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.
Jamie Dunphy
Good afternoon, colleagues.
Members of the council and the general public, I'm calling to order this work session of the Portland City Council.
It is 2:01 PM on Wednesday, October 7th.
Colleagues, welcome once again to the budget, the topic that never stops giving.
Uh, we're here today to kick off our discussion of the Fall Technical Adjustment Ordinance, known colloquially here as the Fall TAO.
Uh, to preview briefly the process ahead, the fall supplemental budget has been filed and is referred to the Committee of the Whole.
As with all items referred by my office, it is visible to councilors and the public on the council documents page.
Today's work session is intended to do the major informational work.
By the end of today, we should have a strong shared understanding of the goals and the content of the TAO as proposed by the administration.
In these 3 hours, staff will walk us through the ordinance as well as discuss and ask questions in preparation for the detailed work that will happen in the Committee of the Whole.
Next week, we will take the item up in committee.
The committee is the place— is the time and the place for us to debate and adopt any major amendments to the ordinance authored by councilors.
Assuming that ordinance passes from committee, we will have agenda time held on the last 2 weeks of October in full council for the first and second readings.
This is intended as a time for smaller tweaks and changes in response to public testimony on the document that has come out of committee.
As I've said many times in this room, one of the most important stories of the first 2 years of the budget process under the new form of government is the steady transition in how documents that become— that come before council are developed before we see them.
A lot of last year's fall TAO process was spent in discussion about carryover encumbrances.
Bureaus still basically had latitude to set their own terms as to what was encumbered carryover and what was not.
As we'll hear early in the presentation, the encumbrance policy has been tightened.
We are slowly and continually moving this city government from a basket of quasi-independent bureaus to a single government.
We're not there yet.
There will be more problems, and we are absolutely going to talk about them.
But I think it's a good sign that the problems of this year are not the same problems we had last year.
Okay, enough fellowship.
CFO Biery and Budget Director Levine will be walking us through this presentation today.
The presentation is in 3 parts.
We will take a break midway through the second section around 3:30.
And if and when we get to the budget calendar, I'll offer some additional framing and an update from my office.
With that, Jonas and Ruth, take it away.
Jonas Biery
Great.
Thank you, Council President.
For the record, Jonas Biery, Chief Financial Officer.
And thank you for the tee-up regarding what we expect.
And yeah, just to lean into that, you know, we're hoping that this space is really providing a preview for you of some of the key information.
And opening up some of that initial dialogue so we can hopefully make more— most efficient use of our time at Finance and Governance Committee next week, and then ultimately the 2 council meetings at the end of October.
Thank you, Council President, for teeing up some of the improvements that we've talked about.
And we can skip ahead one slide, please.
Really glad to have those recognized and wanted to provide a little more context about those to frame up some of those process improvements.
Thank you.
Ruth's going to talk about the numbers in details, but really wanted to highlight some of the upgrades that will emphasize sort of the broader conversations we're having around better analysis and quality of information, improving transparency, and aligning to initiatives that we've talked about recently in the context of financial stabilization.
I believe that all of these improvements are consistent with feedback and requests we've heard from councilors, including some dialogue at this morning's council meeting.
Thank you.
Regarding consistency, predictability, and transparency.
Those are values that we share and hope to continue prioritizing.
So greatly appreciate council support as we continuously improve our processes.
The key upgrades in this package in the fall TAO that you'll be considering in the coming weeks.
The first is doing this work earlier and making more space for dialogue with you.
The second, compared to recent years, we're expanding and enhancing our reporting on prior prior year fund balances and on contingencies and reserves, and we'll have some detail on that.
In this fall TAO, we're taking leadership to recognize reserves in alignment with new guidance from the Department of Revenue.
This change will also align with our own prior discussions on improving information regarding reserves, and it's included a robust citywide review of all contingencies and reserves.
Ultimately, this is a huge transparency improvement, really a big level up and will be, I think, very, very helpful in the future and responsive to some difficult conversations we had in the past so that we can more properly categorize information as contingency versus reserves and be more clear about what those reserves are actually intended to be held for.
And we'll share more detail about that.
The—.
The TAO package also includes creation and formal implementation of a business license tax stabilization reserve and the associated policy with that, which is in response to a fiscal 26-27 budget note and is also in alignment with the financial stabilization recommendations and actions that we discussed a couple of weeks ago.
With a budget as large as the city's, there's always going to be a lot going on within the line item details, and we're certainly happy to share every single one of those with you.
However, I do want to observe that with the exception of some kind of large net-zero packages related to the reserves reclassification I just mentioned and related to organizational realignment, generally this is a simpler and smaller fall TAO compared to prior years.
And I think that's by intention and design and responding to some of the feedback that we've heard and tried to manage through our budget system.
Council President mentioned encumbrance carryovers.
That's received a lot of airtime.
As a result of that feedback, we've instituted a much more kind of restrictive expectation around how encumbrance carryovers are used and a much more robust analytical process related to requests that do come forward.
And so that improvement has limited the amount and volume of encumbrance carryovers compared to prior years.
And so we'll share those details as well.
Lastly, generally, This fall TAO continues the city's movement towards financial stabilization.
I do expect we'll still be facing a budget challenge in fiscal '27-'28, and we obviously can't be complacent about the work we have remaining in fiscal '26-'27.
But the big picture today will show that we're essentially on target with the adopted budget, and that's a massive improvement from where we stood at this point a year ago.
Budgets are inherently complex, can sometimes be arcane, and budget conversations are rarely easy, but I did want to just take a minute and kind of set the tone to emphasize the effort that's been made and will continue to be made to shift away from some of those challenges of the past and move us towards an environment of transparency, confidence, and trust.
All right, so Council President previewed the agenda.
Yeah, you can skip forward.
Thank you.
So kind of 3 sections.
The first will be the prior year reporting.
It's an area where we've heard requests for additional transparency.
We agree with that.
So I want to take some time to walk through some of the details around the the priority reporting.
Second will be to talk about the proposed actions in the fall TAO, the adjustment ordinance itself, which includes some technical adjustments and a small amount of more discretionary items.
And then we'll move to talking about a budget calendar.
And just noting that the budget calendar, as we get there, processing calendar conversation does reflect the feedback that we heard from you all in the September 10th work session around process improvements.
Thank you.
Jamie Dunphy
And colleagues, I'll just note there's a dedicated time for Q&A, so I will not be having folks interrupt.
Please hold your Q&A until there's time for it.
Jonas Biery
So great.
Yeah, thank you, Council President.
Yeah, we do intend to have a little space after each section, so because they are kind of discrete topics to some degree.
All right, so let's dig in.
Wanted to start officially with a reminder of kind of what the fall TAO is and why we do a fall budget adjustment.
The first rule of a mid-year budget adjustment is to maintain continued compliance with budget law and with city policy.
Mid-year adjustments are allowed for urgent or unforeseen expense adjustments, to reconcile fund balances, to adjust contingencies, and et cetera, to match beginning fund balances, to align expenditures to city policy, and in limited circumstances to make other changes.
The fall TAO is an important moment to review prior year actual expenditures, which are now known now that the fiscal year has ended and we've been able to do that work, and to understand why those amounts have changed and how those changes relate to fund balances and other potential decisions.
So the first topic is prior year reporting and updates on contingency and reserve amounts.
Why do we do prior year reporting?
It's a best practice to track, monitor, and report on budget spending and status.
And while reporting and monitoring of budgets has gone through sort of peaks and valleys at the city over the years, where sometimes we've done a little more robust work, in recent years done maybe a little bit less, we're currently working citywide to improve the budget monitoring process, to improve the reporting cadence, And also to ensure that that work is being done in a consistent and coordinated manner that can be sort of strategically implemented citywide rather than being maybe more ad hoc and inconsistent as it has been in the past.
Improved budget tracking and reporting is also responsive to a prior budget note, I believe, Mario 3 from '25-'26.
The budget monitoring detail that we're going to talk about next also provides context for why specific TAO adjustments may occur and helps illuminate why we need to make those changes to remain in budget balance and compliance.
Lastly, priority reporting can help inform future decision-making.
For example, if we observe underspending occurring every year in the same or similar circumstances, that may indicate that we actually need to make a change in what we're budgeting for.
And so that's another important outcome.
And then before I hand to Ruth, just a couple of caveats.
First, you know, we're a large and complex organization.
Financial data changes every single day as we make payments and receive payments, and data can often be messy.
Actual expenditures differ from expected budgets for many reasons, and those reasons can sometimes not be super clear.
And so that's part of the broader process improvement, both to make that clear in the initial budget adoption and to make that clear in ongoing reporting and to make that clear, of course, in these moments of adjustments.
That sort of real or perceived obscurity also makes clear why moments like this are really important so we can have transparent communication and dialogue about what's happening.
The second caveat is that it's not unusual for fund balances to change.
We actually would expect that they change.
They—.
We typically would expect that they would actually increase, that fund balances would increase, i.e., be underspent, rather than decrease, i.e., be overspent.
We don't want overspent budgets.
We do want underspent budgets.
That is why often we have additional fund balance that requires adjustment.
That exists for a variety of reasons, all of which are healthy.
Conservative forecasting, as I mentioned, which might mean revenues are coming in higher than expected, intentional efforts to reduce or eliminate costs, and then potentially program delays, which might be either anticipated or unexpected.
So with that kind of tee-up about why we want to talk about priority reporting and why I think you'll be interested in it, Ruth is going to move to doing kind of a hypothetical explainer about fund balance, And then get into some of the actual numerical changes, importantly including contingency and reserve information.
Elana Pirtle-Guiney
Great.
Unidentified speaker
Okay, so I'm starting way at the beginning here.
I just thought this was helpful because this is a confusing topic even for those of us who do this professionally and do it every year.
So I just, I thought maybe for the public this would be a helpful thing.
So this is a very simplified hypothetical example that's sort of in some sequential slides here to demonstrate why these true-ups are necessary and how they work.
Um, so in this example, we're starting with a prior year budget.
Obviously, in this case, this is '25-'26.
Um, revenues and expenditures are balanced as is required.
There are program expenses, all the stuff we pay for, and there's contingency.
Um, as Jonas mentioned, We, you know, typically per financial policy, we sort of are conservative in forecasting both our revenues and expenses.
So in this hypothetical example, the revenues come in a little bit higher at the end of the year than they were budgeted to, and the program expenses come in a little bit lower at the end of the year than was budgeted.
Mm-hmm.
And, you know, this, as we said, this is not an uncommon occurrence.
In reality, but it's not the only situation that could arise.
In order to maintain balanced budgets and for accounting purposes, the funds, the revenues and expenses have to equal at the end of the year.
That gap between the actual revenues and actual expenses is made up by actual ending fund balance.
That's the term.
Okay.
So now we move to the next year.
And as a reminder, you don't know what those actual numbers are typically for us until mid-August sometime, right, until after the fiscal year has closed and we're able to do all of those accounting true-ups and the like.
At that point, we have already adopted a budget, obviously under law.
And so we don't— at the time of the adoption, you don't know what that ending fund balance is.
So in this example, you've got a little bit more revenue and a little bit more expense.
Yeah.
In the current fiscal year than in the previous fiscal year, and they're both balanced.
Now we come to the fall and we have to recognize that ending fund balance that appeared in at the end of the fiscal of the prior fiscal year and add it to our budget.
In this case, it's a, it's an increase in the during the true-up.
And as you can see in this example, so increases, that becomes what's called beginning fund balance, which is a revenue.
Okay.
Because it's extra resources, essentially.
And that has to be matched on the expenditure side by something.
In this example, it's matched both by an increase in both program expenses and contingency, as an example.
I note that this is a simplified example, although it's not an uncommon one.
But a couple of things.
The sort of true-up of ending fund balance and the expenses, the change in expenses is rarely kind of one-to-one when you get to the fall, right?
First of all, it could be split between program expenses and contingency, and there's often other stuff going on.
There might be other revenues changing, other expenditures changing.
So it often can be a little confusing once you get to the numbers in the fall.
We will, however, as part of this presentation, be going through the specific fund balance adjustments for all of the funds.
Thank you.
And providing a spreadsheet after today that has all of the details about the contingencies and reserves.
So hopefully that will make it a little bit more transparent and that this explainer will help you to make sense of those numbers.
All right.
So, and just to really hit home on this, Why do we update the fund balances?
So why can't you just leave the ending fund balance there?
You have to reflect all of the city's resources in the budget.
And then what does it mean?
I touched on this a little bit, but what does it mean to update the fund balances in the fall TAO?
Does it mean there's new money?
Sometimes it does and sometimes it doesn't.
So I gave a couple of examples of how this could play out differently.
These are not the only 2 examples, but— In one example, there's kind of a multi-year capital project that results in fund balance in year 1 because the capital project wasn't completed, and maybe that was even planned to not be completed in the first year.
Those expenses then travel with the revenue that becomes beginning fund balance.
The expenses, the obligation travels to the next fiscal year as well.
So there may not be another dollar available.
It's just the same work that's moved to the next fiscal year.
Fiscal year.
In the second example, it does result in new resources because, you know, again, maybe this is— we've got a volatile revenue stream, we've conservatively forecast it so it comes in with excess revenue.
There may be some new revenue available that we, you know, having closed the fiscal year, know came in.
There are numerous other ways that this could play out, but just to kind of highlight that.
And then what happens to those fund balances?
Well, Council obviously has to appropriate and make the decisions about all of them.
There is financial policy in some cases, and we're going to talk more about some of that later in the presentation today.
So the next slide looks at general fund ending fund balance and budgeted beginning fund balance over time.
So essentially the same as those graphs I just showed you in the hypothetical example, but the actual general fund numbers over time.
And let's see, a couple of things to note about this.
So the difference between the blue and the yellow is what you're sort of truing up in the next fiscal year.
It's not the case, though, that the entire gap is sort of available because there are some required adjustments that have to be made, and we'll talk more about those for this year later in the presentation.
The other obvious thing to note here is the shape of this graph is unusual.
I think the— and kind of raises questions about why it is.
And the big reason is there was sort of a bump in the snake, I guess, in fiscal year '22-'23, because you can see that really big gap in '21-'22 immediately post-COVID.
That created a whole bunch of one-time resource that we've talked about a lot as kind of the fiscal cliff.
And it took several years to work through that, right?
The more one-time you have allocated, the more is likely to carry over into the next year for several years in a row.
We're now back down to sort of below our pre-COVID numbers on this.
For this year, part of the reason beginning fund balance is so low is because we actually dipped into our contingencies during '25-'26 to make it through the fiscal year.
So often part of beginning fund balance is contingencies that once we get to spring, we say, great, we didn't need this, we can put it into next year as beginning fund balance.
