the bureaus are able to provide.
And ultimately, budget decisions determine where our teams focus their efforts and what services can be delivered.
Next slide, please.
This slide shows what we are funding across the Public Works service area, focusing on 10 highest program offers.
The colors on this chart are working a little bit over time, just like Public Works does.
As you can see in the chart, the largest expenditures are focused on core infrastructure functions such as water treatment, wastewater capital investment, and transportation construction.
These are long-lived infrastructure systems that Portland relies on every day.
And all 3 of those programs operate massive aging, and highly regulated systems.
And work at that scale requires large capital investments that often span multiple years.
And there is also a direct correlation to the $14.2 billion maintenance backlog we discussed earlier.
When maintenance is deferred, the operating cost tends to go up because systems become more expensive to repair and maintain over time.
And every dollar of maintenance deferred today costs more to address later.
That context explains why we are seeing growing pressure on the current service levels.
Next slide, please.
This slide highlights the gap between the revenue available and the cost to maintain and operate this— operate our systems at the current level of service.
Firstly, our current service levels are already lean, which means there's limited capacity to absorb additional cost pressure without consequence.
Second, many services within Public Works are not discretionary, and many of them are required by regulatory requirements and are tied to public health and safety.
These are not areas where there's meaningful flexibility.
At the same time, costs are rising faster than many of the revenue sources that support the system, and as discussed earlier, most funding is restricted to specific purposes, limiting the ability to shift resources between bureaus to close the gap.
So taken today, the policy choices available to address these gaps come down to 2 options, the same 2 options: adjusting revenue or adjusting service levels.
Next slide, please.
This slide shows the primary levers available to close the budget gaps across the service area.
The first is operational optimization, and we at Public Works have prioritized efficiencies first.
And examples include managing vacancies, reducing consulting and professional service contracts, streamlining internal processes, and optimizing procurement of materials and equipment.
After those efficiencies are identified, 2 primary levels— levers remain.
And as I mentioned earlier, those options are service level adjustments or revenue adjustments.
And service level adjustments involve reducing operating hours, narrowing programs, Deferring preventative maintenance or scaling back planning, regulatory, or capital support work.
The other path is revenue adjustments, which includes adjusting rates or fees where the tools exist, or identifying new and sustainable funding sources.
And neither option is easy in a service area which is as visible and as essential as public works.
And again, please forgive me for being a, being a broken record, but the implications are important to be clear about.
When service level changes in public works, the impacts are immediate and noticeable because they affect infrastructure and services people rely on every day.
And reduced investment also increases long-term risks to the system reliability and leads to higher future costs due to deferred maintenance.
The revenue adjustments are equally visible, and I want to highlight them for you as well, particularly when affordability is a real concern for residents and businesses.
Those are the trade-offs in front of you this budget cycle.
Next slide, please.
This slide summarizes the drivers and magnitude of each bureau's gap and the policy levers available to council to address them.
The drivers differ by bureau, but in general, they reflect costs rising faster than existing revenue sources.
Starting at the top, water and BES are experiencing pressures largely from inflation in operating costs and capital obligations within existing systems.
And together, the combined gap is about $7 million.
Because these are utility systems, the primary policy tools available to council are rate adjustments or service level changes.
Parks is at a similar level at about $7 million, driven primarily by lower earned revenue and higher operating costs.
And here the primary levers include general fund allocation decisions, revenue options, or service level changes.
PBOT faces the largest gap, about $25 million in general transportation revenue, largely due to state funding losses and declining parking revenue.
At that level, the policy tool includes new transportation funding sources that are sustainable, parking pricing adjustments, or service level changes that will be very visible.
When we step back and look across the service area, after operational efficiencies are pursued, the choices to address these gaps ultimately come down to how we balance the service levels and revenue within each bureau's funding structure.
And I want to take a moment to acknowledge how difficult these trade-offs are.
And I also want to reiterate that in a service area responsible for long-lived infrastructure with visible community impacts, infrastructure decisions accumulate over time.
And the choices that you make now will shape system condition, maintenance backlogs, and service reliability for decades.
With that context in mind, the next slides walk through how these trade-offs show up in the different bureaus and the specific issues we're solving for in their budgets.
Next slide, please.
This slide shows where the Water Bureau's funding comes from and how it is used.
On the left, you see the water system is about $2.2 billion in resources for the fiscal year '27.
On the left, you see the source of income as well.
The most important point is that the vast majority of the water funding comes from utility rates.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
That are paid for by customers.
And additional resources come from bond revenues used to finance capital projects, along with fund balances and internal transfers used to manage the, manage the system's finances.
On the right, you see how those funds are used.
Funding supports day-to-day operations, major capital investments, and debt service for infrastructure projects.
And a large share of those capital programs is driven by regulatory requirements, including the Bull Run Filtration Project.
Thank you.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
The key takeaway for council is that most of these resources are already committed to operating, maintaining, and financing critical infrastructure, which means there's limited flexibility within the system to absorb cost increases without rate adjustments or service impacts.
Next slide, please.
This slide outlines 3 scenarios for balancing the Water Bureau's budget Each reflecting a different balance between rate affordability, service levels, and long-term costs.
Starting on the left, Scenario 1 maintains the current service level, and this is a scenario preservation— a service preservation scenario.
The cost pressures here are largely driven by cost increases in personnel, chemicals, electricity, basically operating costs, and ongoing infrastructure maintenance.
This scenario assumes 30-year bond financing for the filtration project.
That means the project is paid off in 30— like, faster, but annual debt payments are higher.
As a result, Scenario 1 requires a 9.8% water rate increase.
Now, moving to the middle column, Scenario 2 stays within the previously forecasted rate increase of about 8.1%, and this is a rate increase that you saw in the last budget cycle.
To achieve that, the bureau will have to implement $1 million in operation reductions which includes internal operational adjustments and reductions in maintenance and services.
And that, for example, that will include internal and administrative changes and streamlining processes and reducing contracted services.
And in this case, the customers would see little to no change.
Where the customers would see changes is we will be shifting to paperless billing or adjusting fee structures where feasible with respect to credit card fees.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
This scenario may reduce costs but may create changes— challenges for customers who rely on mailed notices or have limited access to digital tools.
And some reductions begin to affect operational capacity, including facilities management and water quality testing.
These functions are critical for system reliability and regulatory compliance, so reductions in these areas carry significant high service risk.
Scenario 2.
Assumes a 40-year bond financing, which spreads the cost over a longer period and lowers annual debt service payments.
And this reduces near-term rate pressure but comes with significant long-term cost trade-off.
Extending the financing from 30 years to 40 years increases total borrowing costs by about $900 million over the life of the bonds.
So in simple terms, lower rate pressure today equals higher cost over time to customers.
Scenario 3 on the right reflects a 5% revenue reduction, which lowers the rate increase to about 7%.
This is a deeper reduction scenario and would require about $3.3 million in operations reductions.
These reductions would mean less preventative system flushing and maintenance, Less capacity to support billing and customer inquiries, reduced emergency preparedness planning, and fewer resources available for water quality testing and long-term infrastructure resilience.
These may not be immediately visible at the tap, but they reduce the bureau's ability to respond to emergencies, maintain system reliability, and the plan for future risks.
So the decision in front of council is how to balance rate affordability, service levels, and the long-term cost of financing critical infrastructure investments.
Next slide, please.
This slide shows BES revenue, where that comes from, and how it's used.
And you'll see many similarities to the Water Bureau.
Nearly 90% of BES revenue comes from utility rates, which include sanitary sewer and storm services.
And these rates support day-to-day operations, system maintenance, emergency repair, and major capital investment.
Thank you.
BES also receives non-rate revenues such as piece of funding, and that supports maintenance of green infrastructure and natural assets that help the city meet environmental and watershed health requirements.
And on the use side, which is on the right, the majority of the spending supports operations and capital investments needed to maintain and upgrade the sewer and stormwater system.
And because the capital investment needs exceed available resources, BES must focus on the most critical projects, projects first.
As a result, the only area with some level of flexibility is operations and maintenance, and reductions there would directly affect core services and regulatory compliance.
So similar to water, most of the system's funding is already committed to maintaining critical infrastructure, leaving very limited room for reductions without service or compliance impacts.
Next slide, please.
This outlines the 3 scenarios for balancing the BES budget.
Similar to the Water Bureau, each scenario has a different balance between rate affordability, service levels, and long-term system performance.
Starting on the left, Scenario 1 maintains current service levels.
And similar to the Water Bureau, BES is also experiencing higher operating and maintenance costs.
Under this scenario, BES maintains current services with a 5.9% rate increase.
Moving to the middle column, Scenario 2 stays within the previously forecasted rate increase of about 5.15%, and this scenario slows the rate growth through targeted reductions, which means the bureau would have to implement $3.3 million in support functions with about $1.8 million in materials and service reductions.
And some examples include reduced ability to respond to emergency infrastructure repairs, reducing planning and program coordination capacity, reducing resources for developing codes, rules, and manuals needed to support environmental compliance.
These reductions begin to slow planning work and reduce the bureau's ability to respond quickly to emerging infrastructure issues.
Scenario 3 on the right reflects a 5% revenue reduction similar to the Water Bureau, And here it lowers the rate increase to about 3.5%.
And this scenario requires materially deeper service impacts.
Over time, these impacts would slow capital delivery and increase operational and operational risk and compliance risk as well.
And similar to the Water Bureau, the decision for council here is balancing affordability with maintaining service levels and system reliability.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Next slide, please.
It's important to know the scale of capital investment planned over the next 5 years for water and BES.
Together, the utilities manage about $52 billion in infrastructure, with nearly $3 billion in planned capital investment over the next 5 years.
Much of this infrastructure is over 100 years old, so ongoing investment is required to maintain reliability and main— and regulatory requirements.
The major projects for water and BES include the Bull Run Filtration Project, seismic upgrades, water treatment plant and collection system improvements.
And these investments are necessary to maintain critical infrastructure and are a major driver of rate pressures we described earlier.
Next slide, please.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
This slide shows the 5-year rate forecast for water and BES under Scenario 1, which is maintaining current service levels.
And before we go into the details, I want to share a brief framing on utility rates.
Annual rate adjustments are necessary to keep the pace with inflation, ongoing operations and infrastructure maintenance, as well as the delivery of capital plans.
Affordability remains a key priority for our utility bureaus, and rate projections are developed to balance system needs with impacts on households.
Under Scenario 1, which maintains current service levels, the Water Bureau rate, which you see in blue on the top, is about 9.8%, and BSS rates, which you see at the bottom, is about 5.9%.
It begins at 5.9%, and combined, that results in an overall utility rate increase of about 7.5% in fiscal year '26-'27, declining slightly in the later years.
This scenario aligns rates with the cost— actual cost of operating, maintaining, and reinvesting in the systems at the current service levels.
Next slide, please.
Under Scenario 2, which was developed to stay with the previously forecasted rate levels, the combined rate increase remains under about 6.75% over the 5-year period.
You'll see a lower water rate projection under the scenario, and that lower rate is achieved with financing strategies including the long-term bonding, which is a 40-year bonding for the filtration project.
And while this approach reduces the near-term rate pressure, the cost shifts into the future and increases the overall long-term costs for the customers.
Next slide, please.
We wanted to show you the Proposed rate projection for the scenarios 1 and 2 side by side for water and BES.
And as you can see, the combined rates increase for scenario 1 is 7.5% and steps down over time.
And the combined rate increase for scenario 2 is in the mid-6% over the next 4 years, and that is utilizing the 40-year bond.
Unidentified speaker
I—.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Longer-term bonds also saddles future ratepayers with more debt over time, as we will need to continue to reinvest and replace infrastructure.
So it's not a one-time thing.
Reinvestment is important over a long period of time.
I also want to share that we have robust financial assistance programs in place to support customers who need help managing costs, which I will cover in a moment.
Next slide.
The key takeaway in this slide is the difference that customers would see in the monthly bill between Scenario 1 and Scenario 2.
For a typical single-family household That difference is about $1.82 per month in fiscal year '26-'27 and roughly $1 to $2 per month in each year of the 5-year forecast.
Next slide, please.
A common misconception is that Portland has some of the highest utility rates in the region or even in the country.
Despite cost pressures, what this slide shows you is Portland Utilities rates remain within the range of comparable national peer cities with similar systems and regulatory requirements.
Next slide, please.
Access to water and storm and sewer service is essential, and affordability, as I mentioned previously, remains a key priority for both of our utility bureaus.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Last year, about $39 million was dedicated to support financial assistance and affordability programs for customers who need help paying their bills.
These programs provide bill discounts, payment plans, crisis assistance, and, and support for low-income households and affordable housing providers.
Some customers have— some customers receive discounts of up to 75% depending on income eligibility.
And customers can apply online at portland.gov/water/assistance or call a customer service team at 503-823-7770, and staff can walk them through the process.
Next slide, please.
This chart shows PBOT's overall budget with revenue sources on the left and expenditures on the right.
Starting in the upper left, the general transportation revenue, or GTR, represents PBOT's most flexible funding source, totaling of about $156 million in ongoing resources.
GTR includes state highway fund revenues such as gas taxes, DMV fees, parking revenues, transportation network company fees, and interest earnings.
And these funds support many of PBOT's core transportation services, including paving, street cleaning, signals and streetlight maintenance, transportation planning, and operational support.
The bottom portion of the chart represents restricted funding, which totals to about $381 million and makes a majority of PBOT's budget.
These funds are legally restricted to specific uses such as capital projects by grants, permit-related work, or programs supported by dedicated fees.
While these investments support important transportation projects, the funds cannot be redirected to address gaps in other programs.
The key takeaway is that only a portion of PBOT's budget is flexible, and that is where the bureau's structural funding challenges occur.
Next slide.
