Portland City Council TSCC Public Hearing 06/09/26
Portland certified its FY2026-27 budget, but reserves are dropping from 20% to 11-12% by FY27 and the city's Triple-A bond rating is now at risk. The Bull Run water filtration project ballooned from $500M to $2.5B, and $75M in one-time money is still propping up permanent programs with no fix locked in.
Summary
Portland's FY2026-27 budget was certified by the Tax Supervising and Conservation Commission (TSCC) after a public hearing that covered the city's structural deficit, bond rating risk, utility rate increases, and ongoing challenges in the second year under the new council-manager form of government. The TSCC voted unanimously to certify the budget but issued a formal recommendation — for the third straight year — that the city improve internal quality control on budget data before publication, after the proposed budget again contained out-of-balance funds that had to be corrected before adoption.
The hearing surfaced several financial concerns. CFO Jonas Biery warned that general fund reserves are projected to fall to 11-12% of expenditures by FY27, down from over 20% in FY23, and that the city's Triple-A bond rating — which saves Portland millions in borrowing costs — could be at risk if spending trends don't reverse. A financial stabilization plan is being developed and is expected to come to council in September. Budget Director Ruth Levine described the city's reliance on one-time funding as a 'fiscal cliff' that peaked at around $220 million in FY2022-23 and is being stepped down, with roughly $75 million in one-time funding still propping up ongoing programs heading into FY2027-28. On the Bull Run Filtration Project, Councilor Clark reported costs have ballooned to an estimated $2.5 billion — up from a 2017 estimate of $500 million — largely due to a 16-month delay from Multnomah County land use permitting and a LUBA appeal, adding about $450 million in costs. Filtered water service is now targeted to begin by September 30, 2029.
Council President Dunphy outlined improvements made to this year's budget process, including an earlier proposed budget release (April 20 vs. May 5 last year), ten all-council work sessions, and a structured amendment pre-filing process. He acknowledged that public review time for late amendments remained too short and pledged to start planning the next budget cycle by fall 2026. Separately, Councilor Kanal flagged the FPDR pension system — which will consume an estimated 40% of Portland's local property tax levy at its peak — as a long-standing structural issue, with an initial council discussion planned for later in 2026 and a new actuarial analysis expected from Milliman within the next month.
Key Points
- Budget process improvements for FY2026-27 were discussed, including an earlier proposed budget release date (April 20 vs. May 5 last year), ten public work sessions, and a pre-filing deadline for amendments with budget office feasibility review.
- The City's general fund structural deficit is significant, with reserve and contingency levels projected to drop from over 20% in FY23 to approximately 11-12% by FY27, raising concerns about maintaining the Triple-A bond rating.
- The Bull Run Filtration Project total cost is now estimated at $2.5 billion (up from an initial $500M estimate), with completion now targeted for September 30, 2029, after a 16-month delay caused by land use permitting issues.
- Unbudgeted Housing Bureau fund balances were identified as an irregular budgeting practice; corrective policies are being developed requiring all ending fund balances to be re-budgeted in the fall Technical Adjustment Ordinance.
- The Fire and Police Disability and Retirement (FPDR) system's long-term fiscal impact and governance structure were discussed, with an initial council discussion on FPDR scheduled for 2026 and a new actuarial review expected imminently.
- TSCC certified the FY2026-27 budget and recommended the city implement enhanced internal quality control checks on budget data before publication, noting out-of-balance funds in the proposed budget for the third consecutive year.
Votes (1)
TSCC Certification of Portland FY2026-27 Budget
Authorization for the TSCC Commission to sign the certification letter for the City of Portland's FY2026-27 budget, with a recommendation that the city implement enhanced internal quality control checks on budget data before publication.
Action Items
- Council President Dunphy to initiate a budget after-action report immediately after budget adoption and begin planning the FY2027-28 budget process by fall 2026.
- City Budget Office to issue guidance over summer 2026 requiring all ending fund balances to be re-budgeted in the fall Technical Adjustment Ordinance (FY2026-27 fall TAO).
- CFO Biery and Councilors Green and Zimmerman to present a Financial Stabilization and Recovery Plan to council, targeted for September 2026.
- City to implement enhanced internal quality control checks on proposed budget data prior to publication, per TSCC recommendation; TSCC offered pre-publication review assistance.
- City Administrator Lee to assemble a team to evaluate predicted cost savings from the core services centralization/realignment initiative.
- City to pursue Medicaid reimbursement for Portland Street Response (PSR) and CHAT program costs; explore whether fire bureau medical response costs could also qualify.
- Administration to follow up with updated data on the SDC waiver program's impact on housing unit development.
- Initial FPDR governance and fiscal impact discussion to be scheduled for Committee of the Whole in 2026.
- New FPDR actuarial analysis (by Milliman) expected to be released June or July 2026.
- Budget Director Levine to share graph showing one-time funding trends with TSCC as follow-up.