We didn't have much of that this year, and so that's why we're kind of historically low in the current fiscal year.
And I will talk more later in the presentation about what that means for the fall TAP.
General fund returns.
As Jonas mentioned, we did a bit more prior year reporting than we have with bureaus in recent years, particularly around the general fund, to look at essentially where was their underspending.
This slide rolls all of that information up general fund-wide because I didn't have time to go through all 26 bureaus with you.
But we do have additional information, and if there are specific questions, we can come back next thank you.
I'll be back next week to answer them.
But essentially what this shows you is 2 kinds of general fund returns, one from last spring.
And so you can think of this as like true underspending.
Like it doesn't have the revenue side of the picture.
It's just the expenditure side of the picture.
How much less did we spend than we had originally budgeted for?
So $6.5 million was So the $14.8 million was sort of returned to the general fund in the spring, and then looking at the discretionary portion of the kind of the end of the fiscal year budget to what happened— sorry, the last revised budget to what happened at the end of the fiscal year in the general fund, that was $14.8 million.
Of that total, $4.6 million is proposed to be carried over through encumbrance carryovers in the fall, and we'll talk more about that.
Thank you.
Loretta Smith
Yes.
Unidentified speaker
And we'll talk about that number later today.
But the net result of all of that is $16.8 million in what I would call like true general fund underspending.
A couple of things to note about this.
That is out of a total general fund allocation number of about $875 million.
So it's less than 2% of the total.
So that's one thing.
Okay.
Which is kind of roughly what I would expect.
Another thing is it includes $6 million of contingency that wasn't drawn, which includes $4.3 million that we budgeted as beginning fund balance.
That was from the housing ordinance that happened in the spring last year.
And then the other roughly $11 million is split between personnel vacancy savings and external materials and services underspending.
Both of those on some level I think can be tied to directions to restrict spending from the city administrator last year.
There was a hiring freeze in place, so that certainly resulted in some vacancy savings.
And then there were directions to, you know, reduce contract spending.
And we have more details on all of this and can provide additional during Q&A.
I have some of it handy, and then we can also provide more details in spreadsheet form after today.
But I just wanted to give you sort of the high-level view of this kind of prior year reporting that we completed in the general fund.
All right, and then outside of the general fund, in terms of fund balance adjustments, this slide shows you the biggest ones by dollar figure in terms of that difference between what was sort of expected, what was budgeted, and then how did it actually end at the end of the fiscal year.
And you can see it goes in both directions.
Some of them are a reduction and some of them are an increase.
In fund balance.
I'm not going to go through each line on this, but as I mentioned earlier, the— we'll provide a full spreadsheet on the contingencies and reserves.
And then exhibit 2, which is posted with the ordinance, has all of the appropriation changes, and there's for every single fund.
And so there's more details on every fund, um, in that exhibit once when you see that.
A couple of things to highlight here as well.
You'll see a lot of these relate to capital and debt financing, and that's pretty common.
A lot of the big swings in fund balance result from these multi-year capital projects or from debt financing, which obviously has multiple technical entries involved in multiple funds where the funding comes into one fund and then gets dispersed out to other funds.
So one delay in the— in a bond issuance has a big swing, um, in this case for multiple funds in the city.
Um, and then PSF at the bottom is the sort of multi-year projects, um, where the funding is carried from one fiscal year to the next.
All right, we're going to switch topics a little bit.
The next section of the thank you.
So the next presentation is on contingencies and reserves.
And as I sort of said, this is connected in some ways to the fund balance conversation, but it's also a distinct topic in and of itself.
And we're recommending a change in how we're budgeting this.
And so I've asked Allegra Wilhite, who's the Executive Director of the Tax Supervising Conservation Commission, to come.
Here she is.
So she's going to tee it up, and then I'll go into more of the details.
All right, good afternoon, councilors, city administrator, and mayor.
I'm Allegro Wilhite, and I'm the executive director of the Tax Supervising and Conservation Commission.
You may remember that I get to see you all once a year.
We're part of your budget process, as we are for almost all of the taxing districts here in Multnomah County.
So Ruth has talked a lot about some very wonky budget things, and I get to talk about even wonkier budget things.
So, so excited to be here today for that.
City staff had asked if I could come and provide a little bit context on one particular aspect of the TAO that you're hearing about today.
The intent for me to be here is just to provide a little bit of insight into the larger perspective of Oregon budget law that we're talking about here and why you're seeing certain proposed changes.
So the fall TAO includes moving some budgeted contingency funds to the budget category of reserve for future expenditures.
And in Oregon budget law, there is a clear definition and distinguishment between contingency and reserve.
Loretta Smith
Yes.
Unidentified speaker
Though in practice, some local governments have used the terms pretty interchangeably, and I would say generally speaking, the public and for most folks, it all means the same thing.
Oregon budget law is quite explicit about these being different definitions for different flavors of money.
So I think, Ruth, you might have a slide that kind of breaks it down, but I'll say from sort of the simplest way to think of it, I think, is that contingency is defined in law as So the example that I use when I'm giving trainings on this is that maybe, you know, you're going to have some kind of weather event every year.
You don't know what it's going to be, so you put money in contingency.
You know you're going to spend it, but you don't know if it's going to be purchasing materials and services for sandbags because of flooding, or if you might need that money for personnel services to enhance fire services because of wildfire encroachment on the city.
Jamie Dunphy
Councilor Smith.
Unidentified speaker
Right?
You don't know, but you do know you're going to have to be spending something.
So those funds go into contingency from budget law.
Now, there are other things that we know that we're going to purchase, but it's not going to be in the current year.
It's going to be further out.
Another example is a fire engine.
They're really expensive.
We usually have to save for years, right, to buy one of those.
So we might know we're going to buy a fire engine in fiscal year 2029.
So we need some reserves for that, but we're not planning to purchase it in the current year.
Right.
So I'm looking up to see what your slides are here.
Yes, you've got that not anticipated, which again, I think is kind of that clear thing.
Another piece that's important to understand, I think, about the reserve for future expenditures piece is that if that purpose comes up sooner, let's say there's a big sale on fire engines and you can get one for half off this current year, great.
You can actually still access your reserve for future expenditures even though it was planned for fiscal year 2029.
Okay.
Because it's the same purpose.
So that's another way in which it's different from just like fund balance that's sitting there and you can't spend.
You can do a supplemental budget if the purpose for that money comes up sooner, if there's another opportunity.
So as decision makers, I think that's important for you to know.
So in terms of how we got to where we are now, as I mentioned, many local governments would use contingency and reserves somewhat interchangeably and use contingency as an overall savings account.
I believe one of the reasons for this is because it wasn't explicitly stated in budget law that you could have a reserve for future expenditure in any fund.
It looked like it could only be in reserve funds, and so people kind of ignored it and didn't use it very often.
We actually were having conversations with many different districts about this, this very issue this last spring, and so we went to Department of Revenue and said, can we get some clarity on this?
And their guidance back to us was, it's not forbidden to use it in other funds, and so you can.
So given that, we have updated our training and our guidance to say, let's take advantage of this definition of this tool in our budget handbook to be more transparent and clear about the flavor of this money.
And so that's what we're talking about here with reserves versus contingency, is the opportunity to have more transparency about exactly what those funds are committed for and how you're planning on spending them.
Thank you.
So from a budget law perspective, I do see this change as better aligning with the legal budget law categories as well as providing improved transparency.
Great, thank you.
I'll let you talk about the specifics.
That's the—.
Yeah, the wonky budget law stuff is done.
Yeah, stay for questions on this section.
We'll go to questions, Q&A on this section in a few slides.
So, um, so yeah, so as Allegra mentioned, um, the fall TAO includes actions to make this shift for a number of different funds.
Um, and this slide kind of aligns with what Allegra just laid out.
And then at the bottom, it states that the total change that we're recommending based on this guideline, these guidelines, and our review with bureaus of all the different contingencies and reserves citywide the total change is $1.08 billion.
So that is $1.08 billion that would shift what is currently budgeted as contingency but would become budgeted as RFE, as reserve for future expenditure, to improve that distinction and transparency.
And the next slide has a little bit more of a breakdown of what that looks like across the different funds, but I do want to hit this thank you.
I want to make this point clearly because it will be significant because it is still sort of in the budget, but it is not appropriated.
And so importantly, when we report out the number of our total budget that is appropriated by City Council every year, it will be lower by $1.08 billion as a result of this change.
And so we're actually going to put out a press release about this next week and have it clearly on our website so that So when it's in the press in the spring, we can point back to this explainer and this moment when we said, this is why we're doing this.
And it will look funny when we run the year-over-year numbers as a result of this change.
But sort of separate aside on what numbers are the most useful to look at when we're talking about total budget, but for this purpose, that is one of the reasons we wanted to do it.
Jamie Dunphy
Councilor Smith.
Unidentified speaker
To highlight that.
This slide, I couldn't list every fund for space, but these are the largest shifts by dollar value.
The biggest one is PSEF, and again, this is just because they have a clear 5-year spending plan.
And so rather than having the entire amount for that 5-year spending plan that's that's outside the current fiscal year.
In contingency, it splits out.
It remains— there's a significant amount that remains in true contingency, and there is an amount, about $300 million, that is for future fiscal years that moves to reserve for future expenditure.
And as Liger was saying, if for some reason council wanted to make a decision to pull some of that forward, you could still access that money and pull it forward.
It's just differentiating between the 2 different purposes of those funds.
Thank you.
I won't go through each of the others, but, you know, they're some of the biggest funds in the city, so it's kind of no surprise that they have the largest contingencies and the largest shifts.
A lot of them also are capital funds that do a lot of capital investment, and so they have these large multi-year projects that, you know, and they have capital replacement needs out in future years.
Thank you.
This again, all the detail will be provided to back this up, and those 23 other funds that are added together at the bottom will be broken out.
Okay, that is the conclusion of the slides for the first section, so we can do Q&A.
And maybe if you have questions on the contingencies first, we can do that.
Jamie Dunphy
Absolutely.
Colleagues, feel free to jump into the queue if anyone has any questions about this section.
Prioritizing our time around contingencies.
Oh, Councilor Smith, there we go.
Loretta Smith
Thank you, Council President.
Thank you all for, for giving this, um, presentation.
And in terms of the encumbrances, uh, we had $4.5 million In encumbrances?
I thought the encumbrances were not outside of the budget, that they were already in the budget with existing money from the previous budget or the existing fiscal year, and that they don't get paid for out of contingency.
They get paid for out of the money they already have because we thought that they were going to pay the whole thing.
Yeah.
If, if our expectation is what budget law says that their expectation is that it's going to be spent in that fiscal year.
Right.
Unidentified speaker
So, um, the encumbrance— I'm going to come back to the specifics behind that $4.6 million in the encumbrance carryovers later, but it is not funded out of contingency.
So basically, the, the sort of example scenario is you have a project— say we had a project last year and we were paying bills up until the end of the fiscal year.
There may, in some cases, there's a certain amount left over from their budget, and these are general fund bureaus, right?
So if we didn't pull it forward, it would fall back into the general fund.
There's a certain amount left over from their budget, not from contingency, but from their external materials and services budget at the end of the fiscal year.
And they had to keep it open, essentially protect that budget because they might have had bills come due in June.
And so that's the scenario where they're pulling the money forward.
But it is, it's external materials and services money that would appear as underspending.
And then they're saying now this fiscal year, actually, we need that underspending from last year to pay for that project this year.
But we'll talk more about the details of that later in this presentation.
Loretta Smith
And so that's considered an encumbrance?
Unidentified speaker
Yeah, the encumbrance is the, um, is the sort action within the fiscal year to sort of hang on to the budget for a contract, right?
That's the part that's—.
Loretta Smith
So for example, I had a— oh, it was a $30 million spend for software and some other fees that were associated with software.
And I set that aside with my '25-'26 budget.
And when we were going into this new budget, they said it was going to be This can be encumbered because you started this in this fiscal year.
So my thought was that, that, that money that I had set aside, that that automatically comes over or set in a different pot that's encumbered, and it has nothing to do with the money that I have for this fiscal year.
You just take it out of that other pot that we set aside.
Yes.
So this is really confusing to me because it sounds like if you've had any, um, if I had any, uh, unused monies, that that money is going to be used instead of the money that I thought was being moved into a separate pot of money that of my encumbered dollars from the current fiscal year.
Jonas Biery
Councilor, let me try and see if I can shed some light on it.
'Cause I think there's kind of 2 different things that are happening.
Loretta Smith
There's bureau money and then there's—.
Jonas Biery
And they're overlapping, right?
And so the first is in your example of $30 million.
$30 million is sort of budgeted, encumbered, expected to be spent in this current fiscal year.
And we thought we were going to spend $30 million and we only spent $25 because the project didn't get delivered by June.
So there's $5 million left unspent that we want to continue into the next budget.
So it's the same kind of dollar.
We're not having it come from a different pot.
We're saying we had this $5 million remaining that we didn't spend.
We know we need to spend it next year.
Let's take that encumbrance and carry it over to the next year.
Okay.
Separately and simultaneously, we're making adjustments to total fund balance, which lead— the hypothetical example that Ruth gave— that leads to potential changes in contingency.
So I think there's two— if I'm understanding the question, there's sort of two things happening simultaneously.
One is the encumbrance carryovers, which again we're going to talk about in a little more detail and separately, but simultaneously the math around the change in contingency and fund balance.
So another way to think of it is if we had in that example, that $30 million example, if we said We do need to carry some money over, but we only need to carry $4 million.
We don't need the full $30 million.
Now we only need to spend $29 million.
So we're not going to carry— we're not going to do an encumbrance carryover of $5 million.
We're only going to do an encumbrance carryover of $4 million.
And that's some of the analysis that we've really done more deeply is to make sure that those encumbrance carryovers are accurate and needed.
In that example, there's $1 million left, right?
So that $1 million in theory—.
That's not true.
Would move to fund balance and become a consideration for the future year.
Loretta Smith
Right, right.
Thank you.
Jamie Dunphy
Thank you, Councilor.
Thank you, Councilor Smith.
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Council President.
I appreciate this overview of what's changing between contingency and reserves.
I just want to make sure that I understand what I think were more straightforward pieces of contingency and reserves and whether they staying in their current categories or not.
So money put aside for cost overruns on a construction project, that continues to be contingency?
Unidentified speaker
Yeah, I think by and large, unless it was set aside for— unless you wouldn't— you're not going to know about it until 3 years out and you're waiting until that 3 years out time to assess whether you need it.
But yeah, I think generally, like We're doing a construction project right now.
We don't know exactly how much it's going to cost, so we've got a little extra in case it goes over.