Early budget guidance asked each bureau to identify scenarios to address potential budget shortfalls.
And unlike the utility bureaus, these scenarios that you see here are not independent options, but they're cumulative constraints that must be addressed together.
For PBOT, the most significant issue is a projected $25 million gap in the general transportation revenue over the 5-year financial plan.
This gap is driven by higher operating costs and lower than expected revenues, particularly declines in the state highway fund revenues and parking citation.
Addressing this gap will require a combination of service reductions, program adjustments, and/or new revenue sources.
PBOT has limited areas where reductions occur without affecting visible services, so most reductions translate directly into service impacts experienced by the community.
At deeper levels of reductions like these, the bureau shifts from maintaining the system to recovery mode where restoring infrastructure condition and service levels become more difficult and more costly over time.
The second scenario reflects a policy choice around city-controlled revenues.
If parking rates and transportation network fees are not indexed to inflation, PBOT would face an additional $3.6 million in reduction in ongoing transportation revenue.
The 3rd scenario reflects 10% general fund reduction requirement applied across the city for general fund bureaus.
PBOT receives about $1.3 million in ongoing general fund support, resulting in a target reduction of roughly $134,000.
At that level, the bureau would reduce planning capacity related to climate policy work, which would be absorbed by the bureau internally.
Next slide, please.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
This slide shows the major funding sources for Parks and how those resources are used, similar to the other bureaus.
Most of our operating budget in Parks is concentrated in the general fund that you see in the top left.
That includes about $82 million in general fund support, $78 million from the Parks Levy, and about $19 million in earned revenue from programs and fees.
Thank you.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
And together, these resources total to about $178 million.
However, maintaining these current service levels requires about $185 million, leaving about a $7 million current service level gap that must be addressed through reductions and/or additional revenue.
The remaining funds here support specific or restricted purposes such as capital projects, tree planting, or self-supporting enterprise programs like golf and the Portland International Raceway.
The key takeaway is that most of parks operational challenges occur within the general fund and the parks levy portion of the budget.
Next slide.
When council set the parks levy rate last year, you discussed 2 variables that could affect levy's availability— sorry, we discussed 2 variables that could affect the levy's ability to sustain current service levels.
One is rising costs and 2, potential general fund reductions.
General fund reductions remain a possibility and would directly affect service levels.
This slide focuses on cost pressures that are already affecting the base budget.
The largest drivers are internal service costs and employee health benefits, both of which were significantly higher than what was assumed when the levy was sized.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Health costs are expected to stabilize over time, but internal service costs continue to grow at roughly 9% annually and across the city.
And as a result, projected costs are about $12.2 million higher than what was assumed in the financial plan used to set the levy rate.
Thank you.
This is the—.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
This increase is the major reason we are now seeing a cut— a service— this increase is a major reason we are now seeing a current service level gap in the parks budget.
Next slide.
This slide shows what happens to Park's financial outlook under current service levels compared to making reductions.
On the left, maintaining current service levels results in ongoing operating deficits shown in orange and a significant negative ending balance by the end of the forecast shown in blue.
On the right, Implementing about $7 million in ongoing reductions next year largely eliminates those annual deficits and maintains a positive ending balance across the 5-year forecast.
This does not fully resolve the structural imbalance, but it keeps the bureau financially stable in the near term and allows us to stay in the black through the forecast period.
Next slide, please.
This is an important slide, and I want to take a moment to walk through how Parks approached identifying potential reductions including the possibility of general fund reductions of up to $8.1 million.
Given the importance of parks to the community, this work was intentionally structured to be thoughtful, transparent, and grounded in clear principles.
Parks developed a collaborative and transparent process grounded in the bureau's strategic framework, levy priorities, and community feedback, as well as core operational needs.
The work was organized into service categories that reflect how Portlanders experience the park system.
Reduction options that were evaluated were done using clear criteria aligned with the city's core values, with input from advisory bodies including the Parks Board, Parks Levy Oversight Committee, and Urban Forestry Commission.
This approach ensures that decisions are not made in isolation, but reflect community priorities and longstanding policy direction.
And in applying those criteria, similar to the other bureaus in Public Works, Parks looked for operational efficiencies first and then prioritized protecting core services.
And that includes daily park care, keeping community centers open, and maintaining community programming to the extent possible.
Next slide, please.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Using that criteria, the bureau developed nearly 5 dozen potential reduction options across the 3 scenarios that you see on this slide.
The column 1 shows reduction required to maintain current service level, which has a $7 million gap.
Columns 2 and 3 represent alternative general fund reduction scenarios.
So the overall reduction for parks would include column 1, Plus either column 2 or column 3, but not both.
While developing the reduction scenarios, we prioritized protecting levy commitments, including daily restroom cleaning, trash pickup, keeping community centers open, and preserving most programming.
Under the current service level gap and 3% general fund reduction scenarios, the impact primarily focuses— the impacts focus primarily on operational adjustments and reduced capacity, rather than visible closures.
And examples include slower facility repair timelines, reduced natural area and trail maintenance, returning splash pad operations to earlier schedules, and some adjustments to programming.
These reductions affect the bureau's operational capacity and system condition, but most residents may not notice immediate changes.
Under the 10% reduction scenario, the impacts become more visible to the public.
Residents would begin to see changes in park care, field conditions, and playability, longer repair times, reduced support for community gardeners, and slower emergency tree response.
At that level, the Bureau's ability to maintain park assets and respond quickly to issues begin to decline more noticeably.
Even in this scenario, we made every effort to protect levy commitments and maintain basic park services where possible.
Unidentified speaker
Thank you.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Next slide, please.
Before we wrap up, I want to highlight the key takeaways across Public Works bureaus.
We are managing essential systems where costs continue to rise and many services are not discretionary, and funding is both restricted in how it can be used and in some cases declining.
And after operational efficiencies, the remaining choices ultimately come down to 2 things: like service level adjustments or revenue adjustments, and that those trade-offs present differently across each of our Public Works bureaus.
But the underlying challenge across the bureaus is the same.
As service level changes, those impacts will be experienced directly by— will be experienced directly by the community.
Decreased service levels also come with a responsibility to manage expectations with Portlanders in a clear, transparent, and coordinated way.
Reduced investment also increases long-term risks to system reliability and leads to higher future costs due to deferred maintenance.
These are long-term systems, and the decisions made in this budget cycle will shape service reliability, affordability, and asset condition for years to come.
That concludes our formal presentation, and we welcome your questions and feedback.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, DCA Dhanapal.
Colleagues, this is a good time now for open question and answer.
We're going to jump to the queue.
Vice President Clark, lead us off.
1,000 years.
Thank you, Council President.
Uh, thank you for the presentation.
Thank you for, um, making it as understandable as possible, breaking it down into pieces.
I really appreciate that.
I just have a couple comments and a couple of questions.
Um, this is a lot to digest, uh, bureau by bureau inside Public Works.
First, I just want to say I'm really proud of the work Thank you.
Thank you.
Thank you, Mayor.
1,000 years.
I appreciate the work that Public Works does.
I, as the chair of the T&I Committee, really appreciate the working relationship that we have.
I think next to public safety, Public Works is the most, you know, basic area of city services that everyone depends on and takes for granted.
So I know we have tremendous challenges ahead of us, and we have lots of liabilities.
I'm very passionate for my concern about these things, but I did want to just comment that I think for the average person, the maintenance backlog is really difficult to fathom and how we're going to address that.
And I think my colleagues can understand why I started out my term talking about asset management, that we are so far behind that it's almost depressing.
How we're going to address our backlog, because we're going to pay for this one way or another, folks.
And you, you can see that we're paying for it right now when we see water mains busting across the city.
We have 100-year-old pipes that we've got to address because we're going to address it one way or another.
And I hope— hopefully we'll get ahead of it to some degree, but I know we're going to Continue to have emergencies.
And I know I talked to the mayor months ago about a streetlight that had fallen over.
We risk really being quite liable in the public.
The incident we had in parks with the hammock between the lights, how much did that cost us?
I know it was under $1 million, but I can foresee more of those coming if we don't get ahead of our problems.
Thank you.
Unidentified speaker
Thank you.
1,000 years.
I think that's particularly true in parks.
I can foresee if we don't get ahead of the maintenance problem in parks, we're just going to start closing parks.
There are so many pathways, bridges that are at the risk of failure right now.
I don't think we can run around and just start fencing everything off.
It's of great concern to me.
I would say, DCA Dhanapal, that on your list of challenges, that I would add one more, and that is our liabilities, that we are going to face liabilities across all of these areas.
So it's difficult to fathom how we're going to approach this.
Now, T&I is going to take on the transportation issue as best we can, and we'll be talking more about that when we come back from the spring break.
Unidentified speaker
Thank you.
Okay.
1,000 years.
But that's just one slice of public works.
But we're hoping to at least get ahead of that and address the pothole problem, the maintenance problem that we have all across the city.
I do have a question, a couple questions on the Water Bureau.
We have talked about getting an outside independent review of the water filtration plant.
What's going— can you address where we are with that?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Absolutely.
Um, Director Liu is, uh, working on, um, making sure— so we, we have multiple, um, the, the filtration project right now is, um, we have $450 million in, uh, additional, additional cost increases that we have to address, and Director Liu is taking that seriously and wants to make sure that we have an independent financial oversight over the filtration project, not just for the added revenue, but also over the construction project that is ongoing right now.
And she is hoping to provide an update to the council in an upcoming T&I committee, which will now be the Public Works Committee at a future date.
We all— we are also hoping to share with this council on some of the additional cost control measures that we will be taking to ensure that To avoid further cost increases to the extent possible.
And we are looking forward to sharing that with you in the— at a future Public Works Committee.
Thank you.
Great.
1,000 years.
Well, we'll definitely be scheduling that on our agenda after the holiday.
We'll also be scheduling a discussion of the utility rates and colleagues, and we'll be bringing that forward out of the T&I or new Public Works Committee after the break as well.
I'm really glad that you included the slide on how we stack up against other comparable cities Thank you.
I think it's important to compare us to other cities because I often hear that, oh, we're so expensive, oh, we're really out of line, and we're not.
It seems like we're really in line with most cities our size, and we're right in the middle of the pack.
And that gives me some solace.
I think with that, I'll just end there.
I'll have more questions later, but give other— our committee member, Councilor Green, an opportunity to weigh in here too.
Thank you so much for the presentation.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Vice President Clark.
Councilor Green.
Unidentified speaker
Thank you, Mr. President.
And are we just in broad, anything goes?
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Anything?
Well, not anything.
Unidentified speaker
As long as it's related to Public Works.
Um, uh, thank you so much, uh, Deputy City Attorney Dhanapal and staff for, uh, coming here today, uh, and presenting some really tough data for us to wrestle with right now.
I agree with all my comments of the chair for Public Works.
It is such a core piece, and it's something that Portlanders experience every day.
I just received a direct message on my Instagram account with some pictures from streets in a very poor state of disrepair up in Arlington Heights.
And I know that that's in every neighborhood around our city, and that's why it's so important that we pursue this tough conversation that we've— this tough, tough conversation that we've been pursuing.
It's a system that spans multiple agencies.
You've got to pay for the streets.
Unidentified speaker
Thank you.
Stuff.
And I think I have some specific questions, but I just— I do want to frame it up.
You said something earlier on that I think is so prescient in the slides, which is that when we think about the $14.2 billion in deferred maintenance, that deferred maintenance creates an upward cost pressure bias on operation and maintenance, and it only gets worse and worse and worse until we deal with it.
And so whether we're rate basing it all the way right now or we are financing it through long-term bond issuances, we have to think about the generations that follow us and whether we're going to kick the can down the road any further.
And we just can't afford to.
And so I think it's just really, really important to hammer home that just because we don't want to spend the money today, whether that's through borrowing or increasing rates, doesn't mean it doesn't still cost us.
So colleagues, that's what we have to kind of keep in mind when we talk about this.
I appreciate the different scenarios for the rates that you're going to present, and I'll get into that in a second.
But I do have a specific question on slide 6 and also, I guess, 7, because I was a little bit— I just want to confirm my reading.
That's the program expenses by fund and also resources by fund.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
John, can you go to slide 6, please?
Unidentified speaker
Maybe resources by class.
But there's this sort of fund transfers piece.
I guess it's more relevant to slide 7.
What it looks like in the '25-'26, there was a big fund transfer relative to '24-'25.
And then it's tapered off a bit in the sort of current service level budget.
Can you speak a little bit about what was being transferred from which fund to what looks like the Public Works service area?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Are you talking about slide 7, Councilor?
Unidentified speaker
Yeah, it's the orange fund transfers category on the bar charts.
And, you know, there's a material increase in fund transfers as the source, as the resource for the service area.
And I'm just curious And if you don't have that information handy, I can take it by email at a later time.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Yeah, the fund transfers, it represents the internal movement of resources between funds for financial management and transfers to or from the rate stabilization funds.
And that is what there is.
And I'm trying to see if our water finance person is able to answer that.
Unidentified speaker
Thank you.
My intuition was that we're drawing down the rate stabilization fund.
In that year and then maybe looking ahead, but I don't know if I'm correct on that.
Yeah, um, so for the record, my name is Cecilia Yuhin with the Water Bureau.
A large part of the fund transfers are actually within water and within BES.
Within water, we transfer between our operating and construction fund as well as our rate stabilization account, and then for BES similarly.
So The bigger and larger our capital program, the bigger the transfer.
So the increase that you're seeing there is the increase in our capital program.
And that correlates with the slide 6 increases in the— and it's the water filtration system, is that right?
Yeah.
Okay.
That's what I thought.
That's helpful.
I think I want to, since you're up here already, I want to talk a little bit about slide— let's see here— the water rates scenarios.