- City to hire a change management position (approved in the FY2026-27 budget) to support organizational transformation.
- City to pursue an asset management hire and develop a comprehensive Capital Improvement Program.
- CPOT Chair Brett Bourne invited council and Multnomah County BHR to a Measure 110 program meeting scheduled for the current week.
Issues Discussed (18)
CFO Jonas Biery warned that general fund reserves are projected to fall to 11-12% of expenditures by FY27, down from over 20% in FY23, putting the city's Triple-A bond rating at risk. A financial stabilization plan is under development and expected to be presented to council in September 2026.
Councilor Clark reported that the Bull Run Filtration Project's estimated cost has ballooned to $2.5 billion, up from a 2017 estimate of $500 million, with approximately $450 million of the increase attributed to a 16-month delay caused by Multnomah County land use permitting issues and a LUBA appeal. Filtered water service is now targeted to begin by September 30, 2029.
Councilor Kanal flagged the FPDR pension system as a long-standing structural fiscal concern, noting it will consume an estimated 40% of Portland's local property tax levy at its peak. An initial council discussion on the issue is planned for later in 2026, with a new actuarial analysis from Milliman expected within the following month.
Referenced during the TSCC's broader quality control recommendation, which noted for the third consecutive year that the city's proposed budget contained out-of-balance funds requiring correction before adoption, though the Housing Bureau's specific fund balance issues were not discussed in detail.
Referenced during broader budget planning discussion, but no specific details about Portland Street Response were presented or acted upon in this meeting.
CFO Jonas Biery informed the TSCC that a financial stabilization plan is currently being developed in response to the city's structural deficit, with general fund reserves projected to fall to 11-12% by FY27 and the Triple-A bond rating potentially at risk. The plan is expected to be presented to council in September 2026.
The Bull Run Filtration Project was highlighted as a major driver of rising water costs, with its total estimated cost now at $2.5 billion — up from a $500 million estimate in 2017 — due in part to a 16-month permitting delay that added approximately $450 million in costs. Utility rate increases were noted as part of the broader FY2026-27 budget discussion, though specific water and sewer rate figures for the upcoming fiscal year were not detailed in the hearing.
Referenced during broader budget discussion but no specific action taken on the FY 24/25 supplemental budget; the meeting focused on certification and review of the FY 2026-27 budget.
CFO Jonas Biery warned that general fund reserves are projected to fall to 11-12% of expenditures by FY27 — down from over 20% in FY23 — putting the city's Triple-A bond rating at risk. A financial stabilization plan is currently being developed and is expected to be brought before council in September 2026.
Referenced during broader budget discussion, with the TSCC certifying the FY2026-27 budget unanimously amid concerns about declining general fund reserves and structural deficits, which implicitly affect public safety funding levels. No specific action or testimony focused directly on public safety budget cuts was recorded in this hearing.
CFO Jonas Biery warned that general fund reserves are projected to fall to 11-12% of expenditures by FY27, down from over 20% in FY23, putting the city's Triple-A bond rating at risk. A financial stabilization plan is under development and is expected to be presented to council in September 2026.
Councilor Kanal flagged the FPDR pension system as a long-standing structural concern, noting it is projected to consume approximately 40% of Portland's local property tax levy at its peak. An initial council discussion is planned for later in 2026, with a new actuarial analysis from Milliman expected within the next month.
Referenced during broader budget quality control discussion — the TSCC issued its third consecutive formal recommendation that the city improve internal quality control on budget data, noting that the proposed budget again contained out-of-balance funds requiring correction before adoption, though the Housing Bureau specifically was not singled out.
Referenced during broader budget quality control discussion — the TSCC issued its third consecutive formal recommendation that the city improve internal quality control on budget data, noting the proposed budget again contained out-of-balance funds requiring correction before adoption, but no specific action on Housing Bureau fund balances was taken.
Referenced during broader budget discussion as part of ongoing planning, likely related to the TSCC's repeated recommendation that the city improve internal quality control on budget data, which has identified out-of-balance funds requiring correction prior to adoption for three consecutive years.
CFO Jonas Biery warned that general fund reserves are projected to fall to 11-12% of expenditures by FY27, down from over 20% in FY23, putting the city's Triple-A bond rating at risk. A financial stabilization plan is under development and expected to come before council in September, while roughly $75 million in one-time funding continues to prop up ongoing programs heading into FY2027-28.
Councilor Kanal flagged the FPDR pension system as a long-standing structural concern, noting it is projected to consume approximately 40% of Portland's local property tax levy at its peak. An initial council discussion is planned for later in 2026, with a new actuarial analysis from Milliman expected within the next month.
Referenced during broader budget quality control discussion — the TSCC issued its third consecutive formal recommendation that the city improve internal quality control on budget data, noting the proposed budget again contained out-of-balance funds requiring correction before adoption, but no Housing Bureau-specific fund balance issues were separately addressed.