That would stay in contingency.
Elana Pirtle-Guiney
Okay, and then I'm gonna use a very imprecise term, but I'll say true what-if contingency.
So the BLT fund that's set aside, the percentage of our budget that through our budget policies we set aside Every year, those what we have called contingencies in the past, are those still contingencies?
Unidentified speaker
Yeah, the only real shift of those sort of regular kind of general fund contingencies is we've had a confusingly labeled commitment item called major maintenance reserves, and that that would in many cases shift to a later year.
So if you're building a new structure and you know it's going to need maintenance at some point in the future, and you're saving for that future maintenance on this new building, you would put that into RFE.
And some of that type of contingency— some of that type of funding was held in contingency previously, and we've shifted some of it.
Some of it, again, to your point, it might be needed this year, and so we've left that part in contingency.
Jonas Biery
And if I may, I would just add the sum of it is actually kind of important because the work that's been done, I don't want to lose sight of the fact that CBO team and dozens of others have put in many, many hours to do that analysis that we frankly haven't really done meaningfully in the past to identify what the sum of it is and why so that we can be intentional and direct and ultimately transparent to the public and to you about why something is in a contingency.
Thank you.
Expected to be spent this year versus why is it not.
Elana Pirtle-Guiney
And that's work I assume that your team, Ruth, is doing with our bureaus and part of that work to have a more centralized understanding of our budgeting within your office.
Unidentified speaker
Yeah, we've sort of coordinated that work.
We've gathered all the data.
We will share it with you later this week.
And I think in the future, we're also looking at ways— this goes to the later part of the conversation— in the budget book to kind of have more explanation of what different contingencies and reserves are for.
That's been pretty scant in the past, and so hoping to institute that so it's transparent, you know, as you all are reading through and saying, oh, okay, this fund has a contingency for this much and an RFE of this much, you know, do we want to pull some of the RFE forward?
Is this contingency the right size, et cetera?
Angelita Morillo
Okay.
Elana Pirtle-Guiney
Should we expect one of the outcomes of this change to be that we see fewer instances of dollars being carried over multiple years in a row as they remain in a fund unspent because they're being moved from contingency to that longer-range reserve, which is outside of that normal budgeting process?
Unidentified speaker
So I— interestingly, I don't think that will be the result.
It seems like it should be, but it will still fall to fund balance and be reappropriated.
It just— you would expect, you know, oops, sorry.
If PSEF has a $300 million RFE number, we expect, you know, if council doesn't change it, that's still going to be there.
It will fall to balance at the end of the fiscal year in PSEF, and they'll pick it up in the fall and rebudget it as RFE.
Angelita Morillo
Got it.
Elana Pirtle-Guiney
So we will still go through that technical process.
But it will be within the new category.
Council President, can I ask a question on an unrelated slide that we have been through, or do you want this to just be about contingencies and reserves?
Anything we've seen so far.
Okay, on the major non-general fund balance adjustments, there were the 2 largest funds there say that they were because of a bond issuance delay.
Is that because of a delay in the work or because of an issue with the bond issuance or because of changes in the markets that you're expecting in the future?
And when should we expect to see those bonds sold, and does that have any effect on the timeline for the projects?
Jonas Biery
Yeah, no, those are good questions all.
Um, so I think in the case of the water bonds, um, it has— they have in fact now been issued.
Uh, it was just a matter of not falling within the fiscal year end the way we thought they would.
Um, and I'll just note that's, that's actually having that kind of a fund balance adjustment and a delay is not uncommon 'cause sometimes we don't exactly know what the timeline is to do that issuance.
So we have to budget it in the earliest year we think it might happen so that we have that appropriation.
It's way more often that it gets delayed than it gets accelerated.
And so that often means we do have to sort of delay that issuance and it falls into the next fiscal year.
So that's just an indicative of needing to do the planning ahead so we have the earliest possible budget authority but ultimately we issue it at a timeline that matches the project and repayment capacity.
Elana Pirtle-Guiney
But we shouldn't worry that there are project delays or that we are playing the market in such a way that it wasn't a good time to sell the bonds?
Jonas Biery
Yeah, correct.
I mean, these are not— the bond delay is not indicative necessarily of a project delay.
It can.
If the project is delayed, we certainly would also delay the bond issue.
And then just for transparency, uh, we don't, we don't play the market in that way.
Um, I mean, we certainly wouldn't issue if we knew it was a very, very volatile, difficult market.
Um, but we typically issue bonds when we, um, when we need the money and don't, and don't try to, um, be, be tricky about timing the market in that way.
Elana Pirtle-Guiney
Thank you.
Mitch Green
Thank you.
Jamie Dunphy
Thank you, Councilor Pirtle-Guiney.
Councilor Green.
Mitch Green
Thank you.
Um, thanks for the presentation.
I, I, I really like it so far.
I think it's I think we're improving, especially the encumbrance carryover piece.
I feel like just like you guys listened and we're doing the work.
One specific question, just trying to track the numbers here.
The general fund returns all make sense.
It's $16.5 million-ish, somewhere around there.
How is it different from the ending balance?
I know we're going to get that into a later slide, but there's about a $2 million delta that I can't square in my head.
Unidentified speaker
Yeah, great question.
There are 2 reasons it's different.
The first is that I'm counting the spring returns on this slide.
Some of that money actually got spent last year, and so it didn't appear in the ending fund balance because we needed it to get through the fiscal year.
So that's reason number one.
Reason number 2 is this is just the expenditure side.
It doesn't show the revenue portion, and our general fund discretionary revenues came in about $2 million under budget.
Once all was said and done.
So there's an adjustment there.
Like the fund balance adds together the change in expenditure and the change in revenue.
And so this is just isolating the return.
So it's just slightly different things, but it's close to the same number.
Mitch Green
Okay, that's good enough for me.
Thanks.
Jamie Dunphy
Thank you very much, Councilor Green.
Councilor Zimmerman.
Eric Zimmerman
Thanks.
So looking at what was moving from contingency to the reserves, can you talk a little bit about who makes that decision?
Unidentified speaker
Ultimately, council has to decide.
It's a budget action to move from contingency to reserves.
And again, we're going to provide the full details on this.
This was—.
Raymond C. Lee
In the TAO?
Angelita Morillo
Yeah.
Unidentified speaker
Is that when you're going to provide it?
Like the end of this week.
The spreadsheet has every line, like within a given fund, right?
Within the transportation fund, there's multiple lines of contingency with different actions happening.
And so that has all the details and you can kind of assess and ask questions.
And if there's some that seem wrong to you or you don't understand it, feel free to reach out.
This was our joint sort of recommendation with the bureaus and the fund managers for each of the funds, along with our review and OIGRA's guidance on the budget law.
Eric Zimmerman
Okay, so right now these are recommendations from the staff.
Can we go back a few slides to, um, it was— I think it was the, the ending fund.
There's another slide that showed some complete numbers, um, earlier in the presentation that I was hoping to ask about.
Uh, keep going.
Raymond C. Lee
Right here.
Elana Pirtle-Guiney
That one.
Eric Zimmerman
All right, so we adopted a $600 million PISA fund and It's going to be $154 more million than we adopted just some 90 days ago?
Unidentified speaker
Correct.
Angelita Morillo
Okay.
Raymond C. Lee
Yeah.
Eric Zimmerman
And out of that, it's very preschool for all of us.
So our $750 million that's sitting in the bank account, $750 million that's sitting in the bank account, only $300 million of that will be in reserve based on the previous slide we just looked at.
And so based on the use of contingency, I'd like to reiterate, you mentioned earlier contingency.
And Allegro, remind us, how long did you spend at Multnomah County?
Unidentified speaker
I was at Multnomah County for about 3 and a half years.
Eric Zimmerman
They were great years for us.
Unidentified speaker
Being your budget analyst.
Jonas Biery
We appreciated your service there.
Eric Zimmerman
But the point that Allegro is making is contingency is supposed to be used in the year of.
Okay, I want to make sure that but if that's the case, just please clarify that we are then putting out— what's— we're putting out $400-some-odd million this year in PSF.
Is that accurate?
Unidentified speaker
So my guess—.
Eric Zimmerman
It's going to go into the community.
Unidentified speaker
We'll get back to you on the details.
I think what is happening is that in the outgoing grants, they encumber a full amount for multiple years.
Now, that's a decision that could be changed.
I think, and we will get back to you on the details, that they— that the $310 million that's on this later slide assumes they're encumbering multiple years of outgoing grants in one year, which means you have to have the budget in that year to support that multi-year encumbrance.
The alternative would be to encumber only the one fiscal year at a time and then re-encumber it the next year.
Loretta Smith
Okay.
Eric Zimmerman
Do you know, is that programming based upon the money that was in the bank in the first few years where we grew a lot more than we thought, or is it based on the amount of revenue that's coming in each year?
Now, I can understand, and I actually think it's a good practice to say, hey, we want to contract you for more than 1 year.
That makes a ton of sense to me.
And it's going to be a $1 million program every year for the next 5, and you don't have to reapply until 5.
I get that.
Sameer Kanal
But it's not based on revenue.
Eric Zimmerman
But this is a large enough amount of money that it seems like we're— we have encumbered funds that are not part of our yearly revenue.
We've encumbered some one-time that we don't expect that we're going to bring back.
Am I— that's somewhat accurate there?
Unidentified speaker
Yeah, so right, if they're earning roughly $200 million a year, it's not exactly right, but if that were true, there may be more encumbrances than the total annual revenue.
So it actually requires kind of, in a budgetary sense, relying on some of that fund balance to support those multi-year encumbrances.
Okay.
Yeah.
Eric Zimmerman
So if we are bringing in about $200 million a year from that, and the change in fund balance is $154 million from when we adopted the budget 90 days ago, what did we account for 90 days ago in terms of the revenue in this?
And does $154 represent on top of the $200, or what does $154 represent?
Unidentified speaker
I don't think it is an increase in— I don't think it is revenue coming in above forecast.
Okay.
But we can get you the full breakdown of the $154 million.
Eric Zimmerman
Thanks.
I wanted— the reason I'm bringing this up is, right, you know, it was right when we got to office, several of you tried to catch the hair on my head on fire, and you were unsuccessful for several reasons.
But it was, why do we have a $500 million contingency fund for things that are not going to be used this year.
And so this put me on a very quick path, which was the City of Portland uses these words incorrectly.
And so thank you, Allegra, for highlighting that from kind of an outside perspective, because coming from 3 other governments, this was a very confusing first couple of budgets given how we use and don't use reserves and contingencies.
So I just want to give credit to aligning.
This is important work and all these bureaus have been doing it differently.
And I recognize the challenge from the central office to get 26 disparate organizations at times to align.
So thank you for that because we were, for the first 2 years of this new council's budget, we were using various words and descriptions.
And policy different from each bureau, right?
And that really did not make for good decision-making because it had to do with who was the last person to give you the definition book, and that's not great.
So I appreciate this work and will note, I'll get into more details with each of these programs and who set the number and set the goal, but this is the first step, colleagues, to saying we want a reserve that represents this ability to do this thing or this size of our ongoing to be able to react to a thing in the catastrophic moment, and then also what we think is the amount you should have in the savings for that year.
I think that's the area where our policy discussions can get really robust and frankly make some of the arguments that happen during budget season a little less live-wired because they're rooted in just basic policies of good governance.
So like, This is important work, and so thank you for that.
It's been challenging to see, but I think it will make us better decision makers in the out years.
So appreciate it.
Jonas Biery
Thank you, Council President.
Jamie Dunphy
Thank you very much, Councilor Zimmerman.
Okay, no one else in the queue.
Let's move on to section 2.
Loretta Smith
Great.
Jonas Biery
Thank you.
Unidentified speaker
All right.
All right.
The next section of this presentation is focused on other than fund balance and contingencies, the actions that you're gonna see in the fall TAO.
And there's a couple of different subsections.
The first subsection is about sort of realignments and net-zero changes, so things that don't sort of draw resources.
So the first— whoops, sorry.
The first piece of this is the sort of follow-up to the core services realignment work that happened in the adopted budget process yes.
For this fiscal year.
So the core services realignment was discussed with the goal of reducing duplication, creating more consistent citywide service model, and better aligning responsibility and accountability for core services.
The adopted budget made the primary organizational and position changes that were effective July 1st.
The implementation has been sort of phased so that we can maintain service continuity support employees through this transition and work through the operational details of bringing these functions together.
And so what you're going to see in the fall TAO is the kind of technical budget alignment that we sort of knew would be required at some level as we do this implementation process for core services realignment.
And so the adjustments that are included move position funding and the associated materials and services thank you.
And then we also moved the materials and services costs— sorry, move the materials and services costs with the position funding to better align the budgets to where the responsibility now sits.
This was sort of a piece that was technically difficult in the adopted budget process, and so we came back and did that in this portion.
Embedded service model.
We need to make sure those resources sit in the correct places so that people can accurately monitor their budgets and the like in the current fiscal year.
These adjustments don't represent new programming or expansion of services.
They're budget changes that are needed to implement the organizational decisions that were essentially made and included in the budget process.
We expect some additional refinement to occur in the '27-'28 budget process, particularly around where the funding sits and the complex funding relationships that kind of still need— some of which still need to be resolved.
The priority for this year is to make the transition thoughtfully while maintaining services.
So the broader objective has not changed: more consistent, accountable, citywide model for core services with clearer ownership, better transparency, and the resources aligned with the responsibility.
And DCA Warren is here and available for questions on this section.
And the other thing just to note about these changes that's a little bit more technical is in the Um, TAO itself, there is a directive for reflecting certain changes that are included in the TAO in CAL, in our process to set the budgets for next— the base budgets for next fiscal year.
So there is a net increase in the general fund of $121,000 as a result of these changes that would be carried forward into next fiscal year.
Thank you.
A lot of, as you can kind of see on these slot— in the slide here, some of this, some of that has to do with changing the funding for positions that are— were part of core services realignment.
So if positions were in, say, Public Works and now they're in general fund overhead, that results in a hit to the general fund.
It's not that there's So it's not more positions or more cost happening.
It's a shift in how they're being paid for.
Okay.
And then outside of core services realignment, the fall TAO includes 2 sort of realignments of staff within service areas.
And these mainly include staff that work on budget and finance type functions within these service areas.
Those staff were not included in the core services realignment yes.
And they are specific to Community and Economic Development Service Area and the Public Works Service Area.
I'll note that for both Public Safety and City Operations, they already have kind of cohesive enterprise services teams.
And so the other 2 service areas are moving to reflect how the and so these changes don't change the number of FTE or significantly change the work they're doing.
They just pull them into a service area team.