I believe that is slide— yeah, slide 15.
Okay.
As that's coming up on the screen, I understand the table that's being presented.
I want to just say, colleagues, Mr. Mayor, City Administrator, I'm not supportive of Scenario 3 as we kind of get into this.
And the reason why is because I know that there's a desire to show ratepayers that we're cutting rates.
But as we said earlier, this is going to increase the ongoing operations and maintenance liabilities and our system resiliency liabilities, if I understand this correctly.
Yes.
By disinvesting so deeply in our infrastructure program, and then that will continue to sort of yield costs, as it were, down the road.
And I just think when you're dealing with a big infrastructure problem like we deal with in the City of Portland, we can't afford to lose any ground.
And I think Scenario 3 places us in that dangerous territory for not a lot of meaningful ratepayer— on average ratepayer benefit.
Is that a fair way to— I mean, maybe I'm getting a little too political for your comfort, but— No, no, no.
That's how I react to that.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
I think that's accurate.
And Scenario 3 reflects significant cuts to our operations and maintenance over time that will result in increased liabilities and long-term system resilience as well.
So it'll be both visible short-term and long-term visible impacts on the system.
Unidentified speaker
Thank you.
And I just— so taking that off the table for me, The decision that me as a councilor in one office of 12 has to think through is, do I support scenario 1 or scenario 2?
And the chart that you show later on, which shows the sort of typical representative average monthly bill impact between those 2 scenarios, is about a $2 or $1.82 change for the CSL rate increase.
I think it's worth just maybe sharing how I think about the 40-year bond trade-off versus the 30.
I, I appreciate that you laid out that it, it costs another $900 million over 40 years in interest, but I think we have to think about that we are providing an asset that are— it's a 100-year asset, right?
And, uh, when we built Bull Run and we delivered water to the city of Portland 100 or so odd years ago or more, we financed that too.
And it ended up providing the basis for a city to grow into what we have today.
And so when I think about adding things onto utility ratepayers' bills, such as a transportation utility fee, a couple dollars means something.
And so I think I'm going to probably support Scenario 2 largely because I do think it's important to spread that rate pressure over an additional 10 years because we're going to have future ratepayers who are going to help shoulder the bill of the thing that we're building for them today.
And one of the nice things about issuing debt, colleagues, in fixed-rate terms is you— it's in some sense an inflation hedge.
So you're locking in nominal costs today with a bond issuance that then inflation over time eats away in real terms.
So the burden of that debt.
And so if we're smart, we do all this other housing policy work and land use policy work that we want to do, we do the economic development work that we want to do, we're going to grow our rate base over time into that 40 years.
And so that's how I'm thinking about this.
I'm supporting Scenario 2.
I would like to know more about what some of these service impacts are that are on there because there's the 40-year issuance and then there's the other things that are cut.
I want to make sure we're not hampering our ability to deliver services in a meaningful way to ratepayers and Portlanders alike.
But maybe we'll get into that in the broader conversation here.
And then finally, do you have a question on the last substantive slide?
It's the Parks and Rec budget scenarios.
I was having trouble reading, making the connection between the scenarios and the The reduction levels.
Scenario 1 is the current service level gap scenario, which has a $7 million reduction, which I expected to be— I guess I'm not reading it correctly because then it goes Scenario 2 is a 3% reduction, but that's $2.4 million, and then Scenario 3 is a $5.7 million reduction.
And I expect it to kind of be— go from low to high in that.
And what am I missing here?
Is it just that the service level gap is maybe more than 10% or More than 3%.
And so—.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Yeah, go ahead.
Unidentified speaker
Yeah, Claudio Campuzano, Finance Property Technology Manager for Public Works Business Services.
So the first scenario is merely the current service level gap for all of parks— excuse me, parks operating fund, which is that $185 million fund.
So general fund, parks levy, earned revenues.
So that is a gap that we need to close in order to match resources with expenditures.
The next 2 scenarios layer on top of that.
One would be a 3% reduction to general funds, so removing 3% general fund resource.
So we get about $81 million of general fund.
We would take 3% of that away.
These are the reductions associated with that.
And then an additional 7% to get to the 10% scenario.
That's what that next one is.
Those are additive relative to yourself?
Yes, they accumulate, yes.
Okay, so scenario 2 would be a $9.4 million reduction.
Scenario 3 is a 12, 13—.
15.1.
Yeah, thank you.
Terrible at math.
Great at abstract algebra, but terrible at arithmetic.
Um, okay, that is helpful.
Um, I don't want to monopolize too much time up here because I know a lot of my colleagues have some important questions, but I just kind of want to share some comments I've received recently from, uh, Pro-Tech 17, which as we get into As we get into this exercise, like, we're looking at every part of the city for savings.
I've heard multiple times from this union that there's a deep concern that we are not doing our due diligence, especially in the public works service area, on cost control on our contracting side, that there is the perception that we've got contractors who come in low on a bid and then their total effective net cost is much higher than we expected.
And this might be work that can be done in-house.
And I've— Councilor Kanal has talked about this at length about why are we paying others to think for us.
You know, we're losing that administrative capacity building opportunity.
I'd really like to understand, as we go into this very deep budget cycle, what is the true cost of our contracting out program?
What are we saving up front versus what is it costing us over the long run?
Thank you.
To hire out those sorts of services rather than say kind of invest in our rank and file FTEs here at the city?
That's gonna be pretty important for me to know.
I don't expect a— if you have a response now, that's great, but also that's a complicated set of questions and I'd like some—.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Councilor, you're asking a very important question that is also important to me.
And we can get back to you with the actual number.
As a part of, you know, we saw operational optimization as one of the first things that we are gonna look at.
Not just for this budget cycle, but across the service area moving forward.
And whether that is, you know, each of the bureau directors, especially in the water BES, where I think you might be hearing the questions from.
Unidentified speaker
Yeah.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We're looking into how we can do some of those work.
Like, what is, what is, like, you know, evaluating where we are at, how can we be more efficient, and how can we, you know, how can we reduce the spend levels, which includes doing some of the work in-house.
And with our service area now, we have the infrastructure bureaus all within one house.
And so there's opportunities in multiple areas for cross-learning from each other and how we can, you know, even if one bureau doesn't have the ability, there's one bureau that is very strong with design or GIS mapping or even construction.
So there's opportunities to learn from each other and how we can do that in-house.
And so While we may not have immediate action, it's something that we want to do and it may take a few years, but that is something that we are definitely looking into over the next few years.
And we can get back to you with the actual contract numbers.
Unidentified speaker
I appreciate that and that's helpful.
And I do want to convey that I think I've heard from this union that PBOT does a pretty good job at sharing down to a very Fine-grained level of detail what goes out in contracts.
And I think there's just a desire to see that level of detail for transparency purposes in the other parts of Public Works.
So I look forward to that interchange with you.
And I think, colleagues, I'll leave it at that for now.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Green.
I put myself in the queue because I can.
John, you don't have to change the slide, but on slide 15, the water rate-based scenarios that Councilor Green was just talking about, You know, I agree fully with Councilor Green that Scenario 3 feels like a bad option.
And the Scenario 2, I mean, the 40-year bond thing kind of scares me.
And I think it is really important for this council to be very clear-eyed about that and very explicit that this is not, this is a trade-off.
This is a decision.
This is an intentional policy decision that also in many ways binds the hands of future councils.
But I still think it might be the right option.
That is a clear— you know, just wanted to be very explicit about that.
On slide number 4, talking about the maintenance backlog, I am wondering if there is an ability to break this backlog down by district, which no one should be surprised hearing me say that.
A $6 billion PBOT backlog is, you know, it's no joke.
But I also heard specifically, I've received an email from a I think I heard from a PBOT staffer at some point, and I don't remember the exact context, but more or less the bureau calculates maintenance as being more expensive the further from the central city it is, that maintenance costs are calculated as being more expensive in District 1 because of how far the crews have to travel.
4,410.
Mm-hmm.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Is that reflected in this backlog total, this dollar amount?
Is it based off of what the pipe costs per square foot or is it also including having to send a team out to 145th and Division as opposed to, you know, 1st and Division?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We can get back to you on the details of that one.
But I do wanna share that this is an important question and we are happy to one, get the, you know, split of the asset deferred maintenance by district as well as making sure that we are, Um, you know, get, get you the details on whether— how much is it going to cost for the away from the central city.
Uh, one thing that we are doing right now is, uh, our bureaus are working on collecting a summary of all the assets, uh, that we have in each of our bureaus and, um, what is the asset condition, um, and, you know, what is the cost that it's going to take to get it back to good condition.
And that— and we can include District location in it as well.
So we are happy to— once we collect that information, we're happy to bring it back.
We are calling it a Phase 1 data collection.
Phase 2 will be like, you know, a consequence of failure, um, you know, uh, all, all of those things will be in Phase 2.
But Phase 1 is where we're doing the primary data collection.
So we will make sure to include district in those asset data, so we will be able to provide the data for you.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Fantastic.
It's a system that spans multiple agencies.
Council President, I'd like to add to that, you know, historically what you Yes.
And the statements that you just made as it relates to it costs more to drive out further distances, and that's typically related to the unit cost of a pothole or unit cost of doing that type of repair.
Some of the things that I think just lean towards the cost of probably East Portland and the cost of it is, is just the age and the condition of the actual asset itself.
Itself that is really driving that cost.
But when you start looking at unit costs, that distance does build into kind of the unit cost of the repair.
But looking holistically, it's really the age of that infrastructure.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
I mean, that makes sense, but I'm interested to see how this looks on a map because, for example, downtown Portland has the old— probably some of the oldest water pipes.
East Portland probably has the youngest Sewer pipes because we weren't part of the city until the promise of annexation and sewer access.
So perhaps our sewer system is in better shape than the rest of the city, but it will cost more to fix it or whatever that is.
I'm interested to know more.
I think it's just good, you know, information is good.
Thank you.
On slide 13, there's a statement in there about declining parking revenue.
Last year, this council raised the Hourly cost for parking.
Did that lead to lower collections?
Did we scare people away?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
That is a great question, and we have the perfect person to answer that for you.
Jeremy Patton will be happy to take the question.
Unidentified speaker
Yeah, thanks for the question.
Jeremy Patton, the finance lead for the service area.
The declining parking revenue that we're talking about in this particular case is the citation revenue.
So we had assumed higher citation revenue based on the number of citations we were writing.
But that citation revenue has not yet shown up through— it takes a while to make it through the courts.
And so we did reduce our forecast to kind of show what we've seen over the last couple of years.
The other small piece is when we reduce the hours.
So if you remember last year, we talked about extending hours.
We took those hours back out of our forecast.
That led to a little bit— the actual increase in rates, I would say that doesn't lead to a decline in parking revenue.
Do we see slightly less people paying?
Yes, the higher the rate you go, you're going to see less people actually paying, but the actual revenue coming in has not declined on parking districts.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
That's good.
And I'm more for sort of building on that.
Is there a break-even point?
Or, I mean, if we are paying our parking enforcement folks to go out and provide citations, do they ultimately pay for themselves?
Or do they generate revenue?
Or are we sort of paying for the privilege of having parking tickets?
Unidentified speaker
I would say historically they've typically written citations in the amount to pay for themselves.
I would say the data has backed that up.
Recently, there's just a lack of the payment of those citations.
Not that people aren't just necessarily paying, but it just takes a while, so it's harder to do that.
I think you have to build in both the citations written, but also just the parking meter revenues collected in general.
So if we had zero enforcement, nobody would probably pay at the meters.
So when you look at actual parking collections, and citations, they would pay for themselves.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Okay, gotcha.
It's a system that spans multiple agencies.
Council President, I'd like to add to that too as well, and I probably experienced this myself as I tested out our parking system with trying to figure out a ticket.
Um, one thing I've seen from a customer experience standpoint, it's pretty difficult to go on and pay a parking ticket too as well.
So we have to figure out that whole process, uh, to make it more, uh, customer-friendly to be able to go on To be able to pay for these type of citations.
And also looking at the consequences for not paying a parking ticket is very limited.
So there's certain things that we could be looking at and bringing back to the council for consideration as, as we evaluate kind of the parking ticketing process as a whole that I think we could enhance.
To make it better for ourselves and for citizens.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Perfect.
I totally agree.
Thank you.
Unidentified speaker
I have—.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
I'm sorry, I have 3 more quick questions.
The peer city list on slide 23, I was noting— I mean, I think it is helpful for us to have nationwide peer cities in terms of population, but I'm also noticing that we are significantly ahead neighboring cities In terms of our overall rate.
And most specifically concerning for me is that Gresham's water rate is so much lower.
But am I correct in remembering that Gresham gets water from us?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Good question, Councilor.
Gresham used to get water from us.
They are no longer a customer, a wholesale customer.
They are using their own water supply.
Unidentified speaker
And yeah.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Okay.
You know, representing the border with Gresham, I have a lot of worries specifically about, I mean, I worry less about people from District 1 moving to Washington, D.C. than I do them moving across the other side of 165th and turning into Gresham and getting that.
So I'm interested broadly.
I think it is important for us to have some peer-sized cities to recognize, but I am also interested in generally understanding more how we compare across the region, if only because I am also broadly interested in how we compare across the region in terms of all of our metrics, our parks maintenance, our permitting times, all of these things.
It'd be great to be better than Nashville, but I'm more concerned about being better than Gresham and Happy Valley.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Absolutely, Councilor.
One thing that I, if I may add, is we are happy to get back to you with the comparison between our peer cities or our cities in our local jurisdiction.
But one thing that we want to point out is We have to compare, you know, our water system and the regulatory requirements.
And, you know, for BES, we have a combined sewer storm, which is not the case in many of the other neighboring jurisdictions.
So we have to compare apples to apples.
