Multnomah County faces a $10.5 million general fund shortfall as it prepares for the Fiscal Year 2026-27 budget cycle, according to updated projections from Multnomah County’s Budget Office. Unless significant changes are made, the budget deficit could grow to $33.8 million by FY 2029-30 before falling to $15 million in FY 2030-31.
The Budget Office presented its updated financial forecast to the Board of County Commissioners on Thursday, Nov. 13, outlining slow property tax revenue growth and escalating costs that will continue to strain the County’s resources in the coming years.
It would mark Multnomah County’s second year in a row with a significant general fund deficit. For the current fiscal year, which spans July 1, 2025, to June 30, 2026, the Board of Commissioners had to close a $15.5 million general fund deficit, while also navigating reduced revenues from a regional tax that funds homeless services.
The Board also made millions of dollars in midyear reductions and adjustments to housing, homelessness, health and other programs because of federal cutbacks and after the County received less state funding than expected.
The updated forecast spans FY 2026-27 to FY 2030-31. County Economist Jeff Renfro attributed the projected shortfall to a combination of factors, most notably the significant slowing in property tax revenue growth -– the primary source of discretionary funding for the County. At the same time, costs for personnel and materials continue to climb. Even though inflation is lower than in past years, Renfro said it must continue to decrease to put the County on a more sustainable path.
The County’s general fund represents about 25% of the County’s $4 billion budget. Other sources — including the Metro Supportive Housing Services and Preschool for All taxes, as well as federal and state pass-through funding — fund specific County services and programs.
Portland’s commercial real estate market, particularly downtown, continues to struggle. As businesses adjust to shifts in remote work patterns, many properties are no longer worth as much as they were before the COVID-19 pandemic.
Values of residential properties, which contribute the bulk of the County’s property taxes, have remained stable. But sharp declines in the local commercial real estate market have continued to reduce expected property tax returns for the County.
The real market value of downtown commercial properties has continued to fall since last year, with some buildings now worth less than half of their value in 2019. Real market value is the estimated price a property would fetch on the open market, which is used to calculate the amount of property taxes owed. Renfro had previously forecast this trend would have bottomed out in FY 2025-26, that’s now expected to last through 2026-27 at least.
Renfro said some property owners are triggering reassessments of their properties in light of reduced sale prices and real market values. Reassessments would permanently lower those properties’ assessed values, setting a new, lower base when determining property tax payments for those properties. That, in turn, would generate reduced property tax revenues for the foreseeable future.
Rising personnel costs, which represent two-thirds of the County’s overall general fund expenditures, remain key contributors to expected deficits. Personnel expenses are heavily influenced by annual cost-of-living adjustments. Those adjustments, often built into labor contracts, are tied to inflation. Every percentage point increase in base pay represents a $4.1 million increase in expenditures.
The County is also in active contract negotiations with unions representing thousands of employees, which could add to uncertainty and further raise costs in the coming years.
The County’s obligations to the Oregon Public Employees Retirement System (PERS) are also increasing. Each percentage point of PERS rate increases represents $2.9 million in expenses for the County. These rising costs, combined with the slowdown in property tax growth, are contributing to a widening structural deficit.
The County’s financial forecast also points to a number of potential risks, including continued economic uncertainty at the national level. Changes in federal policy — such as tariffs, which influence inflation — will continue to affect the County's budget. Nationally, job openings and hiring rates have slowed down, even though unemployment claims remain at historic lows.
At the local level, employment is falling, with the Portland metro area, driven by trends in Multnomah County, one of five nationally to lose jobs.
Development locally will also remain low for the foreseeable future. In one ongoing bright spot, local domestic travel is recovering, in terms of passengers coming through Portland International Airport, though it remains just shy of pre-pandemic levels.
The County’s budget process will begin in November, with final approval set for June 2026. County leaders will be looking for ways to manage the budget shortfall while preserving critical services. Work sessions and public hearings will be advertised on the budget website.