The goals are somewhat similar to improve service delivery and provide more consistent practices, sort of pool resources for some bureaus that are smaller, don't have to do very much of a given thing.
So it's efficiencies there.
Thank you.
Of scale to do certain actions like that, and then cross-train staff on those different types of budget and finance things.
Okay.
So that's the other kind of major— those are the other major realignments that you'll see in the ordinance.
Outside of the general fund, I just wanted to highlight a few things.
Elana Pirtle-Guiney
BES.
Unidentified speaker
Has, uh, some draws on contingency of $13.5 million.
These are to fund sort of urgent and unforeseen costs, some of which relate to the Lake Oswego, um, uh, treatment facility.
The next is in the co-op program.
Um, this would draw $350,000 of what is now— what would now be classified as reserved for future expenditure forward to use in the current fiscal year.
The third is the PPA Health Fund had higher— experienced higher claims costs than projected, and so this would draw down $1.5 million of the contingency in that fund.
And then in Parks, there are multiple draws on Parks Levy contingency for a few different costs in the current fiscal year, including some pool repairs, graffiti removal, Programming support, small programming support in a few places, and some maintenance costs there.
And again, there are complete details for all decision packages in the fall TAO are in exhibit 5 when you look at that.
Jonas Biery
Okay.
All right.
So back to Jonas.
Yeah, thanks, Ruth.
So the next kind of category is talking about the business license tax stabilization reserve.
I'm realizing that We should probably just acknowledge that every single time you see or hear from me over the next year, you'll probably hear the word stabilization.
And so I'm leaning into that here again.
So the fiscal '26-'27 budget, adopted budget included an initial allocation.
It ended up at $3.5 million towards this new reserve concept.
That $3.5 million was around 1.6% of total BLT revenues.
Significantly lower than the 15% target that was indicated in the budget note.
That budget note also directed development of a policy to more formally guide creation of the reserve.
So we're now bringing that forward in an ordinance that will come alongside the TAO to create that policy.
And then we do expect to transfer a small amount via the TAO, and we'll talk about that in a minute as well.
Thank you.
But we wanted to sort of provide some space to talk about what does the policy, this new policy, actually do.
And I wanted to back up a little bit and just remind everyone about BLT, business license tax.
So while many locally based companies do also pay the business license tax, the vast majority of that revenue collection is driven by the net income of large national and multinational corporations.
And therefore are typically highly sensitive to national economic cycles, to taxpayer behavior, to financial market conditions, and federal tax policy changes.
And because of that kind of volatility, it has historically been true on occasion that revenues can decline by as much as 15 to 20% in a fiscal— in a single fiscal year as a result of economic downturns, as a result of federal tax policy changes, as we've experienced over the last couple budget cycles.
Thank you.
Or other events that may be outside the city's control.
For context, in fiscal '26-'27, BLT revenues are projected at approximately $220 million, which is nearly 30% of the total general fund discretionary revenue.
So a very important source to fund general fund expenses.
Establishing a reserve, establishing and funding a reserve specific to that volatility will protect the city against the potential forced reductions in the event of that unexpected revenue decline and supports the city's strategy to maintain a high credit rating and the financial benefits that that high credit rating provides.
So as proposed, the BLT Stabilization Reserve Policy is to reach a fully funded target of 15% of BLT revenues and to do that by funding incrementally from one-third, sort of the first one-third, of available discretionary resources.
And typically that would happen now in the fall TAO or in the adopted budget.
And so an upcoming slide is going to show how that's calculated for purposes of the fall TAO, assuming policy adoption.
The policy as drafted also sets expectations around conditions when the fund balance can be withdrawn.
It's a little bit funky Uh, wonky, to use the word that was used earlier.
Um, this policy element is, is kind of nested within the larger, uh, former policy— the larger policy that was formerly called FIN 2.03 around financial planning.
Um, so the idea is it just fits within that existing policy kind of category.
Additionally, the City Attorney's Office has recommended a couple of additional changes.
One making a handful of very, very technical administrative changes to update really language post-charter, taking out references to Office of Management and Finance and changes that don't substantially change the actual meaning of the policy, and recommending transferring the full language from the FIN 2.03, including the new BLT reserve element, to become a new Portland City Code 5.90.
So moving away from the FIN Series structure and into, into a more proper code.
So we're not proposing beyond those administrative updates, the very technical updates from City Attorney, and adding the new BLT reserve.
We're not proposing any substantive changes to what's now PCC 590, formerly FIN 2.13, though certainly we would expect that as we've talked about financial stabilization, and looking at having a broader look at financial policy, this will be in that bucket of policies we also want to come back and look at in that project, although expect that the BLT piece may not need to be looked at then.
And then again, just a reminder that that will be— I think there's 3 documents for passage as part of the fall TAO package, and one of those will be an ordinance to adopt this policy.
And Ruth will talk about the numbers here in the next section.
The other thing I wanted to mention and preview, again with the numbers, numbers coming, by creating this BLT reserve, it kind of jumps in front of the existing capital set-aside policy.
For the last 4 or 5 years, we haven't actually used the capital set-aside policy, either because we didn't have money to put in it.
Yeah.
Or we made a decision that policy was waived and we didn't contribute.
But I do want to remind folks, we do still have the capital set-aside policy to put funding in there.
It's also— that language is also reflected in the FIN 2.03, soon to be PCC 590.
That policy says that half of the excess revenues, excess available one-time general fund revenues, go towards capital investment.
So that's not a new policy?
And so the effect of adding in the BLT is essentially the BLT reserve gets the first third of available resource, the capital set-aside gets the next third.
So 50% of what's remaining is how that's nested.
And then once the BLT reserve is filled, then we don't have to contribute back to that reserve and the capital set-aside goes back to the full 50%.
But do want to be clear about the fact that we expect to actually fund not to waive the capital set-aside via the fall TAO.
That's also consistent with recommendation and action from the Financial Stabilization and Recovery Plan.
And then I'll preview, and I think we'll get to the number here in a minute.
It's $1.5 million-ish, something like that.
Maybe $2 million.
I can't— $2.5 million.
Thank you.
So the suggestion is that that capital set— that be put in kind of capital set-aside functionally and be held to address capital expenses at the Moda Center, which we know will be required to support that city asset, even if a broader redevelopment opportunity isn't reached.
We still have an obligation to invest in that large asset, at least to the tune of $2.5 million.
And I think—.
Unidentified speaker
Questions?
Sure.
Jonas Biery
Yeah, why don't we— we're going to go off script and we can maybe take a few questions just on that part before the next section we'll move into, some of the more technical pieces around what's actually in the TAO outside of these, sort of the balancing and decision point efforts.
But maybe we can pause and talk about either the reserve or the other technical net zero adjustments.
Angelita Morillo
Okay.
Jamie Dunphy
Colleagues, feel free to jump into the queue if you have any questions about this section.
Councilor Murillo, followed by Smith and Green.
Angelita Morillo
Um, I think mine's for the next section, so I can wait.
Jamie Dunphy
Sounds good.
Thank you.
Councilor Smith.
Loretta Smith
Thank you.
When do we plan to change the, um, the BLT policy, the FIN rules on that, and who has a vote on that?
Jonas Biery
Um, Councilor, are you asking when are we changing that, the policy I just described?
Yeah.
Yeah, so that will be, um, in— so what is in the, the package, uh, accompanying the fall TAO Will be an ordinance that includes that.
It currently does not exist.
Loretta Smith
No, but what I'm saying, are you going to change the policy and vote on the TAO at the same time?
Jonas Biery
Uh, so the suggestion would be— I haven't thought about the order, but essentially we would have an ordinance that would create the policy, and then the TAO itself would, would put some money back into that.
So we already did set some—.
Loretta Smith
That's really uncommon.
We would have no opportunity to speak about how we change the financial policies if you're going to do it in either concurrently or consecutively in the same day.
That, that seems like you need to change the policy and then write the TALP according to the new policy.
That just seems so—.
Jonas Biery
The opportunity exists to do that.
I'll just remind folks that we did in the adopted budget, we sort of set money aside and said, let's hold this in— I think it's actually in just general fund discretionary, um, to put into this fund, this new, uh, but we don't have a policy yet.
And so we could take that same approach in the, in the fall TAO and just sort of park it somewhere and come back later and create a policy.
Loretta Smith
What I think you need to do is you need to go to the Committee of the Whole and have it come through the committee because we don't have a— they have a finance jurisdiction.
Jonas Biery
Right.
So, so, Councilor, the next step in this process, this is a work session to preview all of this will be coming to Committee of the Whole next week.
Okay.
Together to have that dialogue.
Loretta Smith
And we're going to talk— are we talking about the TAO or are we talking about changing the FIN policy?
Jonas Biery
Both and either.
They will both have to pass through Finance and Governance Committee scheduled for next week.
Raymond C. Lee
Okay.
Loretta Smith
That's what I was like, you have not given us a chance to really look at this and to see if this is the right policy in terms of us going forward and, and what the forecast looks like.
So it's some different things that you have to look at.
Jonas Biery
Yeah, no, appreciate that.
This is, this is just intended to be a preview of what is coming to committee.
Loretta Smith
Okay, thank you.
You didn't tell that.
Jamie Dunphy
Thank you much, Councilor Smith.
Councilor Green.
Mitch Green
Uh, thank, thank you, Mr. Beery.
Um, fully support sort of formalizing this.
We've talked about it, I think, for a while in a couple different venues.
I just want to make sure I clarify, and for everyone reaching along, because I think you might come away with the wrong impression if you just glance at the bullet points.
You're not saying we're going to do $10 million a year.
You're saying it's a third of whatever we have that's available.
So if we have a lean year, if it's $1 million, it'd be $300,000 of that, right?
Jonas Biery
Yeah, Councilor, that's correct.
It's just drafted to be whatever's available.
It takes the first third of whatever's available.
If there's zero available, There's zero that goes into the fund per this policy.
Council could always choose to do something otherwise, you know, above policy.
If it's $30 million that's available, then $10 million would go into the fund, obviously until the fund is fully funded, and then we would only transfer what we need to get to that 15% target.
Mitch Green
I just wanted to reinforce that point because it's sort of automatically scaled by where we're at in the business cycle, where we're at in the volatility.
Jonas Biery
Yeah, that's correct.
And it might be worth noting too with the amount that was sort of set aside in the adopted budget and with this proposed transfer, if council adopts all of that, we're still only at less than 3%.
And so while it's good that we're putting money in there, it's still quite a ways off from the kind of prudent 15% target.
Dan Ryan
Thank you.
Jamie Dunphy
Thank you, Councilor Green.
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Council President.
First piece, going back a section, I just want to make sure we will have details when we hear this in Committee of the Whole.
You mentioned that on the net zero and non-general fund decisions, there are a number of parks decisions that draw on the parks levy.
I will want to know when we get the more detailed presentation what that does to the future sustainability of the parks levy and the ability to ensure that at the end of the parks levy, we are still spending at a sustainable level, and we haven't drawn down in front years so much that we will have boxed ourselves into asking Portlanders for an increase again at the end.
Moving back forward to the most recent slides, you said that the recommendation we should expect this year is that the funding for— the funding in our financial policy that goes to infrastructure maintenance, the recommendation will be that that go to the Moda Center.
Will that— is that funding that you are foreseeing as being available to help offset a city cost for a full remodel there, or is that funding that you see as being available for ongoing upkeep and maintenance of the facility?
Those are very different things, and if we're talking about ongoing upkeep and maintenance, which we've previously funded through other sources.
I at least would think about that recommendation very differently than money that you are saying, hey, we know we're going to have a large project coming soon.
We've been talking about it for quite a while.
This is the first part of trying to find the dollars to go toward that.
Jonas Biery
Yeah, it's a good question, Councilor.
I think the intent is that, A, it's, it's that's sort of available to help contribute to a more immediate large redevelopment plan if that goes forward.
And I think we'll learn more about that soon.
And recognizing if that doesn't go forward, we still will have a need to do some major investment outside of sort of the normal upkeep and maintenance that—.
If that—.
My understanding is if that building is to retain— remain viable, we'll have to come up with sort of an alternative plan that will still require significant capital investment and likely city capital investment.
And so it's really about kind of keeping optionality open around that, recognizing that that's potentially one of the larger obligations that the city knows we have coming on the— capital obligations that we have coming on the near— in our near term.
Elana Pirtle-Guiney
Thank you for that clarification.
Jamie Dunphy
Thank you.
Councilor Pirtle-Guiney.
I think we can move to the next section.
Unidentified speaker
Um, okay, I think we're gonna take a short break.
Jamie Dunphy
Oh, is this time for a break?
Unidentified speaker
Let's take a break if you want one.
Jamie Dunphy
That's great.
Uh, folks, let's have everybody back here at 3:30.
Thank you.
You know, all right, welcome back, folks.
Jonas, Ruth, take us on through the second half of chunk number 2.
Unidentified speaker
All right, so the next, uh, section of material we're going to go through is how the fall TAO as proposed, as filed for committee next week balances the general fund.
So we talked about the fund balance change earlier, and this sort of picks up from there and then says, now what do we do, right?
So the first line— well, this slide is kind of an overview of all of the different changes, and I'm actually going to walk through them one by one on the subsequent slides.
So this is the first piece.
That is what we showed, what I showed at the beginning with the actual ending fund balance and then the budgeted beginning fund balance, which once you subtract that, you end up with about $14.7 million as kind of the starting fund balance.
And so that's kind of what— that's where we start.
And there's a little tracker at the bottom that shows how we get from there down to zero.
And again, that's just because we're filing a balanced A balanced budget.
And so there has to— it has to go somewhere in the filing.
So this slide shows all of the— they're called required adjustments.
They're adjustments that are governed by existing policies or legal requirements.
And some of these we talked about last fall, but we filed with sort of fulfilling all of those existing policies and legal requirements.
Thank you.
Okay.
The first one is the way previous council set up a funding mechanism for short-term rental revenue to go to the Housing Investment Fund.
It specifically directs us to send it in the fall TAO, the amount that came in above the forecast.
And so this year that number is $2.1 million.
So that moves over to the Housing Investment Fund.
There's $40,000 of labor contract pieces that are required.
The next one is a clean air construction policy carryover.
That's essentially a sort of required carryover amount of anything they didn't spend is sort of— there's a policy to carry that forward, and that amount is $387,000 this year.
And then there's a $700,000 settlement amount for PFFA for sort of an amount from the fire health and wellness funds that were sort of incorrectly removed from that fund in the proposed budget.
And so this would backfill that amount.
And so once you make all of those adjustments, those total $3.2 million.
You're left with $11.5 million.
The next page is sort of true technical corrections in that they were like errors in the budget.