We are happy to get you the cost from the other cities, but we want to make sure that there's a difference between what their system is and what our system is.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
You know, don't put too much time into that one in particular.
In fact, I think maybe just for the For a future budget presentation, it would be helpful for me as next year's city councilor to know more.
But you all have a lot going on, so maybe don't spend a ton of time on that.
Unidentified speaker
Sorry to jump in.
I just wanna clarify that the comparison on the slide is both water sewer and stormwater.
The water portion is the lighter blue and it looks like the darker green, what is, what's, more than Gresham, and that is sewer and stormwater.
And I suspect that Gresham didn't have to do the CSO.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Yeah, I suspect not.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
No.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Okay, that actually really is very helpful.
Thank you.
Um, you know, I'll say broadly, um, on slide 25, there are again some camp— some like items that are things that I'd like to see broken down by district wherever possible.
Asset maintenance, derelict RV camp, Cleanup, the street sweeping, vegetation, graffiti stuff.
I'm interested broadly to know, again, I raised a concern last year about street sweeping in District 1.
So I will always be really interested to understand where are we spending our money and how are my neighbors in D1 getting access to that.
My last question then, I'm just going to just— I'll just put that out there and it's not a question.
My last comment is specifically, maybe this is more of a policy I'm sorry.
I know this is not a policy question, but I'm— with regard to parks and the likelihood that we're going to have to reduce some services or some level of what people are accustomed to, the news this morning was also talking about the North Portland Aquatic Center opening, and that process is getting further along in the design, and we're scoping and all of that.
But I'm really worried about that Becoming another— I'm not trying to say anything.
I see them all staring at me.
But are we going to— I know, I know.
Are we going to build a beautiful aquatic center and then in 2 years cut services to it?
And if we are, why would we build it right now?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
That's a really good question.
I know that there's— we are working on it right now, but the timeline, I'm going to call in Director Szymanski to talk about the timeline and what that would look like.
Right now?
1,000 years.
Sure.
It's a system that spans multiple agencies.
What?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Yeah, you can go ahead.
Unidentified speaker
You wanna begin?
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Timeline?
It's a system that spans multiple agencies.
Yeah.
Unidentified speaker
So just jumping in on the timeline, we currently have in our forecast that it comes online in 2030.
And to your question, a little bit about the finances, we have a little bit less than $5 million built in for ongoing major maintenance starting in that year.
So that's included in the forecast and is part of what we're trying to balance for right now.
And I'll add briefly, Sonia Szymanski, Interim Parks Director.
Good afternoon.
This is one of the things we are so happy to talk to you about when we come back on the long-range funding strategy conversation.
There are a lot of things beyond the horizon of our 5-year forecast that need understanding and discussion and in some cases decision.
Including those major pieces of the future operating budget.
Brilliant.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
I mean, that's exactly right.
So don't worry, D2, I'm not saying anything else.
That is the end of it.
Thank you very much.
That's my last comment.
Councilor Novick.
Unidentified speaker
Thank you, Mr. President.
I have to say, I share your fear of Gresham, and I'm afraid I might have taken an action that'll make Gresham even more of a threat.
A few years ago, there was an auto dealership there that had a tagline at the end of their radio ad that said, guts, glory, Gresham.
And I asked Mayor Stovall last year why they haven't adopted that as their official city slogan, and he said he'd think about it.
And then I realized, wait a minute, if they have that slogan, people will just move across to Gresham in droves.
So I apologize for that.
I have one big sort of existential question, as it were, which is Do we know how much it cost and how much regular citizens were paying when we first built the water system, when we first built the initial sewer system?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Could you repeat your question, Councilor?
Unidentified speaker
I sort of want to know, okay, back when our forefathers initially built a water system, when they initially built a sewer system, my assumption is that that was probably really expensive and like the average Portlander spent like 25% of their income for the next 20 years paying for it.
And we could like hold that up as an example of like the investment our predecessors are willing to make.
But I might be totally wrong about that, and it also might be impossible to know.
But I just, at some point, I'd be interested in sort of an historical retrospective on that.
Maybe we can get Shane Cavanaugh to write a big article about the sacrifices people made back then.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We can definitely look into that and get back to you, Councilor.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Okay.
Unidentified speaker
And on parking revenues, I might have missed you already saying this, but Have, aside from citations, have revenues from the garages and the street meters— I know they declined for a while in the wake of the, of the, uh, um, or during the pandemic, um, but has— have those numbers kept on going down even during the recovery?
They haven't kept on going down.
They have been going up, but mostly that is due to the rate increases that we're seeing.
We're not seeing a ton more of just utilization.
I would say it's mostly related to the rates.
Ouch.
It's better than the pandemic.
I don't want to say that it is better than the pandemic, but it is not— and I'd have to look at the data, but I don't think it's quite at that level pre-pandemic as far as utilization.
Okay.
And now I wanted to get to— I'm glad this slide is up— the GTR flexible spending in PBOT.
Have we— I was surprised when you showed me this last week, Priya.
How much of that money goes to street sweeping, graffiti, derelict RV, campsite cleanup?
Are those numbers dramatically higher than they were, say, 8 years ago?
I would say the street sweeping or not, those street sweeping, if you're comparing dollar to dollar, so the value of the dollar doesn't change with inflation, I would say street sweeping was actually reduced a few years back when we removed neighborhood street So I would say that, that wouldn't show an increase.
Some of the newer programs, derelict RV campsite cleanup, those are newer programs that didn't exist in prior years.
So, but it's— we've been doing it for years, but if you think a decade ago.
But it's true.
Okay, so a decade ago, if we hadn't started doing those things, we might have almost $8 million available for maintenance of the actual streets.
That'd be correct.
It's a system that spans multiple agencies.
Yeah.
Unidentified speaker
Yeah.
Then I'd like to see at some point a further breakdown of like Project delivery.
What kind of projects are those?
That's our entire capital program.
So that's everything from the planning, design, engineering, and the actual construction for any capital project in PBOT.
But aren't a chunk of our capital projects done with other kinds of money rather than GTR?
Yeah, this is the restricted.
Are you looking at restricted or the—.
I'm sorry, I'm looking at GTR flexible.
Okay.
That's all I care about.
That piece, yeah, most of it is down.
You can see below in the restricted.
I can get you the details on the specifics.
Right, but there is $25 million for project delivery.
So I'm— I think, to be honest, I think that there's a lot of people who assume that PBOT spends all of its money on bike lanes.
So I'd be interested in a breakdown of that project delivery to be able to respond to that.
Yep.
Happy to get you that.
And then for asset maintenance, I think about $25 million of that, $20 to $25 million of that is pavement.
I'm curious, I'd like to see a breakdown of that too, and I'm just curious off the top of your heads, I mean, how much of it is maintaining the streetlights?
And like, could you give like the, the, the top 4 things other than pavement maintenance that make up that $45 million?
Yeah, I can provide that.
Thank you.
It's—.
Unidentified speaker
We have it.
It's a system that spans multiple agencies.
Yeah.
Unidentified speaker
Is that— do I remember correctly that streetlights themselves are a big chunk of it?
Give me 30 seconds.
I can probably tell you what most of that is.
But streetlights are a big chunk.
Paving is gonna be a large chunk of that asset maintenance.
But the streetlight signals piece is gonna be another large piece of that as well.
Yeah.
Okay.
Oh, and actually, I would also like to see a breakdown of street sweeping versus graffiti versus vegetation at some point.
Okay.
Thank you.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Novick.
Councilor Kanal.
4,410.
Thank you, Council President.
Thanks everybody for being here.
Appreciate the presentation and all the information.
While we're on this slide, I just wanted to note that there's these, these smaller chunks of money that we see here around things like payments for citywide services.
And so our internal fund rates, or so our internal IMS rates, are things that we still need to talk about and haven't had a chance to.
I'm looking forward to opening up that conversation when we have a Committee of the Whole.
I have a bunch of questions.
I'll start just slides 6 and 7, which Councilor Green asked about.
I just wanted to understand, am I reading this wrong, why the budget slides add up to $2.04 billion, but the revenue sides come up to $4.78 billion across the 2 slides?
Should we not be comparing those?
Unidentified speaker
You want me to answer that?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Yes, go ahead.
Unidentified speaker
The slides are actually showing 2 different things as far as— so the resources is all of the revenue or resources coming into the funds.
On slide 6, program expenses doesn't include some of the other fund-level expenses.
4,410.
Sorry, there was a— Doesn't include what?
Unidentified speaker
It doesn't include like fund transfers, contingencies, things like that in the program expenses.
Those are just personnel, materials and services, capital outlay.
That's the only expenses captured there.
4,410.
Okay, thank you for that.
I just wanted to also to build off of Councilor Green, you mentioned this in slide 12, just give you some praise here for thanking, and thank you for putting reduced consulting and professional services in that operational optimization piece.
Slide 24, and this also relates I think a little bit to the conversation that We've had in the past, but not today so far, but which is mentioned, I believe, on slide 22, about monthly bills versus quarterly bills.
And I understand, just, I think these are some things here, the discount program and the option to go to monthly billing are maybe not the best known options for people.
And just wanted to understand a little bit about your plans to help boost awareness and in the case of the discount program utilization.
Unidentified speaker
Yeah.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We can— so we definitely do affordability program information in our— we make sure that we are sharing that information through our social media, through bill inserts, and it is passed on to our community.
And happy to partner with you councilors if you want to share affordability programs in your newsletters to your districts as well.
I think this is important for everybody to have, and people who are eligible, we're happy to provide that information.
And what was your other question about affordability?
Unidentified speaker
Just the—.
4,410.
I don't think it's necessarily something we want to increase or decrease the percentage of people who do this, but to make Portlanders more aware of the option to seek a monthly bill versus a quarterly one.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We can make sure that it's communicated.
I think we've heard that increasingly from both councilors and some constituents as well.
So we'll make sure in upcoming bill insert we can include information on that.
4,410.
Yeah, and I'm happy to, I'm sure many colleagues as well, to share it outward as well.
On the subject of discounts, I think just another tag for our— my colleagues here that when we talk about the TUF, that talking about how we do the discounts is really important to me here because I think the goal of a discount on the TUF is not necessarily the same as the goal of a discount on the water rates.
And just worth kind of seeking into that because we're not— we can't affect behavior the way we can with the water, uh, discounts.
Um, just a topic for another time.
Um, I mentioned— I'm kind of going back to the same thing, but it's on different slides.
So slide 28, you have, uh— I just wanted to understand the internal service fund, uh, Forecasts.
That's a pretty significant change in 6 months.
I just wanted to understand that a little bit better.
You gave kind of a general, like, explanation of what it is, but the why side.
Unidentified speaker
Yeah, no, that's a great question.
So historically, the city economist has provided a figure for internal service fund increases, and we've, you know, we as bureaus have used that figure for our forecasts.
This year, I think we've seen a big improvement in that.
Which is actually working with the internal service funds to identify like what are they forecasting in their rates and what are they planning, what are they expecting to see.
So we received that forecast in November and really that was the first time we'd seen that granular service-by-service forecast.
And so we incorporated that into our forecast and it was pretty substantial.
I will note that a big chunk of it is in the risk IA.
And I think that that is, and we're looking at 17% increases year over year through the forecast.
And we're working with CBO and with risk to try and determine whether there's some opportunity to bend that forecast down a little bit based on some nuance.
But really, like, that's the biggest driver.
As an example, we saw, we had about $2.5 million in the risk IA 2 years ago, the end of fiscal year '25.
It's a system that spans multiple agencies.
Yeah.
Unidentified speaker
And going into fiscal year '27, it's about $4.5 million, and that rises with that 17% escalator to nearly $10 million.
So if we can figure out how to bring that down, that could be some significant savings in the forecast.
4,410.
Great.
When you talk about the reduction packages for parks, I think one of the things that— this is the slide that has the— it's 31.
The built-in sort of assumption being scenario 1 and then adding in either 2 or 3.
I just, I really wanted to kind of focus on that last sentence in the bottom left here of some reductions to recreation and community centers.
And first say, let's not do this again.
We just spent half of a year, it feels like, talking about reductions to community centers and the idea of, Recreation programs being, I think, a core part of the parks levy, which we just asked people to vote on with at least an implication on the environmental ed side too, that we were not going to be reducing these services if the levy passed.
So I just, I want to, let's just stop looking there.
There's plenty of other places in a large bureau to look, and I don't want to be in the position of of telling Portlanders, I know we said that, but now, because we made commitments.
And I, I just think it's, it's a, yeah, something that we, we can and should avoid, at least in the context of this Scenario 1, talking about what we're going to cut automatically.
Um, and I think for those who were at the listening sessions last year, many of us were at more than just our own district.
It was the single biggest thing that came And I understand that's partially because it was one of the things that was already floated for a cut last year, but it's partially because of the volume of support that we have for this particular type of service.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you, Councilor Knoll, and thank you for sharing your concern about the community center.
One thing I would like to clarify is it's not just community centers, but across the board in all the programs that you're seeing, it does not completely eliminate A community center, but we're looking at reducing the operating hours or, you know, maybe a day in a week or something like that for certain community centers.
So, but we are looking into that option.
We're developing those options as we come through, but we will take your input into consideration.
4,410.
Yeah, I think the question that I would have is, would the average voter have thought that if they approved the parks levy, this wasn't going to happen?
And I think there—.
Unidentified speaker
It—.
4,410.
What we said in the, in the vote, that's what I'm concerned about here.
I understand there's a lot of concern here, and I imagine that because we didn't commit around maintenance in the same way except for the 3-cent piece of it, that that's likely to be the place that's the least protected by this conversation or what the voters knew.
But I just wanted to make sure that was in the, in the record here.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you.
4,410.
And on that subject, I'd love to talk about— we— Councilor Ryan talks a lot about the sponsorship and getting the private dollars into parks.
