The County’s budget experts delivered an update on the five-year General Fund forecast Thursday, March 11, offering a more optimistic financial outlook in the midst of better-than-expected revenue and an economic recovery fueled by massive federal stimulus.
Topline recovery remains strong as industries prepare for a post-pandemic future, with 2021 expected to be the strongest year of economic growth in decades. Economists are starting to see signs of activity picking up across many industries, with bookings increasing for cruises, concerts, and other events.
“We’re starting to see signs of both, at a broader financial level and then working its way down to individual households, people starting to anticipate something like a return to normal,” said County Economist Jeff Renfro.
In response to the positive economic news, the County’s budget experts have increased the fiscal year 2021 General Fund revenue forecast by $8.3 million, resulting in $700,000 above what was expected when the budget was adopted. A $2.5 million deficit is predicted for fiscal year 2022 — a significant improvement compared to a $9.1 million deficit estimated in November 2020. The deficit is expected to grow into a $43 million surplus by 2026.
The new outlook is all contingent on progress in ending the pandemic and in economic recovery. And it doesn’t take into account any relief from the $1.9 trillion COVID-19 American Rescue Plan President Joe Biden signed into law this week, which in addition to direct payments to individuals, will send millions to state and local governments.
“We’re still in the process of evaluating those funds and what’s coming to us,” said Christian Elkin, the County’s budget director. “Any time the federal government releases big funding sources like this, there’s strings and stipulations. and so we’re spending a lot of time . . . to evaluate what are the parameters that we can spend that money within and what’s the best and highest use for every single one of those dollars.”
There’s light at the end of the tunnel - but risks of a two-tiered recovery
While many are optimistic about an economic rebound, there are fears of a two-tiered recovery. Industries that didn’t bear the brunt of the pandemic are likely to come out of the crisis relatively unscathed. Women with children, communities of color, and workers in harder-hit industries have left the workforce at higher rates and have been less uplifted by the recovery.
“That top line good news picture hides so much,” said Commissioner Susheela Jayapal. “Poverty is like quicksand - once you slip, it sucks you down. We as a county are going to be dealing with the effects of that for a very long time and it’s not going to be addressed by one-time COVID relief.”
Some of the greatest disparities are seen in labor participation among men and women. Women with children under 16 left the workforce at rates significantly higher than men, underscoring just how strongly the crisis has impacted working mothers.
For women of color, the picture is starker. Between February and December 2020, employment among Black women declined 9.5 percent. Among Latinx women, employment declined 8.3 percent. That’s compared to roughly 5 percent among white men and women.
Unequal recovery underscores need for County services
As Multnomah County prepares for a post-pandemic future, commissioners expressed an urgent need to prevent people from falling through the cracks. That will likely mean a greater need for County services.
One number that may reveal the need is based on something called the Census Pulse Survey, Renfro said. Using housing questions from the weekly state survey, he determined that there may be up to $20 million a month in unmet rent need in Multnomah County. While the number is not precise, he said, it speaks to the number of people struggling to afford housing.
“It really is a tale of two economies that we are seeing,” Commissioner Sharon Meieran said. “The disproportionate need for our services will become very manifest.”
Looking ahead, budget experts predict that the continued response to COVID and the path of recovery will dictate the 2022 budget situation for Multnomah County. Other factors that will influence the outlook include personnel costs, and open labor contracts. Every represented employee will have an open labor contract next year.
While there are many reasons to be optimistic, board members reiterated the path to recovery is a long one with many uncertainties. The greatest challenge will be preventing a two-tiered recovery.
“We can’t walk away from these good forecasts,” Commissioner Jayapal said. “We appreciate them, but we can’t walk away from them thinking, ‘All right that’s it, we’re done in a year, we're going to be done with the effects of this pandemic.’”