And so there's 2 of them, and they actually increase the fund balance together by half a million dollars.
And so that gets you to $12 million.
After that, we get into encumbrance carryovers.
Jamie Dunphy
Yes.
Unidentified speaker
As a reminder, Jonas mentioned this at the start of the presentation, but we've had guidance about what is— what the criteria are for encumbrance carryovers, and we sort of tightened those and reiterated them for bureaus this year as we went into the fall TAO process.
So these are for the general fund only.
So other funds also do carryovers in their own way, but this is for general fund encumbrance carryovers.
The bureau has to have had actual underspending to cover it.
They are— it says that they're supposed to be unable to absorb the expense in the current fiscal year's budget.
So it's not just we had this underspending, we want it back.
The request is supposed to be one-time in nature, so it shouldn't be for ongoing programming.
It should be for a one-time thing that didn't get completed in the prior fiscal year.
Okay.
And then that the request is critical for operations.
And so through the process of sort of reiterating those, we ended up with many fewer encumbrance carryover requests this year than we have in previous years.
So I think that was positive overall in terms of the process.
This slide gives a little bit more detail.
And again, we have full details for all of the decision packages in Exhibit 5.
Thank you.
We also collected information preemptively that council was interested in last year when we went through this encumbrance carryover process.
So bureaus have submitted— we have a complete spreadsheet with all of the purchase orders that each of these dollars is connected to, what it's for, why it was underspent, and what would happen if sort of this funding wasn't allocated.
And happy to answer additional questions on that.
But this is— that's the breakdown by bureau, and then the total amount was— is $4.6 million.
So if those are funded, that sort of comes out of the ending fund balance because that underspending fell to balance in the general fund and became part of that $14.7 number.
Thank you.
So that leaves us with $7.4 million.
That $7.4 million is the basis on which we calculated the amounts per the BLT policy and capital set-aside policy that Jonas talked about a little bit ago.
So the way those, those policies read, that's— this is kind of the point in the process where that gets applied.
And so the way that math works out is a third of that total goes to BLT, that's $2.5 million, and then 50% of the remainder goes to capital set-aside.
The other 50% stays sort of unallocated.
50% Of 2/3 is 1/3, so they all get 1/3.
And so it's $2.5 million to each of those buckets, $2.5 million to BLT reserve, $2.5 million to cap set-aside, and then the remaining $2.5 million is sort of available to be allocated.
Then we move to kind of more discretionary decision points.
This list is also much smaller than it has been in previous years, and most of them are a little, like, somewhat technical.
I already talked about the core services realignment.
Piece.
That's a $342,000 hit to the general fund.
Again, most of that is from changing the way things are being paid for, not by adding things.
The Vision Zero amount is not a new request.
It's also changing the way we're paying for something.
Essentially, it was raised that we were paying for this through the public works bureaus and that it was supposed to be a citywide allocation, and that sort of to legally— to remain compliant with Anderson and legal guidance around that, we should move it to general fund overhead.
Right, for right now, for the current fiscal year, we're putting it into general fund discretionary because we don't rerun the overhead numbers in the middle of the fiscal year.
So that's what that is.
It's not a new thing.
It's just changing how we pay for it.
Thank you.
And then the auditor's compensation set-aside package, that $240,000 is essentially an amount that was intended to be included in the budget, but because we were changing how we did compensation set-aside, there was some confusion around that process.
They weren't the only bureau that had that issue, but in terms of just getting it correct in the proposed, and so okay.
So, but the fall TAO as filed includes that amount going to the auditor's office.
So all of those decisions, if council were to fund all of those, that would be about $800,000 of the remaining $2.5 million, and then for rounding, $2.4 million.
And then the— what's left then is $1.6 million, and that is the amount that's kind of— once you run through all these different things, what you're left with.
The fall TAO as filed recommends placing that into unrestricted general fund contingency this year, and I will talk on the next slide about why that is.
As a reminder, we have less than normal contingency at this point of the fiscal year because of the July supplemental.
And so this would avoid kind of putting all that pressure on the spring and kind of preload a little bit of that amount that was discussed for the spring to replenish those contingencies.
A few things on this slide.
About kind of remaining current year uncertainties other than all of the regular uncertainties about things that none of us can control or know at this point in the fiscal year.
There are some sort of known unknowns.
The first is around council operations related to potential council transition costs and then Open Signal needs for the Open Signal budget.
Parks also did not get the compensation set-aside amount included in their current year budget, but we've recommended waiting until the spring to fill that amount.
There are some early projections for the Police Bureau on their spending, although it is very early in the fiscal year, so I want to emphasize that we don't have a lot of certainty around that right now.
And then there's other dynamics happening that could impact personnel costs citywide.
That's all on the expense side.
On the revenue side, there's a little bit of continued BLT volatility around the impacts of HR 1 and how that may play out in the current fiscal year.
Raymond C. Lee
I—.
Unidentified speaker
Oh, a couple more things.
I think this is the last thing on fall TAO, is just we wanted to highlight some of the grant adjustments.
There are Both carryovers of multi-year grant awards, so amounts that were appropriated last year but for a multi-year time frame and have to be reappropriated this year.
And then there's also appropriations of new grants, and that's that right-hand column there of $10.5 million.
We do have backup also for all of this, so we can share a spreadsheet that details all of the grants, whether they're new or have So I think we can do any questions at this point on fall TAO before we turn to budget process and calendar.
Jamie Dunphy
Sounds good.
Councilor Murillo and then Councilor Smith.
Angelita Morillo
Um, thank you.
Uh, thanks for bringing up the July supplemental.
I had one question on that part.
So when anticipated funds from underspending, interest accruals, and other resources develop in the spring TAO, the funds will be used to restore the general fund contingency.
And I think it was $9.96 million that I saw.
Was— and this isn't a trick question, I'm just genuinely asking sort of the rationale for this.
Was there any consideration of using the $5 million you currently propose to allocate to the BLT stabilization reserve and capital set aside?
To buy down that future liability now?
Because it feels like we don't have any answers for how that's going to come back in the spring.
Jonas Biery
Yeah, Councilor, I'll attempt to answer the question, and I think there's kind of a twofold answer.
One is, at least as if we assume that the BLT policy passes as proposed, The way those— between the new BLT stabilization reserve policy element and the existing capital set-aside would, if we are following those policies, it would not be, frankly, I think, an administrative decision to fund those otherwise.
That would be something that council would have to decide.
So just calling out that fact that we're sort of just trying to follow the policies or assumed policies.
And the second piece to the answer is I agree with you for sure that we are continuing to run really lean with regard to contingency, recognizing those future expectations.
So there is a path that council could choose to differently apply policies or waive policies and put more money to sort of fill that future contingency challenge.
I think, you know, our perspective was that we were always going to be in a place where we were going to need to carefully manage underspending to fill that gap in the spring.
We will continue to need to do that.
If we're able to put this $1.6 million It gives us a greater chance of success, but there's certainly other pathways to do that that would just have different trade-offs, i.e., you know, not shoring up kind of other reserves, et cetera.
Angelita Morillo
Gotcha.
So to summarize what you've said in plain language, maybe let me reiterate it and see if I fully understand it.
We borrowed general fund contingency for this budget ordinance to the tune of $10 million.
Roughly, and the ordinance requires us to repay that from whatever might be available in the spring.
But today we have $5 million that we could put into the general fund contingency to relieve pressure on the general fund bureaus to underspend.
So wouldn't that be a better use of that money to pay down those current obligations before we set up reserves for new ones?
Jonas Biery
Yeah, I think it's— they're different.
Different flavors of similar risk, right?
We're sort of taking a $5 million amount that we expect we need to sort of hold for safety or other future needs, which by the way, we could take back in the spring as well if we needed, and continuing to sort of build the rigor around the underspending.
And again, just reiterate, I think, The perspective that I would take is I don't think it's the administration's role to suggest not following policy.
So again, I just flagged that would be something if council wanted to consider, for example, waiving the capital set-aside policy as we have in the recent past.
If council wanted to consider not funding the BLT reserve, that would be something that we'd look to y'all to propose.
Angelita Morillo
Gotcha.
And when you're talking about the policy that you don't want to waive, or you're talking about 2.03, right?
Jonas Biery
Uh, correct.
So the, the capital set-aside policy is embedded within 2.03.
It might be another subsection, I can't remember exactly.
Um, uh, we can look that up for you.
Um, that references, um, that sort of that first 50%.
Uh, so that is a policy that would be, um, technically would need to be waived.
Uh, and then the BLT policy is the, the new proposed kind of insert into that that we discussed earlier, subject to council adoption of that ordinance and policy.
Angelita Morillo
Yeah, because for— so my understanding is that Financial Policy 2.03 is supposed to be 50% of general fund discretionary money goes towards infrastructure and maintenance replacement.
But so I'm not suggesting that we waive that policy, but I am asking if we should address current liabilities before we start following new policies or policies that we haven't followed in a few years, because to my knowledge, I don't recall us using that policy last year.
And I don't think the city has followed 2.03 for the past 6 years.
And, you know, maybe we should because we have a lot of parks and roads that have dire need for maintenance upgrades.
But I suspect that these dollars are going to be set aside for a different project than the existing projects that we have now.
Jonas Biery
Yeah, yeah.
And Councilor, you're correct that we have, we have not transferred funds into that capital set aside for the last many years.
I know it was at least 4 or 5, maybe it's even 6, partially because like last year, I think there just wasn't— there was $0.
So the application, you know, 50% of 0 is 0.
I think that's been the case in at least one other year.
And then you're right, absolutely, that there have been multiple years where that policy was waived to fund other things in that year.
And so it is a very specific recommendation that we're making to not waive the policy again and to actually use that as intended.
But again, up to council's discretion to make that choice.
Angelita Morillo
Okay.
So basically that policy is obviously only enforced when there's funds to move.
And in the years that we haven't done it, they're not going to move it.
Okay, that makes sense.
I think that's all I have for this section.
Unidentified speaker
Sorry, can I just clarify one other thing on that?
So the July supplemental, part of the funding from that came from the BLT reserve, and that BLT reserve is held in contingency.
So it is still— it can still be accessed in the current year.
So it's not like moving it out entirely.
It's still able to be accessed in the current year.
Angelita Morillo
Okay, thank you so much.
Um, I think that's all my questions for this portion for now.
Thanks.
Jamie Dunphy
Thank you, Councilor Maria.
Councilor Smith.
Loretta Smith
Thank you, Council President.
Thank you.
Could we go back to the $2.1 million in the short-term rental investment?
Can you walk me through why we are paying something back, or is this based on the rental, uh, the number of rental rates?
Because you could you explain that one to me?
Unidentified speaker
Yeah, so we're not paying anything back.
It's just the policy as it was written, and I can get you the citation.
I think it was a 2016 resolution that was adopted.
It just set up that as essentially when they were early in creating that short-term rental revenue fee, they directed some of it to the Housing Investment Fund.
And part of the policy at that time was to take amounts that came in, because it comes into the general fund, amounts that come in above the forecast were direct— were to be transferred in the fall bump at the time to the Housing Investment Fund.
So that's just the policy.
That's just how they wrote the policy at the time.
Loretta Smith
And we've been following this policy?
Unidentified speaker
We have.
And but council has, you know, You could decide not to follow it.
Loretta Smith
We just—.
Unidentified speaker
That's how we follow it.
Loretta Smith
Well, what I'm trying to figure out is, because this $2.1 million looks very similar to a $2.1 million that we had in our Spring Towel, and is this an attempt to get that money back?
Mitch Green
No.
Loretta Smith
I still don't know what the— how you calculated $2.1 million.
So are you saying that we— the money that we received on the rental Um, the short-term rental monies that we received $2.1 million above that?
Unidentified speaker
Whatever was budgeted, we received $2.1 million more than that, and it comes— it falls into the general fund, and then we send it out.
So this is just the mechanism that was established in that resolution per that council.
Loretta Smith
Seems like that could be fool's gold because you could put— I'm going to budget $2.1 million and say, you know what you are likely to have come in, and then you just take another $3 million and put it in there.
So I don't know how you can budget $2.1 million lower.
How do you budget that?
That seems like an awfully big number.
Jonas Biery
Yeah, Councilor, let me— I think this is around the revenue that's collected, not the expense.
So what happens is You know, the Housing Bureau budgets an amount, an expense amount, based upon what they expect to receive, the amount of revenues they expect to receive, so that their revenues match expenditures as required.
What happens, what happened this year is that fund, the short-term rental revenue, was more than expected.
So it's $2.1 million.
Ergo, the existing policy council direction says take that additional revenue.
Okay.
And adjust in the fall TAO.
Loretta Smith
So no fund money, that's, that's straight general fund money, right?
It could be—.
Jonas Biery
It's collected into the general fund.
Yeah.
And sorry, the other thing I would just note is, you know, we call these required adjustments.
As Ruth said, uh, there's probably a pathway where council could choose to modify or adjust the policy.
We call them required because we feel like they're required for us to make because they're reflective of existing because you knew what I was getting ready to say.
Loretta Smith
Because I was going to tell you, you're taking our job away and you just put that $2.1 million where you want it to.
Eric Zimmerman
Yeah, yeah.
Jonas Biery
And just, I, you know, we don't— I would say from my seat, um, I don't have a position where I can do things outside of what council directs.
And so these are things that we've been directed by council.
If council directs to do something otherwise, then, uh, then that's what can be reflected.
Loretta Smith
Yeah, but wouldn't you take that money out?
Why are you taking it out now?
Because this could be used as a part of a bump and not waiting to take it out of this, the, the spring budget?
Why are you taking it out now?
Jonas Biery
Yeah, as Ruth said, I believe that's specifically what the language in the legislation says, is do it in the fall, uh, fall adjustment.
Loretta Smith
So do it in the fall adjustment.
Okay.
Um, the, the other piece is, uh, why would the new grants be appropriated out of the fall adjustment and not the bigger budget?
Shouldn't that be in the bigger budget already, the new grants?
Because if they're new, you know you're going to appropriate so many grants.
Why was that not put in the original budget?
Unidentified speaker
So I believe we can get you the details, and we have a full spreadsheet of all of the grants.
I believe these are things that have come in this fiscal year that they may not— that bureaus may not have known they were going to get this fiscal year.
Loretta Smith
Okay, so these are grants that we got awarded from outside sources that we are now getting ready to award, but we're using our own general fund money?
Unidentified speaker
No, it's entirely in the grants fund.
It's all grant money.
Loretta Smith
I really don't even understand the grants money because all of a sudden it's a big multi-hundred million dollar grant.
I don't know where they get their money or how they get but so are you saying that they did not know about this in the spring, this $10 million?