But one thing that also came up, which I also believe Councilor Ryan talked about, was the volunteer programs that we used to have.
And I'd love to see updates on that.
Councilor Clark had an item on this last year, and I think that might be a place to look.
And I can see Director Schavansky nodding, of course, I see you're already looking into it.
I'd love to get some updates on that at a later time.
So we have some hopefully hope for how to assist with the sort of gaps here.
Everything else I have is on kind of the transportation side.
I imagine to Council President Dunphy's point about the deferred maintenance backlog by district that some, I don't know if you distinguish between deferred maintenance And the stuff we never built at all and have therefore no— it's not necessarily maintaining something, but it's sort of deferred capital broadly.
And I'm not sure if that would be helpful to understand because some of the things that we're talking about needing maintenance in D2, D3, D4 are things that we're talking about needing to build for the first time in D1.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
And what you're saying is absolutely real.
Like for the Water Bureau, we are significantly investing in the filtration plant that many of our capital needs have been deferred because the resources have been focused on the filtration plant.
And we can, in addition to the deferred maintenance, we can look into what has been deferred with respect to capital need and we can get back to you as well, district by district.
4,410.
And my guess would— am I correct in saying that that means that the backlogs we're seeing here do not capture the full amount of necessary capital investments?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
That is my understanding, yeah.
4,410.
Okay, so it is worse than we thought.
Great.
That's the thing we hear the most in, I think, the City Council, my experience, not from anyone specific, but that there's— it's a bigger problem that we've been left to figure out and that you've been left to figure out as well.
I would love to get more on that, and I appreciate the information because I was not aware that BES actually had a larger backlog than PBOT until today, for example.
That's— we hear about PBOT, I think, all the time.
On the subject of parking enforcement, you said that if we had no enforcement, we'd have nobody paying parking rates.
And I would love to understand the conversation around enforcement on double parking for loading vehicles.
Every single day I drive in here, I have to change lanes, get around a truck that is double parked illegally.
And I don't want to be that guy taking pictures out of my window, but I can start if it's helpful.
Over to you.
1,000 years.
Yeah.
4,410.
And okay, thanks.
But I would love to understand why there's limited investments in that enforcement and how the amount be raised to the point that it is whatever one step beyond a deterrent is?
Because it's, it's something I hear about in downtown, of course, but also out in district as well on all the major roads that people are trying to use to get to the local businesses that they go to.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Director Williams is here to answer your— respond to your question.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Thank you so much.
Good afternoon.
Millicent Williams, Director of the Portland Bureau of Transportation.
Thanks for your question, Councilor.
I did want to mention several Several years ago, we more than doubled the number of parking enforcement officers that we had providing the service to the city with the goal of creating the opportunity for more people to comply.
We felt like if they were actually receiving tickets, there would be the potential for them to actually pay the tickets.
And so we have, over the course of the past several years, seen an increase in compliance.
So compliance is up 70%.
But the—.
4,410.
And that makes sense on the I agree with what you said earlier.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
And so then the revenue part has to catch up, as Jeremy has mentioned previously.
And as the city administrator reflected, there's some opportunities we have to work with Multnomah County and the courts to ensure that the payment system reflects the ease with which we need for people to be able to pay.
We also, as has been mentioned, don't have or don't use the levers that are available to us to encourage people to pay their tickets on time or at all.
People do not receive double penalties anymore.
There used to be a time when we would double tickets.
That doesn't happen anymore.
4,410.
And I'm not suggesting being more punitive on the conversation around individual parking tickets.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
And so then with regard to people double parking in loading zones or non-loading zones, we do have those officers who are out often ticketing.
And what we have heard from some businesses at least is that the cost of doing business is to just park the vehicle wherever, even though we have created and extended loading zones for businesses to be able to park in the appropriate places and spaces.
It is very challenging.
And so it's very difficult for us to essentially ticket our way out of getting people to comply as it currently stands.
Those who are loading and unloading, if they're in the parking— in the loading zones, or not even in a loading zone, do not have to pay to use the curb.
In other jurisdictions, people who are delivering goods and other services actually do have to pay to use the curb.
We do not require that here in the city, and that's something that we're also discussing.
But that's a big challenge.
And because people feel like it's easier to just pay the $80, $100, $200 ticket, Thank you.
They will do that instead of waiting for a space to free up, waiting for us to tow a vehicle that's parked in a space that they should not be in so that loading can happen appropriately.
But we also have an opportunity to work with companies to ensure that we schedule when they're able to do the deliveries so that everyone's not showing up at Pioneer Courthouse Square or around the mall Yeah, I appreciate that.
4,410.
And I think those are things worth considering is how the loading zones work.
I'm mostly interested in the delivery vehicles that are in driving lanes and are stopped in the middle of the road.
And I would love to talk about how we can add a zero to the end of the amount every time until it gets that done.
I think that's a great idea.
I want to incentivize your parking enforcement officers to go after those people.
And it is completely unacceptable and it's rampant.
Thank you.
We agree.
4,410.
Literally every day I come downtown.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
And I experience the same thing.
And in fact, I've spoken with our parking enforcement leadership and said there are certain points of— there are certain parts of town at certain points in the day Yes.
So that a person is not parking in the 5-minute spot, sticking their tail end out, blocking, for example, 4th Avenue on a daily basis.
I see that, those types of things happening.
Again, if there's no trigger, there's nothing that's causing a person to pay that $100, $200, $300 ticket, there's no consequence to them not paying it.
That is just an exercise in futility.
So we've got to work on that.
On the jaws of the enforcement action so that people will feel the need to be in greater compliance as it relates to that.
1,000 years.
Council President, can we— maybe we could just deputize Councilor Kanal to be that officer, that kind of vigilante parking officer.
4,410.
You know, New York does have a sort of vigilante program on it.
I know, I know.
I don't think they call it that, but yeah.
The last thing, and this kind of relates Sorry, 2 last things.
One is I'd love to also talk about adjustable parking, kind of event parking style overlays for larger portions of the city, including smart parks and street parking in downtown as well.
But the thing I wanted to float here is, and this relates to Council President's comment about the way of looking at everything by district, that it doesn't necessarily I think it's worth noting that it doesn't necessarily make sense to apply every— a 25% rule to everything, that 25% of our problem or 25% of our investment should be in every district.
It also has not worked to have no rule whatsoever because all the money goes to D4 for the last 150 years.
And so I think it's worth, um, worth having a conversation around a 15 or 20% understanding to give administration a lot of flexibility.
It's a system that spans multiple agencies.
Thank you.
4,410.
But having some sort of penciling in of what we should expect as a minimum for every district.
I'd love to have that conversation, um, because— and it's, it's been a, a— and, and by the way, there are many parts of D4 that are also neglected.
I should note that.
Uh, so I, I— it just, it so happens that the parts that are not neglected, a lot of them are also in D4.
Um, and so for the people out in outer South I definitely understand and have heard a lot of the same stories.
But I would love to have some understanding of a flexibility that's council, a council conversation around a flexible framework that has, that can give Portlanders certainty that at least a portion of the investments we're making that are citywide will be in their district.
And I don't know if that's 15% for every district and 40% is flexible.
1,000 years.
Yeah.
4,410.
Or something nearly that prescriptive.
That's not an actual number, but just illustrative example.
But I would love to have that conversation with colleagues going forward and not specific to Public Works alone.
Thanks.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Kanal.
Colleagues, I promised staff we would take a quick 10-minute bathroom break halfway through, and we are a little bit past halfway through on this.
We may not last until 5, but I was— I shouldn't have said that.
I'm sorry.
To take an 8-minute bathroom break and have us back here at 3:50 to jump back into the queue.
Thank you.
Apologies.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Get back to order, please.
Ladies and gentlemen, from the old budget office, we're getting back to it.
I love the amount of fun happening here.
Councilor Pirtle-Guiney.
Thank you.
Thank you, Council President.
Um, I want to I'd like to ask a couple of questions about the bond option on slide 15.
My colleague said this is a 100-year asset, and I actually would like to ask the question.
We're talking about bonding for a water treatment facility.
How long do we expect that asset to last?
And I guess 2 pieces to that question.
How long do we expect it to last total lifespan, and how long do we expect How long do you expect it to last before it needs some sort of major maintenance that we might also bond for?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
The typical lifespan of infrastructure asset like that for the— in a water bureau is about 50 to 100 years.
Unidentified speaker
Okay.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
And that being said, you know, in addition to that new infrastructure, there's going to be ongoing maintenance.
A thought is to spread the cost to the future years as much as possible because it's going to be a 50 to 100-year infrastructure.
But I also want to highlight that the deferred maintenance and other maintenance, ongoing operations maintenance, is going to also compound over time.
And so the future generation, in addition to getting to pay for this particular infrastructure, they will have their own aging infrastructure and maintenance to pay for.
And I don't know if Cecilia, if you have a number on the maintenance.
Unidentified speaker
I think the question was on when will more capital maintenance will be coming on with the—.
Thank you.
Exactly.
And what, what I'm trying to understand is if this is a 50 to 100-year asset, are we looking at the larger maintenance, the capital maintenance that's needed to extend the lifespan, or that's needed to replace major parts at year 30, at year 40, at year 60?
Unidentified speaker
Yes, I suspect that there will be parts of the filtration plant that will need to be replaced in 20 years, electrical, and then there will be ones that will be much later.
So over the next 20, 30, 40 years, there's going to be parts of the treatment plant that will need major maintenance work and replacements, equipment that is put into the plant, those will need to be replaced.
Thank you.
Thank you.
I'm interested in understanding what the rates would look like if we looked at the reductions in Scenario 2, but a 30-year bond.
And I'm interested in that because The longer we push out our bond payments, the more we are depending on either significant population growth that does not bring with it its own costs, or hoping that we don't have other significant deferred maintenance costs, or assuming that we will double up and be paying for these bonds and the costs of that significant maintenance.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you.
Thank you.
I'm not comfortable with any of those scenarios.
I'm not comfortable with the first scenario because while population growth will certainly, as my colleague pointed out, help to spread the cost, it also will come with additional pressures on our system that I have to assume will increase costs.
And I don't want to set us up for a long-term cycle of chasing growth in an unsustainable way.
I do not like the idea of setting ourselves up to be paying off bonds from an asset that we've purchased while we also are looking at the next big investment here and needing to either save or begin bonds for the next big investment on the facility as well and doubling up costs for future generations.
If you're telling me that this is a 50 to 100-year asset, I'm going to assume that maybe an electrical upgrade aside, we can get through 25 to 30 years before we have major maintenance on it.
40 Years starts to push where I worry that you'll be sitting in front of 12 new people, or 4 new people will be sitting in front of 12 new people.
I think that's a fair point.
30, 35 Years from now saying, hey, we need to be planning for something and we still have 10 years left on these old bonds.
So I'd like to see what that interim scenario, that in-between scenario looks like that is a 30-year bond, but with the reductions in scenario 2, I'm hoping that's something that you might be able to share with us when you send follow-up documents.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We actually have the information and Cecilia can share that with you right now.
Councilor, if that's okay with you.
Thank you.
That would be great.
Unidentified speaker
Yeah, so if we go with the 30-year term bonds, we're pretty much looking at Scenario 1 rates.
The reduction, the $1 million reduction, will be able to allow us to drop year 1, fiscal year '26-'27, from 9.8% to 9.4%.
So it's a 9.4% rate increase for year 1, and then the forecast will be 9.8%.
Thank you.
So it would give us a slight decrease in the increase in year 1, but we would still be looking at the same numbers lowered by just a couple of dollars from that first year out from there.
Why is it that even with the— Well, okay, that's helpful.
Thank you.
I appreciate that.
I'd love to see the exact numbers on what that looks like on the bar charts, the cost to taxpayers when you have that available, or if you have it, if you want to send it along.
It sounds like it's not significantly better though than doing a full Scenario 1.
Unidentified speaker
That's right.
Thank you.
I am also wondering about the Ratepayer Stability Fund.
We talk about having contingencies, having stability funds for hard times.
Are there triggers that you have in code for when we can access those funds?
When do we usually turn to those?
From the historic data that I've seen over the past 8 or 10 years, those reserves are Decent, not huge, and relatively stable.
We haven't drawn on them significantly.
And I am wondering if that is a source we should be looking to, to make our costs look more like Scenario 2 while still having a more responsible bonding timeline, or if there are reasons that we're holding on to those funds or triggers that have not been So we're talking about the rate stabilization funds.
Unidentified speaker
They really serve 2 purposes.
One is to be able to allow us to smooth rates, 9.8, 9.8.
We are drawing on those funds in some years.
The second purpose is also for us to be able to meet our liquidity metric that the rating agencies are looking at.
And we also maintain a minimum fund balance equal to about 90 days of operating expenses.
So together, it allows us to be able to maintain our credit rating because of the strong cash position that we hold.
Thank you.
So the first part of what you said, that 9.8% over 5 years in Scenario 1, that is already drawing on funds from the Stabilization fund, dollars from the stabilization fund to keep that 9.8 level.
That's not actual true costs that we're seeing?
Unidentified speaker
That's correct.
Thank you.
Okay.
I didn't see that in the initial information, so I apologize.
And is that being drawn on in scenario 2 as well, or are we able to move forward without drawing on those funds in scenario 2?
Unidentified speaker
Likely are drawn a little bit on that as well.
Um, again, you know, in the years where if we didn't use the account, it may require more than 8.5%.
So we're just, you know, using the account to allow us to smooth the rates.
Thank you.
Okay, I have a couple of questions about parks, and I want to start by thanking you for specifically looking to reductions that minimize impact to Portlanders who are using our parks facilities and especially minimizing impacts to things that we promised during the levy conversation.
