Last-minute budget revisions at the City of Portland are threatening more than 100 union-represented jobs and could lead to rougher roads and under-maintained water and sewer lines.
The changes — made at the request of Mayor Ted Wheeler — walk back about $14.5 million of planned new revenue from utility rate and parking fee increases. They came after months of deliberate budget planning by bureau officials that determined how much the city should raise rates to maintain the city’s water, sewer, and road systems.
Wheeler’s media team told the Labor Press last week he was not available for comment. In public meetings he has fiercely defended his eleventh hour decision to freeze rates as one that will benefit Portlanders at a time everyone is struggling with high inflation.
But leaders of city employee unions have billed the decision as a political stunt to placate business lobbyists. And at least two of Wheeler’s colleagues on city council tried to resist the changes.
Representatives of AFSCME Local 189, Laborers Local 483, and PROTEC 17 are urging commissioners to rethink the decision before formally adopting the budget in June. They argue that the rate freeze will lead to layoffs, higher infrastructure maintenance costs, and worse city services, with only negligible savings for most taxpayers.
Mayor flip flop
The city’s fiscal year runs July 1 through June 30, and city bureaus typically begin budgeting for the next fiscal year in October. Bureaus submit proposals to the mayor in the spring, and the mayor releases a complete budget proposal for council consideration in May. By that point, budgets are effectively set.
“You generally don’t expect the mayor to go in and make a lot of adjustments there, because there is about six months of dialogue, and we are basically budgeting toward what the mayor is already recommending,” said Commissioner Mingus Mapps, who has been outspoken opposing the budget changes.
Wheeler released his $7.1 billion budget proposal for the 2023-24 fiscal year on May 4. It included bureau-requested rate hikes for water and sewer services and a 40-cent-an-hour downtown parking fee increase. But a week later, the mayor asked to amend his own budget to “hold the line” on taxes, fees, and utility rates. Specifically, he asked to:
Drop the proposed rate increase for water services to 7.7% from 8.9%, lowering Water Bureau revenues by $2.4 million next year
Drop the proposed rate increase for storm water services to 3.15% from 5.15%, lowering Bureau of Environmental Services revenues by $8 million
Eliminate the parking fee increase, dropping Portland Bureau of Transportation projected revenues by $8.3 million.
On May 17, city council approved the rate freezes for water and environmental services on a 3-2 vote, with Mapps and Rene Gonzalez voting no, and Dan Ryan and Carmen Rubio joining Wheeler in voting yes. A modified version for parking fees that would raise rates by 20 cents an hour passed 4-1. The change was pitched by Mapps and opposed by Wheeler.
“It doesn’t solve our problem at all, but it definitely reduces the damage the mayor did here by half,” said Mapps, who oversees the Portland Bureau of Transportation (PBOT). He also manages the Portland Water Bureau and the Portland Bureau of Environmental Services, and he worked with the bureaus to craft their original budget proposals.
Wheeler said his amendments were necessary to avoid overburdening taxpayers. He asked for them after a May 12 work session where a tax accounting consultant firm argued that high taxes and fees are driving business out of the city.
Officials estimate that the average Portland taxpayer would save $2.25 a month on their water and sewer bills as a result of the mayor’s cut in the rate increase. Laborers Local 483 Business Manager Ryan Sotomayor said that savings comes at a multi-million dollar cost to the bureaus that keep critical city services running. Sotomayor disputed the mayor’s claim that the rate freeze would benefit citizens. Instead, it means less money for maintenance and repairs on water lines, sewer systems, and roads.
“This is going to be harmful to our workforce. It’s going to be harmful to our community,” Sotomayor said. “(The mayor) keeps talking about the people who are leaving, but we are not talking about the people who are staying. Everyone who lives in the City of Portland deserves these services. We need our infrastructure to keep running.”
Caught off guard
Because it came so late in the budget process, Wheeler’s rate freeze caught the utility bureaus off guard. Bureau heads have not yet determined the specific effects it will have on their services next year, but they anticipate needing to pause work on some projects, scale back on community programs, defer maintenance, shrink staffing, or a combination of those measures.
In big picture estimates drafted May 26, Mapps said the Portland Water Bureau estimated that it would need to cut 25 full-time positions or delay $42 million worth of new projects to balance its budget. Bureau of Environmental Services (which maintains sewer lines and treatment) estimated it would have to cut 33 full-time positions or $78 million in projects.
PBOT expects to feel the hardest hit with the rate freeze. Parking fees have not increased since 2016, and transportation is the only city bureau that’s taken budget cuts every year for the last five years. It was already bracing for multi-million dollar cuts in 2023-24, even with the planned 40-cent boost at parking meters. Officials say to lose even more of their projected income will almost certainly lead to layoffs, lost programs, and worsening road conditions.
“We will continue to look internally, really looking forward to what we can do to right size things and how to make sure the impacts both on our staff and on our services are reasonable,” said PBOT spokesperson Hannah Schafer. “There’s just not more fat to cut, so there will likely be impacts.”
Schafer said bureau leaders think they can avoid firing staff in 2023 by keeping vacant positions open. But come next year, PBOT might need to cut up to 100 or more jobs.
That will be demoralizing for workers who lose their livelihood — and for the employees left behind to take on more work with less funding, said PROTEC 17 representative Rachel Whiteside.
“Obviously there are very real consequences if you are laid off at a time when there is a lot of high inflation and economic uncertainty,” Whiteside said. “For the workers who are left behind, it has a very real impact as well. … You still have a ton of work, and you feel like you can’t complain, you have to be grateful because you still have a job.”
Residents will see the results of the rate freeze in deferred infrastructure maintenance or program cuts, Mapps said. For example, potholes and rough roads may not get repaired as quickly, and it may take more time for crews to respond to leaky pipes and fix sinkholes caused by waterline breaks.
“If the goal here is to convince Portlanders not to leave town, I don’t understand how allowing your water system to deteriorate is going to get people not to move to Vancouver,” Mapps said.
Again, the effects on PBOT services will be among the most noticeable. Beloved community programs run through the bureau, including Sunday Parkways and Safe Routes to School, will likely scale back, Mapps said. Road and sidewalk conditions will worsen as maintenance is delayed to save money.
Local 189 President Rob Martineau says the rate freeze also will have long term impacts. The quickest and easiest way to balance budgets will be to put off maintenance, he said. But that will cost taxpayers more down the line, when neglected roads or water lines need even more repair. Martineau likened it to “pressing the skip payment button” for a credit card payment. Although it saves money in the now, the bill still has to be paid — and it accrues interest as it waits.
Although commissioners approved the amendments, they have not formally adopted the budget. That vote will happen later this month. Local 483 launched a petition to try to sway commissioners to reinstate the rate increases as originally proposed. However, there’s a legal timeline to set next year’s utility rates, and the days are running out, so the budget is very unlikely to change again, Mapps said.
“I really want people to understand this is a big deal,” Mapps said. “I also want labor in particular to know that … I’m going to do everything I can to minimize job losses. I will be working with labor leadership to figure out how to move things forward.”