Unidentified speaker
I don't know specifically on all of them.
Again, I— we can get you the details on each one.
I—.
Yeah, so I don't, I don't know all the details of each line item.
Loretta Smith
Because this right here to me is— it is also another egregious thing that we should have known about in the spring.
This high of a number, you don't just pull This out of your back pocket and say, oh, I have, I have new grants and $10 million, we got to get that out of the, um, the fall TAO.
That doesn't make sense to me.
It, it just— they don't even have enough time to even put out an RFP and get it back quick enough to know that they need another $10 million.
They knew about this prior to.
It's too early in, in the process for them to know that they have new grants.
Jonas Biery
Councilwoman Smith, Yes.
Loretta Smith
So I— this is, um, it's, it's difficult for me to, to buy, and it is taking up a big chunk of money, especially when they got multi-hundreds of millions of dollars in the grant fund, and you're saying it's not coming out of that grant fund It's coming out of the general fund.
Unidentified speaker
Sorry, it's not coming out of the general fund.
It is in the grants fund.
And apologies, I probably should have put this slide in the earlier section of the presentation, but none of this is general fund money.
It's all grants.
Loretta Smith
So why are we trying to adjust this?
Because they've already— they already knew what they were going to do.
Jonas Biery
Well, I think, and again, we'll have— I mean, we do have, I just don't know if it's published yet, the sort of detail with each I think it's literally a line item detail of every grant.
On the new grant piece, and again, I don't have, as Ruth indicated, we don't have detail on each specific piece that's in there.
My understanding is that by and large, these are grants that we have received.
So we're receiving a new grant and we're appropriating now doing something with that grant.
Loretta Smith
That's what I asked.
These are outside monies?
And she said no, this is money that was in the grants fund.
Jonas Biery
Well, it's budgeted in the grants fund.
Fund is where we capture that reality.
And it is true that in an ideal world, we see all that ahead of time in advance so that we can just reflect it at one moment in the budget.
But often that isn't the case because we're getting things happening, you know, in real time throughout the 12-month fiscal year.
Loretta Smith
And so I want to go back to my original ordinance from last year.
I don't know if it's still good, But again, you waited 3 months.
You're supposed to— if you get new grant money in within that 15 days, you need to tell us that you got— you received it.
So when you give us this, it looks crazy.
You waited 3 months and then called the ordinance.
Jonas Biery
Yeah, thank you for flagging that as well.
I believe— and I don't— I think this is in the information in the spreadsheet, but I know we had at least a conversation about tracking this as well so that we can identify in that bigger spreadsheet at what point it had been communicated.
Typically through the city administrator report would be where that happened.
I don't have that crosswalk in front of me, but yes, hear you.
We're working on making sure that we both do that reporting in alignment with that direction and that we're connecting that tissue so that we can see that transparency and transparently in these actions.
Loretta Smith
Okay.
All right.
Thank you.
Jamie Dunphy
Thank you, Councilor Smith.
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Council President.
Colleagues, the Council President told me that this would be the right time to preview an amendment that I will be bringing when we hear the fall TAO in Committee of the Whole, and I wanted to make sure to do that before we get to that time next week and it comes as a surprise to anybody.
So I want to speak briefly about the Community Opportunities and Enhancement Program, or COEP program, that was mentioned briefly on slide— what was that?
This is one of the programs that Ruth listed as a non-general fund decision where money is being put into the program from a self-contained fund.
This program does not touch the general fund currently.
I want to start before I get into the details by thanking DCA Warren, folks in procurement and the budget office for working with us to understand what happened to co-op funding after the last budget.
Thank you.
And importantly, to all those folks in the mayor's office for helping us to make sure that some of that was in— some of those funds were replaced in the TAO proposal that is being brought forward to council.
And also to Councilor Zimmerman for his partnership on this work as we move forward.
So Co+op exists for a very straightforward reason.
When the city invests billions of dollars in construction, we need to make sure that those public investments create opportunities for Portlanders who pre-apprenticeship programs, which are funded through the co-op program, are a critical part of making that happen.
They help people get the training, certifications, support, and connections that they need to have a real shot when they apply for an apprenticeship program and move into union construction careers.
That's especially important in light of the commitments that the city has made through our regional work plan to workforce increase the number of apprenticeships in Portland.
Equity Agreement, or our WEA.
I know some of these terms are new to some folks up here, but I know there are many of you who do know about these programs.
These create a pathway into the trades for people who have historically faced barriers, and we have programs in Portland that work with Black Portlanders, that work with young people, that work with women, that work with formerly incarcerated individuals to make sure that they can enter the trades and work on these very expansive projects.
Thank you.
Last year in the budget, we transferred the co-op program from Prosper Portland back to our city bureaus.
When we did that, there was a discussion about the necessity of that change and about the fact that the program would continue without changes when it moved back to the city.
Unfortunately, that's not what happened.
And the co-op program was not funded and was stalled.
So I'm glad we're releasing $350,000 in co-op funding, which exists as a separate bucket within our budget in the fall TAO.
And I am sincerely appreciative to folks who worked with us to get that there.
We were— I apologize.
In doing this, we also need to address the long-term funding stability of co-ops.
Thank you.
And double down on the importance of these programs through the renegotiation of our WIA, which will be coming up in the next year or so.
Otherwise, I fear we are going to say goodbye to the pathways that help so many Portlanders into these union apprenticeship programs.
Co-op funding levels over the last 2 years were significantly elevated because of one-time construction revenues from the Bull Run project, so we knew that these these programs would be taking a financial hit.
The hit down to zero was obviously not what anybody thought was coming, and even with the addition of the $350,000, which will help to ensure that we are less likely to lose any of those programs over the coming year, those programs are still looking at a significant cut.
Specifically, they were facing a total $2 million with Councilor Zimmerman, I will be bringing an amendment to further restore a portion of the cut funds to the tune of $600,000 additional.
This will get programs back to just under 50% of the funding they had previously received.
Again, we're not trying to reach back to the full amount of funding because there was an artificial increase in funding because of dollars coming in through the Bull Run project.
But we do need to get these programs back up to that 50% level.
We wanted to flag for you all, or I wanted to flag for you all, that this amendment was coming so that it didn't come as a surprise.
I'm happy to answer any questions over the next week about the co-op program, the importance of it, and what seems to have happened when the program was moved over, as well as the conversations that we're already having about sustainable funding.
The amendment will be pre-filed and available to the public well before the hearing next week, but I wanted to make sure you all had the time to ask questions even in advance of that as well.
Thank you.
Jamie Dunphy
Thank you, Councilor Pirtle-Guiney.
Councilor Knoll.
Sameer Kanal
Thank you, Council President.
Councilor Pirtle-Guiney, where's the money coming from?
Elana Pirtle-Guiney
Co-op has a separate fund.
I hesitate to use the word fund because fund means different things within our budget.
Co-op has a separate line item which has been funded through a surcharge on projects that are— that the city— construction projects that the city needs to construct.
Using duplicative words here.
There are additional dollars in that fund that are sitting aside right now.
That is where the $350,000 came from.
It is where we will pull this $600,000 from.
So it doesn't touch other programs.
It just releases some of the money that is already set aside for these programs in the next year so that we don't lose the providers who we work with.
Sameer Kanal
Great, thank you.
I have a question on the same slide, so that's why I jumped on it here.
It's about the next line.
Can you speak to— we increased the PPA Health plan.
And then in part of last year, Councilors Smith and I put up a paired amendments, one to PPA and one to the general health plan for everybody else.
And as part of that, we also ensured that we were funding it and there was supposed to be a little bit of extra wiggle room there, but also aware that we didn't have a ton of money in the fund.
Okay.
So my understanding is that that was designed to avoid this situation effectively, where we'd be taking more money out of a smaller fund to fund something that, um, was not fully funded in the first place.
Can you just kind of square that circle for me?
Like, what, what am I, what am I missing?
How do we get to this point?
Unidentified speaker
I may need to phone a friend, or we might need to get back to you, um, because I don't have a ton of details on— I Yeah, I just don't have all the details.
I mean, the baseline is what I said earlier, which is that claims came in much, much higher than forecast.
It's not dissimilar to what happened in the LMBC fund, the main health plan fund for the rest of the city.
The claims costs just— we have a third-party actuarial firm that provides projections for both health funds in terms of how much our expenses are forecast to be.
And it was just, they just came in higher than that.
But as to what you're speaking to with the amendment and the like, we can get you more details on exact numbers and where we are vis-à-vis what was expected when council adopted that.
Sameer Kanal
Great, thank you.
Yeah, I mean, obviously we wanna make sure that we're not leaving a deficit some variety here.
And I, I just, um, I want to make sure that I understand that so that for the next time when we have this conversation, we're, uh, able to set this up for success so that we're not needing to drain a fund that— my understanding, I remember the shape of the graph— is not, um, not as at its highest level.
Yeah.
And so we, we need to, you know, and I know, uh, CFO Biery's probably already working, if not all, um, in progress on it in, in shoring up that fund over time.
But in terms of, um, and BHR as well, but in terms of, uh, how do we make sure that we're not taking more money out of it?
Because I, I basically, my, my understanding is the point of the vote last time included a caveat, not only increasing to the highest, uh, of the 3 options of the PPA, um, health plan options, but also ensuring that we wouldn't need to do this.
So that, that's just the part I'm trying to Okay.
Yeah.
Thanks, Council President.
Jamie Dunphy
Thank you, Councilor Kanal.
Okay, that exhausts the queue of councilors.
Onto the next section.
Unidentified speaker
Great.
Jamie Dunphy
Am I teeing this one up?
Unidentified speaker
You can go ahead and do that.
Loretta Smith
Great.
All right.
So—.
Unidentified speaker
Sorry, there's— sorry, there's a quick slide on process improvements, and then can I pass it over to you?
Mitch Green
Absolutely.
Unidentified speaker
Okay, so this slide, before we jump into the calendar part, which is what Council President's going to speak to, we wanted to circle back on the last time we were at Council on September 10th.
We had a conversation about budget process improvements, gathering all of the feedback that we'd heard over the prior months, and coming to you with kind of options about what could change going forward.
So we wanted to come back to that and say, Here is what— this is an incomplete list, and I could spend much more time talking about this, but here's what we're planning to incorporate from that discussion at the work session.
And then subsequent to the work session, I also had 2 sessions with council staff and some councilors more informally to talk specifically about budget materials and what folks wanted to see in budget materials.
So here are the things I just wanted to highlight here, focusing— again, these focus on the things that sort of council is interested in on the public engagement and information portion of budget process.
Within the sort of information and access theme, we're looking to improve program offers, which exist within the current budget book and in our dashboard, but could be more robust and helpful.
And so we're adding FTE information, incorporating performance measures, and rolling decision package information up to the program offer level.
And that's the plan for the proposed and adopted books for '27-'28.
The second bullet there under number one is we're working on creating a budget data open data website, essentially a new website that where all of the spreadsheets can be stored and there's a proper data dictionary, and so that any member of the public could download it and figure out what it means, hopefully.
And then the third bullet is, Council President will speak to this, work sessions on sort of what I would call base budget or what if nothing changed budget information about all of the bureaus starting in January.
So much earlier.
Working on increasing council information sharing and providing additional trainings and analytical support.
And I'll be talking about that more in the coming weeks with councilors.
In the second budget decision-making support, looking at producing the sort of a current service level complete budget with a CA budget report in February.
And that would sort of expand again similar content to what you would hear in the work sessions in January, but in written form in February.
And then on the budget engagement front, Laura Oppenheimer, our interim engagement officer, is going to speak more to this in a couple of slides, but essentially doing earlier engagement to gather high-level priorities well in advance of the mayor's proposed.
So happy to have conversation about that.
Again today, but that's kind of the shortlist of things that I wanted to bring back to you all to say, here's what we're doing, in hopes that the next year will be smoother and more transparent.
Okay, now I can hand it to you.
Jamie Dunphy
Okay, thank you very much.
So colleagues, I just wanted to very quickly frame up the budget calendar conversation.
We're going to be looking at a budget process schedule resolution that comes alongside the, the how?
And I want to talk in the big picture about how I'm approaching this budget schedule.
I will not be the council president next year, and I don't know who will be.
The next person may want to make a lot of changes to the budget process, and they may want to make a very few— make some very few.
That's not a sentence.
They want to make very few.
They may have a good idea of how they want to operate.
They may even be on a steep learning curve like I was.
The next president may not even be somebody who's currently elected to this body.
The main goal, my main goal, is to leave a roadmap for the next council president and for the next— or for this next council that is an iterative step forward from what we did in 2026.
I'm trying to offer something complete enough for the next president to follow if they want to without having to reinvent the wheel.
It's meant to provide the administration with enough information to plan and do their work during a leadership transition.
And finally, it's meant to be something that this council and the next president can change either this month or early next year.
This calendar is pretty close to what I shared a couple weeks ago with a couple of minor tweaks.
The mayor's proposed due date is set at April 20th.
The big new thing is the inclusion of dates for council to pre-file budget amendments for CBO review and a date with the— when those pre-filed budget amendments will be made public.
Both of those are voluntary deadlines.
The mayor's charter deadline is May 5th, and council has no hard deadline for amendments at all.
However, both voluntary deadlines really helped us out last year, even if both had some problems with implementation.
So they're both on the calendar for us to think about.
And again, this is a roadmap.
Council should feel free to change it as we work through this TAO process and to remove detail where they feel it's excessive.
I won't be offended.
This is simply a tool to try and be helpful for all of us, the 12 of us sitting up here, and for the entire administration that has to deal with whatever nonsense comes off this dais.
So Ruth, I'm gonna turn it back to you for the rest of this presentation.
Unidentified speaker
Great.
So yes, so along with the TAO ordinance and the the financial policy code ordinance.
There is a calendar resolution.
All 3 of those are filed currently and going to be discussed at committee next week.
So just to be clear.
Okay, so this— the next 3 slides go through 3 months at a time, what will happen over the next 9 months, roughly speaking.
Here we are today at the beginning.
Loretta Smith
Wow.
Unidentified speaker
So the— in October, the hope is to— sorry, one other thing to note.
Some of the things on these slides are not on that— in the calendar resolution just because they're a little bit more internal-facing, but I thought it would be helpful to note them here.
So the hope is to have sort of both budget— mayor's budget guidance and budget process guidance out to the bureaus by the end of this month.
That is earlier than it has been in recent years, and I think would be a big help to getting information to you all and to the public earlier in the process.
So that's just one thing to note.
In November, we are sort of on a parallel track of a whole lot of technical work that has to happen in order to get the budget systems and our— and SAP ready for the next year.
Thank you.