I appreciate that that's the intent.
I'm a little worried that we don't fully capture that.
And so I'd like to pick up on some of the questioning that my District 2 colleague started and understand more what the reduction in recreation, community centers, and environmental education are more specifically?
Because you said that they are not shutting down a full facility, which I appreciate, that it might be some hours or days reduced.
What are those proposals?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
We are looking forward to coming back in April and May with more information on what those proposals look like, Councilor.
We are still evaluating what that would be.
We are still finalizing those— that information.
So either in a Public Works Committee or when we come back in April, or we can follow up with more information on that.
Thank you.
I think it's important as we look at any reduced hours that we are taking into account all of the uses in our community centers.
Closing community centers on days when preschool or after-school programs are there has a significant impact beyond just the, the standard recreation programs.
Closing community centers on days when kids are not in school and don't have other places to go has a significant impact beyond what some other days might look like.
So I would encourage you to think about not just what a day might cost, But what the impact might be if we're looking at some certain days, whatever those are.
Environmental education cuts—I'm not sure what is included there.
I know that those programs cover a lot of different things, but when we get specifics, I will be asking very specifically about summer programming, affordable camp options.
I know that.
Some of our camps are not included under environmental education, but some are.
Some are free-for-all options.
The things that make sure that kids have a safe place to go, a meal to eat, that parents have what is one of the only affordable day camp options in our city available to them at the level that is needed.
Those are things that are going to be really important for me to see maintained.
So as you work out the specifics, I hope that those are included in the programming that moves forward, and I'll certainly be asking about them.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you for that feedback, Councilor.
We will definitely take that into consideration.
I do want to mention, if I may, the choices that we are looking at are you know, program adjustments where we can scale back services with our alternate providers or closing lower demand sites.
And so we are— I think we are aligned in what you're saying, and we will take that into consideration as we make, make those proposals forward.
Yeah.
Thank you.
Thank you.
I also just want to note on slide 29, we're looking at closing the gaps here.
Is that deficit line parks levy or full parks funding?
Unidentified speaker
So that is, that is just the levy, which is that marginal resource on top of the general fund.
Yeah.
Thank you.
So I am concerned that in both of these slides we show a deficit in the final year of the levy.
And I'm concerned with that because when we reviewed what happened with the previous levy.
What we discovered was that because we had phased funding, we used less at the beginning in order to afford more at the end.
We set up a situation where we were necessarily going to have to ask voters for a higher levy funding this past year because we ended the levy period spending more than we had available in any given Councilor Smith.
I see that happening again.
I'm very concerned that I see that happening again.
One of the conversations that we had during the process of putting the levy together was that we could not end up in a scenario where we necessarily had to go back to Portlanders and say we need more to do the same.
I would love to end up in a place 5 years from now where we have If we have to go back to Portlanders in 5 years and say, we saw this coming 5 years ago, we need more money to do the same, Portlanders should not say yes to us.
Unidentified speaker
And if Portlanders do not say yes to a levy, we will not be able to do the work that we need to do.
Thank you.
Thank you.
We do not have the park system that our families absolutely rely on to have the type of city they want to live in.
So I hope that over the next year, because I know this doesn't change with what we do between now and a budget 2 months from now, we can figure out how to change the projections on levy spending so that that line is either flat and we are using the levy in a consistent way across the 5-year period, or that line starts higher so that it still ends in the positive.
I don't think it's acceptable just a few months after we asked Portlanders to fund a sustainable level of levy to project a parks plan that shows us 5 years from now needing to ask them for even more to do the same thing.
Unidentified speaker
So I think that's a really great point, and it is one of the reasons why we are showing the before and after.
And I just want to acknowledge that as a finance guy, I try to be as conservative as possible in our projections.
And so one thing we don't want to do is overcut in order to meet that, to meet that goal.
And so there is some hope for some upside, but it does give us several years of positive, of no deficit in order to figure out does that upside materialize?
We just talked about potential adjustments to the expense forecast in some of the internal services.
So it's those areas where we wanna make sure that we're not overcutting in advance of other decisions or possible things that might come into the forecast.
But absolutely, we wanna be looking out those 5 years and that's really why we're bringing this to you and we wanna make sure that collectively we're looking at that.
It's a system that spans multiple agencies.
Thank you.
Unidentified speaker
Always and all the time.
Thank you.
Thank you.
And I know that the ending fund balance is in a much better place, is in the positive with the $7 million reductions, but the year over year still shows a deficit in that final year, even with the $7 million reduction.
And that's the piece that's concerning to me.
Council President, I think I'm going to end there because I don't want to draw us into 20 more minutes questions, which is what will happen if I start going down the PBOT path.
And I think we have a lot of other work that will happen around our transportation funding.
Thank you very much.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Sounds good.
Thank you.
There are 6 councilors still in queue, folks.
We also have a brief discussion with the CFO at the end of this to discuss what happens after today.
So I'm hoping we can be a little timely in this.
Councilor Clark.
1,000 years.
Thank you, Councilor President.
I'll be very brief.
Um, I don't have any questions, I just have some more comments.
Um, I guess I'm somewhere on the other end of the stick from, uh, my colleagues in District 2.
Uh, I'm quite concerned that on slide 31 that we're looking at reducing more of the parks maintenance budget.
We are already so underfunded in taking care of the assets that we have.
As I said earlier, I think we're risking liability issues.
Um, that is of great concern to me.
It hasn't been taken into consideration what kind of liabilities we may have, but we're already way underfunding maintenance.
Um, so, uh, I was very disappointed to see maintenance, uh, parks maintenance highlighted, uh, on page 31.
I'm hoping that There's other ways we can skin this cat.
And my second comment is about not so much volunteerism, but entrepreneurial approach to our assets.
We have assets that, as the mayor likes to say, they are not sweating.
We need to make some of these things sweat.
We need to be more creative about the public-private partnerships that we have when it comes to parks and recreation.
I was just at the Multnomah Arts Center here recently, and, um, don't worry, I'm not, I'm not going there.
Um, but I, I realized that the kitchen— it was a commercial kitchen— if that was updated, they would be able to rent out the, the gymnasium and the other facilities there and actually make money for the arts programs.
But I don't understand why that kind of an entrepreneurial Yes.
Is not being encouraged more at our facilities.
So I just want to put that out there.
That's a future issue.
But let's not be, as I said the other day in one of the other budget discussions, penny-wise and pound-foolish.
There are investments here that we should be making that will pay off, that will prevent us from having liabilities, and really encourage growth and potentially revenue generation.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Vice President Clark.
Councilor Ryan.
Thank you.
Thank you, Council President.
First off, excellent presentation, uh, DCA Dhanapal.
I really appreciate it, you— especially that you got to the scenario planning.
Um, we've talked a lot about trade-offs in the past year, and this year it can no longer be talk.
I mean, we're here, and so it's going to be really hard, it's going to be painful, And it's the action that we have to take this year.
And so by having the scenario planning slides, it brought that reality, and I appreciate that.
And the reason why the reality is probably hitting harder with this presentation than the others is because Portlanders, if you add public safety to this, public works and public safety is our must-haves.
Like, these are the basics that when you compare to your Neighboring cities that you mentioned earlier, Council President.
That's the equation.
It's how much are they paying for their basic services, and then what's their service they're receiving from those.
And when I listen to Portlanders, they are asking those questions.
And so this is tough work.
And I want to acknowledge that I see the public servants that are in Public Works.
Unidentified speaker
Thank you.
Thank you.
Like public safety that are engaging and interacting with Portlanders every day.
So I hope that we can prepare, we can protect as much the wisdom on the ground as we look at some of those trade-offs that are going to be painful again, but might be in some of the positions that are between, that are up higher.
And so I've always agreed with your— is it, you call it pillar and pyramid?
Unidentified speaker
Yeah.
Yeah.
Thank you.
Okay, I'll go with that for right now.
I want to do something with the pyramid, but anyway, I'll go with that.
And I think that this is the kind of presentation that reminds us of that.
I have a few comments to make about, um, we've had a lot of dialogue about the bond rate.
And actually, Jonas, could you come up and give us bold, direct, crisp, uh, Jonas on What is it?
What's really the impacts of 40-year bond compared to 30-year bond, for example?
I think we've all made statements, but I kind of want to hear it from the CFO.
Unidentified speaker
Yeah, thank you, Councilor, for the question.
For the record, Jonas Biery, the city's Chief Financial Officer, anticipated this question may come up at some point today.
Couple things I'll observe.
First is that broadly, You know, particularly over the last couple few years that we've experienced sort of an increase in higher or medium risk kind of decision-making, deferred payments around debt, extending those bond payment schedules, you know, reductions in reserves.
So I really appreciate the question, Councilor, because it does highlight how the collective impacts of those little decisions do start to have demonstrable impacts.
Thank you.
And we're certainly seeing indications of that when we have those credit rating discussions right now.
Specific to the kind of 40-year bond question, and this came up I think in another comment around, a couple of comments around kind of intergenerational equity and kicking the can.
There's an important lens to look at, and I think Cecilia kind of got to this earlier as well, but extending the debt payment is literally kicking the can.
Thank you.
It's literally extending those payments out to future generations, stacking additional debt onto that.
I believe the strategy is that all debt for that project would go to 40 years.
And so that not only kicks the can down beyond, you know, kind of the foreseeable generation, it also limits our capacity to invest in the future as we stack those debt payments on.
We have less available in future years to invest in the next cycle of asset needs.
So I just wanna observe that, that that's an important trade-off.
I'd also kind of note that having been around here for a while, it wasn't that long ago that we actually shifted from 20-year debt to 25- and 30-year debt.
I was in a different seat and advocating for making that change despite some anxiety around even extending to the 30-year window that we have now.
Also recognizing it's a slippery slope.
Thank you.
When you say not long ago?
Unidentified speaker
A decade or so ago.
I mean, maybe 15 years or so.
So I just want to also acknowledge that we only recently extended in the utilities beyond kind of a 20-year timeframe.
And then just lastly, to summarize, I mean, I certainly understand deeply the rate pressure and the need to continue to invest in our infrastructure on a timely basis.
If you're asking me as CFO what my recommendation is with all those trade-offs considered, it is not extending beyond the 30-year timeframe.
Thank you.
That was really helpful.
Thank you, Jonas.
I'm going to shift to the Water Bureau, and I just have to plug one more time how much I appreciate and support the filtration system project.
It's the big— it's like It's bigger than the Big Pipe and it keeps growing.
And what I like about it, and I'll always be an advocate for this part for sure, I see the student graduating from David Douglas, getting a pre-apprenticeship, staying on that project for 10 years and becoming a journey person.
So from a labor standpoint, it's just so— it's a good story and I want to go out of the way.
It's also a Portland story because we have access to fresh water.
That's the envy of like Many around the entire world.
It's like one of our most precious jewels, if you will.
And I don't have to wax on about why everyone knows that's important.
We gotta make it, make certain that it like works and it is that asset that we want for the over a century.
And so I think what I'm missing this past year that I experienced differently 2 years ago, if you will, was more frequent updates on that.
It's a system that spans multiple agencies.
Yeah.
Thank you.
And so I think that would be helpful, CA Lee, if we work that into the reports from the city administrator.
They feel like it comes too infrequent.
And I know some of that's because we had stoppage and such, but it's such a big project.
And so thank you for hearing that.
I am rushing to go through stuff because others had gone earlier and I have to be quick.
Unidentified speaker
Thank you.
Thank you.
PBOT.
Do I want to say any of that?
PBOT, I feel your pain already just looking at these numbers, and there's not a general fund to help rescue.
And maybe what I'll just say is that I appreciate the work that you're doing.
I also appreciate everyone that's bellyaching to me about when they have— they know construction rates are different than Cost of living rates, but they can only live in the world of cost of living.
And so when rates get— increases get above 3.7 or so, wherever they're at right now, who knows what's going on in Washington, D.C. today that could make them go up even more.
But it's just so important that we're mindful of how many Portlanders are struggling right now with affordability.
And that gets passed down to renters as well, as we know.
And so thank you, Councilor Clark.
You're doing really hard work and it's going to be tough.
And I hope with that we see creative, bold restructuring.
I was disappointed with the last city administrator that was here in the interim and that we didn't go harder on accepting the fact that we have an opportunity to break down the silos.
Remember, that was one of the reasons people voted for the charter.
And so we've focused on the political part of the restructure, but we're waiting for the enterprise of the city to be a part of that new form of government.
And this is the time.
And it's going to be painful, but this is the time.
So I look forward to that.
And I think the PBOT story clearly makes me want to speak to that.
So I'll I'll avoid the details.
On parks, first I want to applaud you, or you are, Sonya Szymanski, Director Szymanski, for hiring someone to focus on philanthropic efforts, for private endeavors, for partnerships.
And we have to keep going harder there.
We've talked about the friends groups.
How do we go from the Bureau of No sometimes when it came to embracing That joy and messiness that is having a lot of volunteers to just embracing it and just having them more and more part of even some of the cleanup.
And I'm going to end with a story yesterday.
I, I won't say their name because I didn't get permission.
I had a conversation with a person from Parks that was doing painting.
They were painting a restroom, so they were doing maintenance work.
Unidentified speaker
Oh, that's great.
Thank you.
But I kept asking them questions about, is it different doing this work today than it was 10 years ago?
And they said, yes, there's more damage, there's more repair now.
Some of the same challenges we're having because, of course, abatement work has gone up, graffiti removal has gone up.
Well, that's parks.
All of our assets that are facing the public right-of-way are experiencing more damage.
Unidentified speaker
Right.
Thank you.
That's just a fact.
And it's making our cost drivers go up and expenses go up.
They didn't get into that detail 'cause that's my job at this level, but they're just so enthusiastic about their job and they were so content with making that restroom look better than it has in a long time.
