- Why don’t we forgo cost-of-living adjustments (COLAs) to preserve FTE? Haven’t we done this in the past?
County staff have previously given up cost of living adjustments (COLA) and wage freezes have been negotiated with the County’s bargaining units during past budget cut cycles in order to preserve FTE. For instance, in 2020, the first year of the COVID-19 pandemic, non-represented employees did not receive a COLA, and some also did not receive a merit increase. The downside of these wage freezes is that they eventually cause compression between job classes and can lead to retention issues.
- Will we use reserves to offset the deficit?
No. Reserves provide a temporary buffer in response to unexpected decreases in revenue (the current decrease was not unexpected). If revenues decline significantly mid-fiscal year, reserves could be used to offset the revenue declines (for that year) and allow the County to avoid immediate, steep cuts in programming. In such an instance, the County would then incorporate any ongoing reductions into the next budget cycle so they could be implemented as part of a more thoughtful process. Reserves are not considered an ongoing revenue source and do not solve longer-term problems. Using reserves to avoid making tough decisions about ongoing services that will be necessary at some point could also lower the County’s Bond Rating.
- Why is the constraint 12%? During the forecast presentation, the Budget Office said 3.5 to 4% would cover the shortfall?
A 4% constraint applied uniformly across all departments would cover the $21.2 million deficit if all cuts were accepted. But the Chair’s guidance provided smaller constraints for public safety and some other specific areas, which means the constraint for other programs and areas must be greater than 4%.
Because nearly half of General Fund spending goes to public safety, any cuts applied uniformly across the County would have a larger impact on that system. And, in turn, because the vast majority of the Multnomah County Sheriff’s Office budget funds jail beds, the full constraint would require the closure of a jail dorm.
For those reasons, the Chair has proposed keeping the Sheriff’s Office and Corrections Health at their current level, while applying just a 3% constraint to the District Attorney’s Office and Department of Community Justice. She also proposed 3% constraints for the County’s elected officials’ staffs, and for the Division of Assessment, Recording and Taxation (DART), which generates revenue for the County.
The Chair also is asking for additional budget capacity from the constraint to preserve the County’s ability to reallocate resources to emerging needs.
- Are we considering borrowing to offset the deficit?
No. Borrowing to cover the cost of ongoing programs would only push off the changes necessary to align expenses and revenues, while making future budgets worse due to interest expenses.
- Is this the largest constraint the County has ever had?
No. During the Financial Crisis/Great Recession, the County was forced to make significant mid-year cuts that were then followed by additional cuts in the following formal budget process. These cuts were bigger both in absolute terms and as a percentage of the General Fund.
- Why can’t offices and departments keep and carry over any unspent General Fund from one year to the next, to reduce their constraints?
Per longstanding County financial policy, unspent General Fund dollars in one fiscal year must go back to the Board for reallocation two fiscal years later, instead of remaining with their original departments. For example, unspent GF in FY 2024 will be available in FY 2026 to use for one-time-only projects. That timing is driven by the County’s spending in a fiscal year. The fiscal year isn’t officially closed until the end of September. That’s when the County can fully account for underspending in 2024, and that’s why those funds would have to be part of the next formal budget process .
Beyond that issue, one-time-only funding presents great temptations to fund ongoing programs without a long-term plan to pay for services in the future. The result of using short-term funding is that we expand our programs and the public expectations beyond the County’s capacity to generate continued funding — and that approach inevitably leads to budget shortfalls and crises.
- Why can’t we use unspent Preschool for All resources to offset the deficit?
Preschool for All is funded by a voter-approved income tax on higher income individuals. The resources from the tax can be used only for activities defined in the ballot initiative, which is limited to preschool-related activities. The General Fund accounts for approximately 25% of the total County budget. Many of the non-General Fund resources used by the County are restricted to specific activities or programs.
- Why can’t the Board just vote to increase revenues?
The Board has the authority to vote to increase some taxes and fees, but this must be weighed against the community’s ability and willingness to pay them. The Business Income Tax (BIT) rate was increased most recently in February 2020 (from 1.45% to 2.00%).
- Why can’t the Assessor’s Office just raise property tax assessments?
The rules for Oregon property taxes are laid out in the Oregon Constitution and are not controlled by local Assessors or County Boards. Property value growth is strictly capped at 3% annually (assuming no redevelopment), and the permanent tax rates established when the property tax system was overhauled in the late 1990s cannot be changed. Most significant changes to Oregon’s property tax system would require a statewide ballot initiative.
- Is the County planning early retirement incentives to help departments meet their constraint?
Historically, offering early retirements have not generated the significant savings needed to offset a large deficit. Nonetheless, the Chair and Chief Operating Officer will work to determine by mid-March whether a voluntary retirement program will be offered, and, if so, they will establish eligibility at that time.
- When will we know the impact of these cuts on the workforce?
There are three key dates when more information and impact becomes clear:
- Feb. 21 when the department requested program offers will be posted on the Budget Office website.
- April 24 when the Chair releases her Executive Budget - this is the first set of official decisions. HR/Department staff will reach out to impacted staff the week before the release..
- June 12, when the Board of Commissioners votes on the FY 2026 Budget.