Next fiscal year's budget development, as well as beginning to develop budget options, and can talk more about how that will happen.
But that's kind of the work for November.
In December, we'll be coming to you all with a forecast information work session on the 9th.
Hopefully we'll have the citywide, a new citywide revenue and expenditure forecast released 2 days before that, so that's an improvement.
And then continuing the work on the sort of budget development in the background with that in December.
And then looking to early in the new year, the budget calendar has those early budget committee work sessions, which are focused on sort of base budget information and, you know, the what-if-nothing-changed version of the budget for all of the bureaus.
And there is a suggestion— suggested order in the budget calendar resolution, but again, totally up to council to change the order of that.
At the end of January, we expect to have a budget calendar We expect bureaus to submit all of their budget information to the CA.
That will go into the CA's budget report, and it will also begin the process of talking about how to actually balance the proposed budget.
And then moving into February, those work sessions continue, and then the estimated date for the city administrator's budget report release yes.
Is, uh, February 19th.
Um, and then that, um, in the beginning of March would come before, um, council.
Um, the date on the resolution is March 4th.
Um, on March 10th, there is a suggested council, um, budget priorities work session.
This is similar to what happened last year that was added into the budget calendar, but it's a bit earlier in the process.
And so the hope is that it's— I mean, I think this timing sets it up so that the mayor can hear that feedback and still incorporate it into his proposed budget in time.
The spring TAO also begins around the end of March, so there would be a work session that last week after spring break.
And then we get into the thick of it, April, May, and June.
The start of April is the spring TAO.
Again, that timing is to maximize the amount of financial data we have available before we have to file that so that we actually have a decent forecast of what the year will look like.
And but that also happens yes.
You know, before the proposed is released, before things get really crazy.
And then the mayor's proposed release would be April 20th.
The proposed budget hearings, which are required under state budget law and include public testimony, and they're hearings because it's both the city and Prosper, would be Thursday, April 22nd.
And then immediately the following week would be Budget Committee work sessions.
Those work sessions would begin.
And there again, there are some suggested topics in the calendar, but up to council to figure out how you all want to schedule those.
Oh, sorry, the 5/5 is supposed to be the date.
We can remove that.
Apologies.
Angelita Morillo
Oh, apologies.
Unidentified speaker
5/11 Is the budget amendment due date to CBO, and then 5/13— sorry, some last-minute work on the slides here— it would be the public posting date.
So essentially, the posting date would be a Thursday.
We're asking for 2 days ahead of that to be able to do the to do the work in the background of vetting them, getting legal review when necessary and the like.
And then Monday the 17th, the approved budget hearing would begin.
And as again scheduled, it would be scheduled for 3 days similar to what it was this year.
And then the June calendar is fairly prescriptive.
Okay.
There's a work session on the 2nd, TSCC hearing on the 8th, adopted budget first reading.
Council President added a day there so that it would span 2 days, and then the final vote would be on the 17th.
I know that's a lot.
Do you want to— we can do quick questions on calendar before we turn to Communications and community engagement if you want to.
Jamie Dunphy
I think that's a good idea.
All right, so colleagues, anyone in the queue?
We're going to have, uh, questions about this section specific to the calendar.
Start with Councilor Connell.
Sameer Kanal
Uh, Council President, thank you.
I had a question on the slide that actually was the queue up for it as well, and I think it's the same question.
Um, can you go back 2 more slides, please?
Yeah, so this— it went 2 questions.
First, can you explain what the CA budget report is as differentiated from what we got 2 years ago or a year and a half ago?
Raymond C. Lee
That hasn't been defined yet.
We're still going through the process to define what that CA report will look like.
Sameer Kanal
Okay, well, first, thank you for including it.
Um, I think after it happened the first time, it was probably 1 to 11 up here whether it was a good idea, but I was the one So I'm very grateful.
So, you know, I think it gave us a lot of additional information from previous CA Jordan, and I think it really also set us up for success.
I think combining that with the, again, replicating the earlier release date of the mayor's budget, which I'm very grateful for the mayor's proposal to do, is great.
Have thoughts on what should be in it, happy to follow up in an email or something.
Thank you.
On this slide it says budget engagement and it says conducting earlier engagement, and then 2 slides later up at the top it says mayor-led engagement.
And I just wanted to— is that going to be in the next section?
Are we digging into that?
Unidentified speaker
Yes.
Sameer Kanal
Okay.
And what is the timeline on having a permanent chief city engagement officer?
Raymond C. Lee
As we concluded kind of this last presentation with council to better define what that role is.
I'll be sitting down with the team to kind of really clarify how we move forward in really developing a profile for the next recruitment that we'll do for this role.
I'm anticipating this role not to come on probably until the new year.
I would want to keep the work that we're doing right now and the work that Laura's doing as we get right hot and heavy with the actual budget work from an engagement standpoint so we can keep that continuity going forward, but having that process start sometime in the new year.
Sameer Kanal
That's new calendar year?
Raymond C. Lee
Correct.
Sameer Kanal
Okay, thanks.
2 years ago, as chair of the then Finance Committee, Councilor Zimmerman had come up with a plan to do engagement that had to be adapted with a new citywide engagement officer coming on at the same time.
So I'm hoping that we can be— don't slow it down, it's good, you know— but, uh, I'm hoping that we can be in communication with everybody who's relevant to this, which obviously may change, uh, in the new year from which councilors, in a way that allows us to be involved.
And the way in which we'll be involved, I'm sure we'll talk about in the next slide, so I can, I can leave it there.
But, um, I'm, I'm very interested in this and ensuring that there's sort of continuity not only within the administration but in terms of planning for this specific budget engagement process.
Jamie Dunphy
Thank you, Councilor Knell.
Councilor Ryan.
Dan Ryan
Yeah, thank you, Council President.
It's good to keep the process changes up.
I think I put my hand up during that section as well.
I wanted to actually say thank you for including the FTE data and also performance measures.
Our conversation earlier, was it earlier this morning, about performance measures and KPIs, So I'm happy to see that, but based on our conversation this morning, is that going to be a discipline that's realistic throughout the enterprise?
Or is it— I know when I had the opportunity to be over BDS, was permitting BDS, that culture was pretty aligned with having performance metrics.
But the other bureaus that I had an opportunity to oversee did not.
So is this something where we're moving forward and trying to get some symmetry across the city?
Raymond C. Lee
Absolutely.
Elana Pirtle-Guiney
Okay.
Dan Ryan
And your goal is for that to be included this year?
Raymond C. Lee
Yes.
I know this is going to be a work in progress, and we're a continuous improvement organization.
So we know we're going to keep getting better with each iteration of this and each cycle of it.
But we have to start now.
Yeah.
Dan Ryan
I love that answer.
There's no such thing as best practice in my opinion.
They're just better and they keep improving.
So also when I looked at the calendar, I recall everyone having some challenges with the release of the mayor's budget and then when the amendments were due.
It still seems tight for me, but was it tighter last year than this?
Raymond C. Lee
It was.
Jonas Biery
No wonder.
Dan Ryan
But how much tighter?
'Cause was it just like, was it 6 days or 7?
Like now it's 10.
Jonas Biery
It is loosely better.
Dan Ryan
It's not dramatically better this year.
Okay.
Raymond C. Lee
But it is.
Jamie Dunphy
And I'll tell you that this is something that I think will require some iteration and some dedication from this council.
I also encourage all of our colleagues to file their amendments as soon as physically possible.
But yes, it does.
Jonas Biery
Yeah, and Council President, if I can add some context.
Dan Ryan
I have a moment of clarity because this was such an item last year and I just can't tell if this is much of an improvement.
Jonas Biery
Yeah, so it is, I think, maybe a couple business day improvement, which is not a lot.
Still too little.
But I think I just wanted to put it also in the broader context of all of the improvements.
And we talked about some of this on September 10th that, you know, I think we've had an unintentional kind of habit over the last couple years of kind of looking at everything at the last second.
And so there's a lot of these improvements are around getting some of that base information to you all and to the community earlier and in a more robust form so that both the mayor's proposed is better, better reflective of that input, better reflective perhaps of your input, is clearer and easier to interpret, and makes it easier for you all to develop those amendments.
So it doesn't—.
I think that's a great point.
Solve that timing challenge because we do have that.
But a major objective of all of this process change is to pull a lot of that all forward so that we can get both recognizing we're always going to have a limited timeframe, but what we can improve is the quality of information getting into that to make that shorter timeframe easier to manage.
It'll never be fun or easy, but at least better, to use your terminology, and maybe a little easier.
Dan Ryan
Well, I think the more transparent we are leading up to the mayor's proposed budget about what our interests are, that will help.
I think that some of us wait to see if our lobbying efforts paid off and we've got to see what we wanted.
But I also think it's interesting to have everything pre-baked before the mayor releases his budget.
So it's just a— it's an art form.
Yeah, thanks.
Jamie Dunphy
Thank you, Councilor Ryan.
Councilor Green.
Mitch Green
Thank you.
There was an earlier slide that had the timelines that I didn't necessarily see in the same format posted.
Can you go back to the City Administrator's report slide?
This one?
Yeah, perfect.
I wanted to verify the date.
So for the February 19th report, do we anticipate I hope so.
Raymond C. Lee
That's the initial plan to have it within that report.
Mitch Green
Okay, I think that'd be really helpful because I think we've talked, you know, multiple times over the summer to be like, we, we definitely want to know what, what actions could happen in that next budget.
Sameer Kanal
Thanks.
Jamie Dunphy
Thank you, Councilor Green.
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Council President.
A question and a comment.
Last year during that amendment process, council was able to work with Ruth, one of your analysts, which was incredibly helpful.
We learned today that he is now in a different position at the city.
I think all of our offices are mourning that.
Will we have somebody on your team who we are able to work with through this process in that same very hands-on detailed way?
Unidentified speaker
Yes, we're— and I'm actually coming to the heads of staff meeting next week to discuss it.
I'm also mourning, but We are planning to fill that position, and I'll talk to your offices about collaborating on that process.
Elana Pirtle-Guiney
Great, thank you.
And just a note on this council— on this calendar, Council President, on the next page in April, the Jewish holiday of Passover begins on, I believe, April 21st.
You have on here that we are going to have a hearing on the mayor's budget on April 22nd.
The first and second nights of that holiday are major celebrations.
I, for one, will likely be remote that day because I usually have 25 people at my house for the second night of Passover.
If we have Jewish members of our community, either councilors, staff, or members of the public who are expecting to be a part of this, those 2 days are not great.
Jamie Dunphy
Good flag.
Thank you.
We'll take a look at that.
Thank you, Councilor Pirtle-Guiney.
Councilor Kanal.
Sameer Kanal
Thank you, Council President.
Um, I wanted to just follow up a little bit, if you can go to the next slide please, uh, on Councilor Ryan's questions.
So, uh, I, I think having, um, whoop, this is— maybe I'm wrong on the slide I just saw, but, um, the idea of having, uh, 6 days, right, um, was Am I looking at the same slide we were looking at before?
Dan Ryan
Sorry.
Unidentified speaker
Sorry, I removed the 5/5 date because it was incorrectly labeled and I thought it was confusing.
Jamie Dunphy
Okay, okay.
Angelita Morillo
Sorry.
Sameer Kanal
Yeah, so, but what I think is, I appreciate that actually because it does show that we have from the 20th to the 11th, right?
Correct.
Which is significant.
Unidentified speaker
Yes, yes, yes.
Sameer Kanal
I think the—.
Sorry.
Which is a— and I'm not sure whether, Councilor Ryan, you meant last year as in last budget year as in A couple— 4 or 5 months ago versus last year's calendar year.
So—.
Dan Ryan
Sorry, of course I was talking about the budget calendar.
Sameer Kanal
So obviously both what we did 4 or 5 months ago and this are, uh, by schedule much better than a year and a half ago or whatever.
Um, I did want to mention the— that, and I, I don't mean to do this in a, in a negative way, the, the budget changed that we were amending after its initial release this year, the proposal.
So I think that we are guaranteed 6 days by virtue of the charter, meaning you can't change it after the 5th.
But I, I think if we're able to, to have that be locked, then it is actually a huge improvement.
I think that that's a variable I wanted to acknowledge that, um, hopefully is being improved upon.
And I, I think is a, you know, there's a trade-off there, obviously, but I, I, and I, I don't mistakes happen.
I'm not trying to fault anyone.
Also, since he's in the back of the room, I just also wanted to pile on with the thanks and mourning related to Owen moving over.
But I know that PSSA needs good folks as well, and happy that they're going to have another good person over there.
Unidentified speaker
Yeah.
And thank you for mentioning the thing about the sort of budget accuracy.
We are also making changes that I didn't highlight on that previous slide to lengthen the time for QA/QC prior to the mayor's proposed release.
And so we're building that into the full calendar so that we can be more confident in the numbers once they've been released on the 20th and not have those changes that were confusing and difficult for folks to navigate.
Sameer Kanal
So great.
Question for Council President, is this the last section for Q&A, or are there—.
Jamie Dunphy
We have one more Section after this that is going to be focused on engagement.
Yeah, engagement side of things still.
Raymond C. Lee
Got it.
Sameer Kanal
Okay, I have questions that are not in the slides, so I'll save them for the last part.
Jamie Dunphy
Great.
Elana Pirtle-Guiney
Thanks.
Jamie Dunphy
Thank you very much, Councilor Kanal.
Councilor Ryan.
Dan Ryan
I can wait, but I'm just going to say like 21 days is a lot different than 11, so I'm glad we caught that.
Yeah, thanks.
Jamie Dunphy
Thank you very much.
Okay, let's move on to the last section.
Laura Oppenheimer
Good afternoon, everyone.
Uh, for the record, my name is Laura Oppenheimer.
I'm the city's Chief Communications Officer and Interim Chief Engagement Officer.
I'm just going to briefly walk through a draft framework that shows an integrated plan for communications and engagement on the budget.
Go ahead and next slide, please.
Thank you.
Thank you.
I think and hope this will feel very familiar.
It is responsive to what we heard from all of you during the budget process work session recently, as well as much of what we discussed during the Civic Life work session last week.
This first slide, I'm just going to walk through our commitments and philosophy around budget engagement, and then we'll walk through a proposed calendar.
First, we're committed to providing clear, accessible information on the challenges priorities and trade-offs.
Secondly, and this is really key, you will see that each phase of engagement aligns with the budget milestones.
We need to be absolutely certain that we're providing a clear purpose to each phase and that the feedback that we're requesting from community and employees is meaningful and can inform decision-making.
Third, this is a lot of what we talked about in the Civic Life work session.
We don't need to treat Thank you.
We have a lot of great engagement practices and systems in place at the city, and we should leverage those.