But that job takes longer than it did 10 years ago, and they've worked here for some time.
I am intrigued by how you got to your budget approach.
Like, who was at the table?
Was that predominantly with the Parks Board?
Was it with the friends groups?
Who were the voices at the table that inspired this approach to budget prioritization?
I will say that Your wonderful finance person is very conservative with estimates.
I know this.
Yeah.
Hi, Director Szymanski.
Unidentified speaker
Hi, thank you.
Great question.
Sonia Szymanski, Parks Bureau.
We had very little time to develop scenarios for this process.
We worked primarily among our senior management team.
We did not have a lot of opportunity to work with our advisory bodies, of which we have a few, primarily Parks Board, nor has there been time for deep community engagement in this process so far.
We did lean heavily though on prior community engagement, including very recent.
And we really, I think rigorously for the time we had, looked to community needs survey information, Portland Insight survey information, our employee survey, Healthy Parks, Healthy Portland, and what we've heard from you, including in the last budget cycle, to try to align as closely as we could to all of that direction.
Thank you.
That was helpful.
Thank you.
Since the pool came up, thank you, Council President.
I want to remind people why it was selected at that Thank you.
So, Councilor Dan Ryan, can you tell us why we selected that site and why swim literacy really matters?
It was selected at that site because it was by far the highest equity-rated site of the 3 locations.
It was closest to our schools and the schools that have the higher BIPOC populations.
And data suggests very heavily that the ones— people, families who don't have access to pools and therefore have a higher rate of Not knowing how to swim.
Not knowing how to swim.
Let's just call it that.
And so that's what swim literacy is, and it's trying to narrow that gap.
And that site was selected for that.
There's a Schools to Pools program that I hope we can keep engaging with PPS, because in David Douglas School District, one reason they have a much higher swim literacy rate is because the students do a PE class called swimming at their So Portland, working with our school system, can do swimming lessons called PE with their elementary schools.
And that site was centrally located around the entire catchment area for the Roosevelt cluster.
And then you have Dishman that's more centralized to the Jefferson and Summer Grant.
So we have to think of it as a system to improve swim literacy.
And that's one of the main drivers of this goal for that pool.
It's a system that spans multiple agencies.
Thank you.
Thank you.
So I just wanted to bring it back to some of the original intention as we're in the budget aspect of this.
I think it's important to remind our colleagues one reason we're here is because our bread and butter revenue for general fund is way down.
Our business taxes, licenses are flat.
And our property taxes, no matter what your opinion is of this, the commercial buildings downtown's value have gone—.
Unidentified speaker
Down.
Thank you.
Down considerably.
So we have less revenue coming into the city and the county.
That's our reality.
And so we have to keep figuring out how to provide a city that attracts currency so that we can start to see our general fund come up.
And we can't tax our way out of this, but we can, we can continue to provide a place that attracts people that want to live here, invest here.
And shamelessly visit.
Like, thank you to all the people who are here from all the different universities across the country.
We're like having a really good weekend in terms of collecting revenue.
It's one of those moments where you wish you could do a temporary sales tax for restaurants.
It's called the tourist tax.
'Cause I always feel like in the summer and moments like this, we leave so much money on the table compared to other cities.
Okay, that was a colorful thing to say that I'm was not in my— obviously in my text, so I better stop.
It's spring break time.
All right, be bold, be creative, impress us.
Thanks.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Ryan.
Councilor Green.
Unidentified speaker
Thank you.
I'll, I'll be brief.
Um, I want to weigh back in on the conversation around bonds, and I think I just want to clarify that— I mean, I think if the choice is between not issuing the bonds and paying for A and issuing the bonds for paying for A, always don't issue the bonds.
Like, just pay for A. I mean, that's obviously a better proposition to make.
I think where I get concerned is, are we going to not do other important things because we're making trade-offs with scarce current resources?
And I think in the context of PBOT's revenue challenge, context of just the broad affordability discussion that we're thinking about, We hear over and over and over again that Portlanders are leaving the city because they can't afford to be here anymore.
Utility rates are a big part of that, or at least that's what I hear from my constituents.
And so if we're able to ease that a little bit, to send a signal that we, we do care about giving folks a break right now and they don't leave, that is a boon to our growth.
And the scholarly research in urban regional economics is very clear that when you have a density-focused growth regime, that your cost per unit of delivery of infrastructure declines.
So that's an economy of scale.
And so I think I get concerned about growing our way out of it, as Councilor Pirtle-Guiney had raised.
I mean, it's a really legitimate concern.
If we don't have a growth regime that sets us up to have dense growth, And we're growing it in a very tepid way, very slow way, and we're just kind of pushing out at the boundaries, then I'm not sure you get that economy of scale.
And you probably do match your costs with your growth, and that's scary.
And if we don't grow at all, if we're just flat, then that debt overhang is— that is the doom loop, frankly.
That is what cities— that's the Detroit example.
I think that's what people are really worried about when we think about the debt.
Thank you.
So, you know, at the end of the day, if we choose Scenario 1 or Scenario 2, it's probably not going to make a huge difference one way or the other.
I just needed to name that $900 million over 20 years in interest is not as scary as it sounds when you think about— or I should say 40 years— when you think about the opportunity that we have to climb out of this trough we're in, in a very robust growth climate.
Thank you.
Thank you.
Unidentified speaker
Because we've set the right land use policies in place.
That's the opportunity ahead of us.
And I think we're actually trying to go in that direction.
This council may be the most pro-growth council in a long period of time.
I think $2 on an average utility bill is probably not going to send the price signal to make a difference one way or the other.
So it's a really rich conversation to have.
But I think I didn't want to miss the moment to name that People who study this and publish in peer-reviewed journals do find that when we let our cities grow more densely, then our cost per unit of infrastructure delivery declines.
That's what we want to do.
That's, that's where we want to go.
And I think the city of Portland will have a challenge because we have— we've got a pretty low-density city, and we do have the infrastructure deficits in East Portland that will take a long period to catch up.
I think that's a good point.
And so even if we were to upzone and grow in East Portland, we're going to have that lag.
And that might be what you're worried about, Councilor Pirtle-Guiney.
I'm worried about it too.
And so, you know, I'll wrap up my rant here by saying that our ability to issue the bonds is going to be a function of creditworthiness, our willingness to raise rates when we have to raise rates, and what our overall asset and liability picture looks like.
And so if we're a growing city, it's not a finite resource.
Right.
Like, that will scale with the size of our city.
So, uh, I'm grateful we can have this conversation.
There's some critical voices up here, so, um, I'm going to leave it at that.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Green.
Councilor Novick.
Unidentified speaker
Thank you, Mr. President.
Um, on the proposed parks cuts, um, I think that the, the biggest chunks of parks expenses are maintenance of the outdoor parks in particular and operation of the community centers and other places where kids go to play.
Facilities.
And I was wondering if you looked at another cut package that focused more on reducing operations of facilities, or is there some accounting thing where we rely on the levy more for that than general fund?
So I think that some of the reductions that are being considered that Deputy City Administrator Dhanapal spoke about earlier speak to some of those services rather than rather than maintenance.
But I think you're right.
Those are— you've identified the, like, the main costs associated with delivering service in parks.
Director Szymanski, did you want to elaborate on that?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
I'm just in the wings.
Unidentified speaker
Okay.
Yeah, because I just— I mean, I think that it might be reasonable to sort of look at 2 approaches.
One, cutting back on maintenance.
2, Cutting back on operations.
And we could see what the what those would look like.
On PBOT, first of all, Director Williams, I'm glad to hear that we've increased the number of parking enforcement officers because it was Bob Dylan who said in Subterranean Homesick Blues, don't follow leaders, watch the parking meters.
I wanted to ask a question that Councilor Kanal and I were talking about earlier today, which is— and I will recite my favorite grim statistic that It would take an additional $40 to $50 million a year to keep our streets of citywide concern in their current mediocre condition.
And what we were wondering is, can you break the streets of citywide concern into kind of like categories?
Like, could we say, here's what it would take to maintain the streets that would be absolutely terrifying to lose, and here's what it would take to maintain the ones who'd be worrying to lose.
Here's the ones who would take the ones with the sound like Break it into streets of citywide terror, streets of citywide worry, and streets of citywide concern.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Yes, we can do that.
4,410.
Thank you.
Unidentified speaker
I think that'd be really useful as we get into the tough conversation and talk about how much goes to maintenance, how much to other things, and what are we maintaining.
Thank you, Mayor. The Portland Metro system is a complex and complex system.
Happy to provide that.
Unidentified speaker
Thank you.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Novick.
Councilor Avalos.
Thank you.
All right, well, um, yeah, I want to start by saying I really appreciate the line of questioning that we've heard today.
I think that, uh, my colleagues have done a strong job at surfacing the trade-offs and the pressures that we're facing.
So instead of repeating all of that, I just wanted to take a step back and add my voice to talk about how I'm thinking about the budget and the values that I'm bringing into it, especially speaking for East Portlanders.
So, um, I think ultimately that this is a reflection of what we believe Portlanders deserve in their daily lives.
These, um, assets, these programs, these are all things that make a city in a lot of ways.
And so what really stood out to me in the presentation is the scale of the challenge, right?
We're managing $77 billion in assets.
We've got a $14.2 billion maintenance backlog.
Our workforce is flat or declining, and costs are rising faster than revenue.
So at the same time, we're being asked to consider reductions that are going to defer more maintenance, reduce service levels, or increase costs on residents through rates and fees.
So to me, this is not just a budget exercise, but a capacity crisis is how I see it.
So I want to be clear about how I'm approaching that.
First, I'll say that maintenance is not optional.
It's safety.
I know you know that, but I think it's important to just elevate that because when we defer maintenance, we're not saving money.
We're just pushing risk forward.
And that shows up as unsafe roads, failing infrastructure, parks that feel neglected or unsafe.
And you know, East Portlanders are feeling All of these things acutely.
And so I want to make sure that we're not balancing the budget in a way that's going to let the city fall apart.
Secondly, parks are not a luxury.
They are essential infrastructure.
And, you know, I fought hard last year for parks funding.
I will continue to do that because in East Portland and across the city, parks are cooling centers in heat waves.
They are safe places for kids and families.
They're one of the few public spaces that people can access without costs.
We know that we need much more third spaces, especially with this economy.
People need more places to go that aren't going to cost them money.
And so what I'm seeing here is this $7 million gap for parks, reduced maintenance, potential service cuts, and that is not a small hit.
I see that as a direct hit to quality of life and public health.
And so I think that if parks are core infrastructure and not something that we cut when times get tough, then I want to see that elevated when we look at this budget about how we're prioritizing those investments.
1,000 years.
Thank you.
Thank you.
Third, we can't balance this budget on the backs of residents.
I know it's difficult.
I know that we have a revenue crisis, and— but I have to speak up for East Portlanders who are already on the brink.
We are looking at utility rate increases, fee increases, service reductions, and, you know, I understand the reason.
I think that there are ways to go about it that can minimize the harm.
And yet I think just everybody is feeling a pinch, and it's important to just name what that looks like and just be extremely cautious about shifting costs onto residents who are just already struggling to stay afloat.
So that's the one of the value that I'm looking at at this budget.
Fourth, equity has to be real, not theoretical.
And we heard that reduction criteria includes looking at disparate impacts, which I appreciate, but those impacts are not abstract.
They're often geographic, they are visible, and they're predictable.
I think that's the key to me.
And because we already know which neighborhoods have fewer parks, we already know which areas have worse conditions, we already know which communities rely most on public services.
And so we should be able to clearly show who is impacted before decisions are made, not after.
So that's what I want to see as we look at the impacts of these cut scenarios.
I want to see clearly who is being impacted so we can make those judgments based on that.
So as we move forward in this process, the things I'm going to be looking for are, are we protecting core infrastructure?
Are we investing in parks as essential services?
Are we avoiding cost burdens on residents?
And are we being honest about who is impacted by these decisions?
Because at the end of the day, the budget is about whether people experience a city that works for them.
We're the city that works.
I think that people are feeling some kind of way about that.
And I don't want this to be a city that is slowly pulling away from our constituents, the people that we serve.
And I want to make sure we're moving in the right direction.
So I appreciate what you're putting forward.
I know that we're in a difficult budget crunch, but I do think that we have a lot of choices.
I think we can be very creative.
I appreciate the way you guys are starting to show that.
And offer options that give us different paths.
And I'm gonna continue to elevate the particular impact on East Portlanders who desperately need the city's services and are often not receiving them at the rate that the rest of the city is.
Thank you for your time.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Avalos.
I have myself in the queue, colleagues.
DCA Dhanapal, I had a follow-up question about the filtration project and specifically the oversight and some of the cost controls you have put— you're putting in place.
You'd mentioned an independent financial oversight committee is something that the Bureau is working on setting up.
Are there other accountability or cost control measures the Bureau is working on?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Absolutely.
I'm gonna call Director Lu to talk to that one.
The Bureau is looking forward to implement several steps to ensure for the accountability and cost control measures, and Director Lu here is here to talk about it.
Unidentified speaker
Thank you so much, DC, Dhanapal.
Hello, Councilors.
My name's Ting Lu.
Portland Public Utilities Director.
So I want to commit everyone that the transparency and accountability is a top priority for us for the filtration project.
I'm currently working with the project staff to evaluating existing measures that we have put in place, and also will soon share a plan for additional independent financial oversight to you all.
Regarding the existing measures I have put in place for the last a couple months.
I want to share there are 3 perspectives.
One is from a contractor perspective, 'cause they are the ones day-to-day going out to the field and doing the construction project.
And that's where I have been requesting a supply chain audit and also a potential price volatility mitigation strategy from contractors because of a lot of equipment and the systems that could potentially go additional price going up.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you.