You'll see that the plan will include the Portland Insights survey, tapping into our community partnerships, the neighborhood system, the New Portlanders Policy Commission, and the Multnomah Youth Commission.
We've heard a lot from you and from our employees that it would be really helpful to have some employee engagement.
Of course, they are Portlanders, still welcome out at community events as well, but they have unique perspectives.
So providing some tailored feedback opportunities is something we'd like to build in this year.
We want to make sure that we circle back and close the feedback loop and let community members know how the input that we received from them influenced the budget and the decision-making process.
Thank you.
And then I have a feeling we're all on the same page with this one, that by planning an engagement program now, we can really improve clarity for everyone in this room, for the community, for our employees.
And it will also allow us to maximize participation by planning this in advance and not having last-minute planning.
So let's move on to what we're proposing.
You will see that each phase does have a very explicit purpose and a format and a timing that aligns with the budget cycle.
First, we want to focus on raising understanding and really kind of seeding that public conversation about the financial challenges, the economic trends, and the potential solutions on the table.
That's more communications-focused, but is an opportunity to preview the engagement that will be available in 2027, which will be the reason for that timing, the week of December 7th, is to align with the economic forecast that we do have more information and can have a meaningful conversation there.
Then in January, we'll be ready to roll out the results of the Portland Insights Survey.
It will be— it comes out every other year, so it will be the first one that this council has received.
And I really do want to emphasize, I think this has been an underutilized tool.
Raymond C. Lee
Yes.
Angelita Morillo
Yes.
Laura Oppenheimer
It's a really robust representative survey of our community, including targeted outreach toward communities who historically have been underrepresented to ensure that we can get results across districts, across demographic groups.
And it asks them about their priorities for city spending, about their satisfaction with city services, about the biggest problems they see in their communities.
So we will roll that out in partnership with our survey partners at Portland State University in January.
The survey is just closing right now, and that should be really relevant to helping shape the rest of the budget engagement.
Then utilizing that and building upon it, we would move into the values and priorities phase.
This is before specific budget proposals are on the table.
We're hoping that we can utilize what we've heard from that representative survey to pick themes and priorities that we would engage people more deeply in, in qualitative feedback.
That's timed for following that City Administrator report.
Again, want to ensure that we are sharing as much information as possible to inform the feedback that we're getting.
I know there were questions around, is that the mayor's engagement?
Is that the council's engagement?
While a core purpose is to inform the mayor's proposed budget, I think everyone around this dais has an interest in the values and priorities and having those thank you.
I think that's really important.
We know that public comment is something that continues to shape the decisions made around the budget.
So I think we can show up as a city and we're proposing to do those as in-district open houses as well as a digital component for those who prefer to participate that way and then employee-focused opportunities as well.
We do wanna make sure that that occurs by early March to provide time for a feedback report that the mayor can really thoroughly consider in advance of decision-making around the proposed budget.
Thank you.
Then you see that date of April 21st.
Thank you for the note around the holidays.
We will certainly look at that in terms of the timing of these aspects.
It's really more of a communications touchpoint and rolling out that proposed budget, but we're committed to doing so in a way that helps break it down and clearly explain the choices and trade-offs for community members and for employees.
That is a really tight timeline.
Great timeline then to conduct the next phase of engagement after the proposed budget is out, but before you all have to move into decision-making.
You'll see we've proposed to do that in late April into early March.
That's a piece where I think we'd really want Council to shape what that engagement looks like, to work closely with the Council Operations team and your new outreach coordinator there.
Civic Life is here and ready to show up and support and kind kind of co-lead that engagement, but believe it, you know, ought to be council-owned.
So that's the process we're mapping out.
And to that point about leadership transition, at whatever point we're at in onboarding the new Chief Engagement Officer, I'm not going far.
You know, we're gonna make sure that we have continuity through the process.
Jamie Dunphy
Thank you very much.
Thank you.
Colleagues, any questions, comments, concerns, short stories, or interpretive dance?
Councilor Ryan.
Dan Ryan
Tempted on the last one.
Yeah.
Um, thank you, Council President.
When you talk about the values and priorities, the late February, early March, did you make it clear would be both council— well, actually council, CA, and the mayor?
Laura Oppenheimer
Yes, that is the intent.
We would do one per District and go out, and councilors would be welcome to join.
I know the mayor is really interested in making sure he's getting feedback from across the city to inform the proposed budget.
But yes, absolutely, I think it's an opportunity for councilors to also participate alongside him.
Dan Ryan
I think it worked out really well when we were all there together.
I also have a question about economic forecast.
I know there's one in December.
Isn't there one in late April, early May?
And did that always kind of— is that the reason why the mayor's proposed would come out after you had a chance to digest that?
Unidentified speaker
Historically, yes.
So there is a moment for a forecast update in April, and that's kind of the last minute to make a change based off of tax revenue.
The issue with it is there's not a ton of information available until the last 2 weeks of April because of Tax Day.
And the ability to really roll that into the proposed has always been strained, frankly.
Even just— it's hard timing-wise.
And so— and in the last few years, there hasn't been much of an update.
It's been a zero update, I think, 2 years in a row, and small in prior So I think, you know, that obviously is still true that we will get additional information in April and there will still be an opportunity to update council.
I think it will just come as a joint update to the mayor and council because it's really—.
Dan Ryan
If in fact the impact is different than has been the last few years.
Unidentified speaker
Correct, because it's really right around May 1st that there's any meaningful update.
Dan Ryan
Thanks, just jogging my memory on why that was the mayor's proposal came out later.
I think it was— all right, thanks.
Jamie Dunphy
Thank you, Councilor Ryan.
Councilor Knoll.
Sameer Kanal
Thank you, Council President.
Um, so I mentioned a negative thing that happened 2 years ago in this space, uh, or 2 budget years ago.
Last year, I, I agree with what Councilor Ryan was starting off with.
I think working with the, uh, the, um, engagement officer, we were able to plan something that I think reflected, in District 2 at least, every I know your district was a little different.
But in District 2, at least something that where we were all there together, it reflected all of our interests.
I think I'm not speaking for Councilor Pirtle-Guiney, but I think that she agrees.
You know, I'll give her a chance to speak.
Dan Ryan
Oh yeah, she put all the charts up and dots and yeah.
Sameer Kanal
And obviously, you know, Mayor, Administrator, they were there too.
So I think that approach was really helpful for that in both of those 2 timeframes.
And I really appreciate that.
Very interested in digging in, in particular on that and the last one entirely, 'cause that is when it's more in the council wheelhouse.
After any questions that anyone else has on engagement, I have questions on other things, so I'll just get outta the queue and hop back in.
Thanks.
Jamie Dunphy
Sounds good.
Thank you, Councilor Knoll.
Councilor Zimmerman.
Eric Zimmerman
Thank you.
This is the only government I've worked at where our employees are utilizing the public comment periods during the budget, and, and not in a small manner.
And some days they were the majority.
That tells me that we have an opportunity to build in an employee moment for, for public feedback or public comment.
And I think that actually would protect the, the nature of the, of the public comment moments.
And I think finding a way to, to divorce 2 from being the same thing because it has a growing trend, and I think it can actually be a more fruitful conversation if we are more deliberate and plan that out.
And I'm not seeing that here reflected quite, and if I've missed it, please tell me.
But it has grown to be such a huge trend at this point.
It—.
I think we, I think we mentioned it last year.
I think a few people mentioned it last year, and I think we really need to get deliberate about that because I would hope that I think that members of the public who don't have access to us all day, all the time, are able to take those slots a lot.
There were people who didn't get heard last year.
And employee feedback is clearly a very important thing because so many are showing up.
So let's find an opportunity in a different manner, in a different place, in a different time to have that occur.
Because I think that there are community conversations, public conversations about the services from and I mean this in the best way, the layperson's perspective for what they expect from the city.
And then there's the internal workings of an organization going through change.
And those conversations got quite muddied last year.
So I think we can be better just across the board for both audiences and both perspectives.
So I hope we can build that into engagement.
Thank you.
Laura Oppenheimer
Yeah, thank you.
We did briefly note under that values and priorities phase, building in some employee-focused We have not mapped out the details of what that will look like yet.
I agree that looking at some peer organizations for the defining details would be helpful, but we do think that employees will really appreciate as well having some employee-focused opportunities.
Eric Zimmerman
Let me rephrase it then.
I think I didn't realize that what you meant by that, that I see that line now.
I think that having more than one of these phases incorporate is gonna be important.
Given what we saw the last 2 years.
But I am now noting that.
So thank you for highlighting that one in values and priorities.
Dan Ryan
Thanks.
Laura Oppenheimer
Yeah, absolutely.
And did just wanna chime in too on the aspect of shaping exactly how each of these opportunities happen.
There will be ample opportunity for that.
I do plan to work with all the parties involved here to get feedback on exactly how it should look.
I think what we're hoping to do at this stage is get agreement on the phases the purpose of each phase so that we can kind of move on to the planning and be able to lock things in at a much earlier date and then work on the details.
Jamie Dunphy
Thank you, Councilor Zimmerman.
Okay, colleagues, I'm going to open the queue to questions about the engagement, but also if there are any other last questions that you have about this presentation, the TAO set, even some questions about the coming budget cycle.
So Councilor Kanal.
Sameer Kanal
Thank you.
So there are a lot of questions I have around specific decision packages.
I think the ones that I think are worth getting into here, there's one about, it's 28495 on the Portland Tennis Center.
The other one is 28401 on the shelter program encumbrance carryover.
And a third one is $28,580 on the convention tourism fund balance true-up.
I think the convention tourism one is maybe illustrative of some other things.
This one effectively shows that we had extra money, that there was unspent dollars last year.
We're carrying it over as beginning fund balance, but then it says it's putting it into external materials and services.
And I'm curious, there's no detail on that.
Unidentified speaker
How would one find out what the expected Uh, we would have to ask them and provide more information in the decision package, so I will do that and we can update it.
Sameer Kanal
Okay, uh, I have a few others that are kind of in this space too, so I'll just give the full list to you, uh, offline.
Um, the question I have on 28401, yeah, um, which is a shelter program encumbrance carryover, is less about the carryover and more about the, uh, It's the beginning of service impacts.
It's the very beginning of page 16 of that.
The shelter program's approved and planned budget for fiscal year '26-'27 relies on this $2.76 million carryover.
And my question is, isn't that the exact thing we were trying to avoid last year is building— and even earlier today on the fireside, but at least there was detail in the budget.
But the idea that it was— that we were not building around an expectation of a carryover.
Yes.
So can I get some more information on this one and what happened there?
Unidentified speaker
Yeah, I think probably— I mean, I don't know if you want to do it right now, but I think probably will be easiest to have the Portland Solutions staff respond to that.
But I don't know if you want to do that now, if they're still in the room or not.
Sameer Kanal
This is less a programmatic question and more— didn't— wasn't the idea behind the budget we voted on that the deliverables in the budget we voted on and the money that was in the budget we were voting on yes.
Jonas Biery
Yeah, and I would just say you're absolutely right, Councilor, um, um, that philosophically that is the intent and the norm.
Um, I think this is a circumstance, and again, I think once we have time to have a little more dialogue about it, there's sort of unique elements of this request related to transfer of funds multi-jurisdictionally, etc., that made that ideal norm a little more challenging.
So I wanted to acknowledge that you're right, that is the intent, and also true that sometimes that isn't 100% possible.
Sameer Kanal
Okay, and then I'll follow up on the programmatic side.
I guess the big picture is the more we can do to not make Portland Solutions an exception to every rule, the better we will be.
And I'm looking forward to it either being the 5th service area or part of a service area, but not this thing that exists last question.
Portland Tennis Center funding request.
I find it challenging to even wrestle with the idea that we're supposed to vote on something related to putting money into sidewalk repairs that relate to it when we were originally told in the budget process that we were going to vote on whether or not to transfer it over in the first place.
I think that's a fair point.
First place, and now we're being asked because of a request that came in from the chosen partner, which we had no influence over, to, to do this.
And then it's also talking about access to something that, as far as we know, is going to get closed off to the public at some point.
So we have— I mean, we have no information, at least I've been given none despite asking, on what has even happened.
This was signed, you know, Um, during our council recess after we were promised that it was going to be brought back to council.
So I'm, I'm just big picture trying to understand what is going on with this one.
Um, and sort of the legal framework as well about like, we budgeted for something where it would come back to us.
It was in the, the conversation.
I run the transcripts.
I've read them out loud several times up here.
I won't do it again about won't we have a chance to weigh in on whether or not we're privatizing this thing.
And then we're told we would, got privatized, private partner is now asking for $200,000 to be spent for something, and we don't even know if Portlanders are going to be allowed into this thing for free or not or how that's going to work.
So can I— I think this is more of a programmatic question and a legal question than for the folks sitting up here.
But can we get some information on what exactly is going on and, and even just the basic guarantee that access will remain open to the City of Portland's residents?
Because we don't even have that right now.
Raymond C. Lee
Yeah, we'll follow up on you on that, Councilor.
I'll make sure I follow up personally on that.
Sameer Kanal
Thank you.
Um, and I'll follow up as well with Parks on just the very specific stuff, but I thank you for the big picture.
Jamie Dunphy
Thank you, Councilor Kanal.
Well, colleagues, any further questions, conversations, comments?
If you got another question.
Sameer Kanal
Uh, say, question on the HomeShare pilot carryover.
Um, what happened here?
Uh, because this one we budgeted $500,000 and $471,000 is currently a request for, for being carried over.
I know this is a priority for you, Mayor, and I appreciate you being here and being able to answer this.
I'm not sure if it is your question or administrator or somebody else, but what wasn't— why did it not get all spent this year is really my question.
Unidentified speaker
I'll take the first shot.
Jonas Biery
It's a pilot, so the pilot's being rolled out and it's picking up steam.
But as far as the encumbrance carryover, it's just taking the funds and still isolating in that program.
That's being advertised and we're accepting applications and we're expanding the providers.
Sameer Kanal
Okay, so it's a ramp-up to the—.
Right.
Okay, appreciate that clarification.
I'll follow up with the rest offline, but thank you, Council President.
Jamie Dunphy
Thank you, Councilor Kanal.
All right, we have reached the conclusion of our work session.
Thank you all so much for this first conversation about the next budget cycle.
It's always budget season here.
Um, as promised, colleagues, the next big conversation and opportunity for us to actually meddle with the TAO is going to be at the Committee of the Whole, in which we can actually have conversations about any potential amendments, as we heard Councilor Pirtle-Guiney and potentially others.
With that, I am adjourning this work session of the Portland City Council.
Thank you.
Angelita Morillo
Thank you.