Unidentified speaker
So we have been requesting that information, making sure to avoid the cost increase as much as possible.
From an internal perspective, I have also refreshed the governance model for the filtration project and having the direct oversight of the project design delivery team reporting to the chief engineer versus previously the program manager to having that technical disciplined approach We have also enhanced internal reporting on project spending, schedule risk, and key milestones, and reporting on a monthly basis.
There is also enhanced project management practices to ensure there is clear timelines and cost tracking moving forward too.
So that's the internal measures I have put in place.
For external communication perspective, I have also directed the team to having a new place for Water Bureau's filtration project, which include additional information on the budgeting, spending milestone progress, and financial projections.
So I envision this will be a work in progress, but happy to share with you all the first, the public-facing website, and getting all of your feedback as we continue moving forward to increase transparency.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you very much.
That's my only question.
Councilor Kanal.
Okay, legacy hand from Councilor Kanal.
Councilor Ryan.
Thank you.
Oh yeah, real quick, uh, Deputy City Attorney Dhanapal, where— what's the status on One Water?
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you, that's a great question.
Um, we are— Public Works has been focused on One Water and unified CIP moving forward, and we've made progress on the One Water.
Um, Director Liu, the utilities director who's been in place for about a couple of months, is working together with the leadership teams of both Water and BES and is looking forward to put together a draft integration organizational chart for the leadership team.
And we will be coming to the Public Works Committee to share that update as well.
We are looking for, you know, one thing I want to reiterate is when we look at integration, one of the first things we look for is cost efficiencies.
And in the One Water space, It's going to take a few years to realize those cost efficiencies, but there are so many, so many important benefits that we would have other than cost, non-cost benefits.
For example, water and PES are trying to solve for their, you know, have similar challenges, rate increases, aging infrastructure, affordability programs.
And they're, instead of solving for it separately, they're looking to work together to solve for those challenges together.
And the teams have already working on multiple of these initiatives together, especially on the affordability front.
So we are making slow but sure progress on it.
Both water and BES are utilities that are heavily regulated, so you want to make sure that any changes that we make in the organizational structure doesn't impact what we deliver or to any of the programs, whether it's capital or operational service that we provide.
And so we are definitely making forward momentum.
In the upcoming few months, we will be coming to the Public Works All right, thank you.
Thank you.
I appreciate that.
I just— I'll just say I think the average person in the public would assume they're already merged because it's all in one bill.
So yeah, thanks.
Third, outside of that major capital investment, inflation in labor, materials, and the cost of internal services is impacting all of us across the city, including our public works bureaus. As a result, operating costs are rising faster than many of our revenue sources. So what this chart really shows is that the public works spending growth is driven by the cost of operating, maintaining, and modernizing the infrastructure that Portland depends on every day. Next slide, please. This slide provides an overview of revenue sources that support the Public Works Service Area. The stacked bars show total revenues for each fiscal year shown on the y-axis, and the colors represent the different funding sources that make up the total. I'm happy to go into the details of each funding source, but in the interest of time, I can skip to the key messages of the Next slide. The key takeaways from this slide are Public Works has a complicated revenue structure made up of multiple funding sources. And the second important point is most of these funds are restricted to specific purposes. As a result, there's limited flexibility to move these resources across systems or bureaus. In practice, what that means is that the funding available in one area cannot be used to solve gaps in another area.
Thank you for your question.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Okay, and that brings us to the end of questions.
Thank you all for your presentation today.
Um, you all may go.
Thank you.
Next, I'm going to invite, uh, CFO Jonas Biery up.
We are going to, uh, discuss about What is coming next, what the process is beyond today.
You may have noticed quite a number of holds on your calendars in the coming weeks, friends.
We're going to spend a lot of time in this room together.
Unidentified speaker
Great.
Thank you, Council President.
Again, for the record, Jonas Biery, City's Chief Financial Officer.
And I think— oh yeah, we've got a presentation pulling up.
Just a few brief slides to help Kind of visualize what's happening.
City Budget Office Director Ruth Levine had to leave kind of unexpectedly, so I'm pitch hitting here.
Owen and CBO staff are here to help out if needed.
What we wanted to do is just take a few minutes to daylight the calendar of kind of upcoming public meetings that are related to the city budget.
These will include moments for additional information sharing, for Q&A, particularly with service areas and bureaus.
Thank you.
And space for Council dialogue.
I just wanna reiterate my appreciation for Council's input and feedback as we're kind of learning together and trying new pathways to make adequate space to support Council decision-making related to the annual budget.
So just to walk through the items here.
So just noting the first, third, and fourth items, The work session on April 1st, the— I'm sorry, the 1st, 2nd, and 4th items, the work session on April 1st, the council meeting on April 8th, and then the council meeting on April 15th are related to the spring TAO, Technical Adjustment Ordinance, which is the current year, fiscal year '25-'26 adjustment.
So we've included those here.
Those are a little bit of a separate but simultaneous track.
Our next formal conversation related to next year's budget, the '26-'27 budget, will be on April 8th.
So the 3rd item there, April 8th in the afternoon.
And so we anticipate that to be an update from the city economist about the general fund forecast, kind of updates on general financial condition in the context of that forecast, and then lots of space for councilors to share input and suggestions for the fiscal '26-'27 mayor's proposed budget.
The next major step in the budget process is that we expect the big old package of the full detail in the mayor's proposed budget will be published Monday, April 20th, which will then be followed by a budget hearing on Tuesday, April 21st.
State budget law requires That the mayor present a balanced proposed budget to City Council and to the public, and that meeting will fulfill that requirement.
I want to pause, kind of divert for a quick second, and just make a couple of notes about budget committee and public testimony.
So you'll see in the way this is presented, and we've heard dialogue at council conversation before about convening as the budget committee.
And so just take this moment to sort of—.
Thank you.
Clarify, there's under state budget law, the capital B Budget Committee, capital B, capital C Budget Committee, is required to meet to do 2 things: to receive the proposed budget and approve the budget that ultimately goes to TSCC.
And we'll talk about TSCC in a second.
Um, the capital B, capital C Budget Committee is not required to do anything more than that.
Those are the requirements of, of that capital, um, capital letter Budget Committee.
But work sessions between the proposed and approved can still be thought of as sort of, let's say, lowercase budget committee meetings.
So you'll see reference to budget committee in the context of those work sessions.
Just wanna be clear with that technical reality that when you actually say words and convene as the Budget Committee, it's those 2 moments.
So hopefully that's more clear and not confusing.
Thank you.
And then once the approved budget is sent to the TSCC, then you're just back to being a normal council from there on out.
And then regarding public testimony, the 2 moments, at least related to the '26-'27 budget, the 2 moments that public testimony is required are for the mayor's proposed hearing on April 21st and then the approved budget hearing the week of May 18th.
We'll talk about that in a second.
And then of course any regular council meetings per usual.
All right, the last item on this first page is— oh, sorry, if we can move to the next slide please.
Sorry.
Yeah, so then the next item here also on April 21st.
So April 21st will be the mayor's proposed hearing.
There's sort of an adjacent moment on April 21st related to the budget for Prosper Portland.
Councilor Dan Ryan.
Sits as Prosper's budget committee, but not as its board, obviously.
So Council's role as it relates to Prosper's budget is kind of twofold.
One is Council is a funder to the extent there's any appropriated general fund that goes to Council via the city budget.
Council adopts, approves and adopts that budget that then sends those resources to Prosper.
And City Council serves as the budget committee to amend and approve the PROSPER budget.
The PROSPER board then adopts that agency budget and has the legal authority to adopt the recommendations of Council as the budget committee.
The next kind of series of things, and I don't intend to go through these all in detail, but kind of the next series of, I think there's 8 work Sessions are kind of the next deep dive.
So kind of what is in the mayor's proposed and more opportunity for council to have additional due diligence and dialogue about that.
We do recommend that the first session, the April 29th session, focus on generally the topics here.
We're kind of more of the central service type functions so that we can get maybe a little bit of Insight and clarity into that so that we can start building the general fund overhead and doing some of the work behind the scenes that will flow through kind of all those rates that flow through the other bureaus and sort of impacts the budget math that will ultimately help us define those trade-offs.
So we would recommend that that session come at the front end.
And then after that, there's some flexibility around how we structure those.
It's certainly likely that things will adjust as we get through it and identify Areas of interest.
We've tried to kind of recommend here a flow of topics that we think kind of generally matches our understanding of expectations, but obviously expect some adjustment there and happy to accommodate those adjustments.
The one note I would make is having upfront clarity about sort of the timelines and plans and expectations is immensely helpful to kind of the humans who are doing the work to prepare for these dates.
And so I think to the extent that we can have a little insight, foresight into what those topic areas will be, I think results in better information for council and for the public to the extent that's possible.
Let's see, next slide please.
And I'm happy to come back to any of the details here, but so a series of work sessions and then the last couple lines here, the week of May 18th will be the approved Thank you, Councilor Smith.
Next up, we have the approved budget hearing.
And a few notes about this.
The approved hearing will be a bit different, I think, than it was last year.
Hopefully it'll certainly feel different, I hope.
Our understanding is that Council President aims to begin the hearing on Monday, May 18th, and please update me if this is incorrect, Council President, but begin the hearing on Monday and then carry it over potentially over the next couple of days as needed.
With the intent of hopefully avoiding, you know, very, very late evenings and exceptionally long hours on any one given day.
But that's, I think, the intent around that.
During that hearing, and we'll probably have more opportunity to talk about this, again, just as a reminder to folks and to the public, but during that hearing, there's sort of a list of steps that'll be required under state budget law for council to do.
City Budget Office will help navigate that.
The key pieces of that will be to discuss amendments to the proposed budget and to take public testimony.
In addition to that amendment conversation, which I'm sure will be streamlined and efficient— pause to let that sink in— in addition to that, 3 key things will need to occur before that hearing ends.
Council will approve the city's budget to send to TSCC, will approve the for budget, to also send to TSCC, and then we'll vote on the utility rate ordinance as regular City Council.
But that'll be a simultaneous action.
We've got kind of a— next slide, please.
And I think this is the last sequence here.
We've got kind of a— yeah, so you can see the continued continuation of the budget hearing to the extent needed through May 20th.
And then we've got a placeholder work session on June 3rd.
If we need space for— to continue dialogue between the approved budget and the budget adoption in June, at least have a moment there.
You've all been through now one round of TSCC, the Tax Supervising and Conservation Commission, sometimes affectionately called Tax Soup.
So that is a required hearing with public members, the commissioners of that body to fulfill the public participation requirements under state budget law.
And so that's actually a hearing of that commission.
Thank you.
Okay.
Unidentified speaker
Of which City Council also participates.
And that date is firmly scheduled.
And then that all culminates obviously in adoption, first reading on June 10th and a vote on June 17th.
Lastly, we just noted is, as it was the case last year and every year, it is critical that we meet that final date and have a balanced city budget so that we can achieve the technical implementation over the last couple weeks of the— of the year.
Month of June and ensure we have uninterrupted city operations on July 1st when fiscal '26-'27 begins.
Thank you, and happy to, in the last few minutes, take questions or move on.
Thank you.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you.
And Jonas, I just want to add on to that, that colleagues, you should anticipate a memo coming from me with detailed information about this, including all these dates.
Yeah, you know, I hope no one was furiously taking notes.
We will share this with all the times and all the Topics, including some additional work that we've been doing with the budget office around amendments, how we're going to track them, how we're going to prioritize them, how we're going to group them.
I will preview for you that I would like to be able to work individually with you to figure out what your priorities are, but also there will be an opportunity for you to demonstrate interest in other people's amendments so that we're not going in blind and assuming that everything only has one And additionally, there'll be some additional parameters around budget notes, making sure that we are using those tools to their absolute maximum rather than what might be better.
So I'm going to open it to some questions from our colleagues.
Councilor Ryan.
Thank you.
Yeah, thank you so much, Jonas.
Mine is actually a plug for parks.
Next week is Spring break.
And so many of us have the opportunity to go away and some of us just have that luxury of never worrying about food.
But I love that parks always make sure that they target our students during spring break and you'll be having free lunch delivery services or no, they come and take it out, right?
At several parks next week, correct?
Unidentified speaker
Yeah.
Thank you.
All right, so make sure that all of you publicize that.
It's a really important service that Parks does every spring break, and I'm delighted that we have enough funds to make sure that this is happening in 2026.
Thank you, Sonia, and your team.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you, Councilor Ryan.
Councilor Kanal.
4,410.
Yeah, I, I didn't have a— can you go back a couple slides?
2 Slides.
Uh, actually, sorry, one forward.
I just wanted to ask if it's possible to, to get Either not through creation of a new thing, but to separate Portland Solutions and revenue generation.
Those are both incredibly big conversations, and I think we're going to run out of time on either of them if they have 3 hours each.
And I think putting them together, I think Portland Solutions is probably the expenditure side that gets the most conversation from the most of us at this point, and revenue generation Obviously it's its own thing that, that may have it.
So just wanted to, to, as you're working through this and as you go from near final to final, just wanted to, to put that plug in there because I think it'll, it'll end up, uh, running out of time pretty, pretty quickly otherwise.
Thanks.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
Thank you very much.
Councilor Kanal.
Thank you.
I, I am, I am curious why they're together.
So do, do either of you want to speak to that?
Unidentified speaker
Councilor, I'll just note I think they're together just under the anticip— that we just have to Puzzle the pieces together.
And so that was a date that was available that we thought there could be space for 2 topics, not because there's any necessary— necessarily any relation.
Thank you.
Yep.
Thank you so much.
Yeah, perfect.
I'm going to be just turning it over directly to DCA Dhanapal and staff.
All right, with that, I am going to adjourn this work session.
Thank you very much.
4:54.