Multnomah County's financial forecast has slightly improved, with updated projections showing a less severe budget deficit than previously anticipated, according to a March 2025 budget forecast prepared by the Multnomah County Budget Office.
The updated forecast, presented to the Board of County Commissioners on Tuesday, March 18, paints a more refined picture than earlier predictions. While the County still faces financial constraints, the latest forecast suggests the situation will remain serious but will now be a bit less dire than initially feared.
The updated forecast anticipates a deficit of $15.5 million for Fiscal Year 2026, down from roughly $21 million. But even after addressing that gap for FY 2026, the County still could face another deficit, as much as $30 million, by FY 2030.
Several factors are contributing to the deficit, including declining commercial real estate values, inflation, rising personnel costs, and the end of federal relief funds. In response, Chair Jessica Vega Pederson asked County departments to prepare lists of potential budget cuts and service reductions that she will weigh as she builds her draft budget, due April 24. The Board of Commissioners will then have several weeks of discussions and work sessions to discuss the Chair’s draft before voting on a final budget in June.
Chair Vega Pederson said the updated forecast is crucial to helping the Board understand economic trends and uncertainties so that “we can help make the best possible decisions as we are moving into our budget process.”
“The practical implication is it reduces the amount of cuts necessary to balance our budget,” County Economist Jeff Renfro said of the revised forecast.
Business income, motor vehicle rental tax collections higher than expected
The improved revenue projections are partly attributed to a slight increase in corporate profits, which have boosted business income tax collections by $2 million to a total of $165 million. Increased travel — more flights and rental car reservations through Portland International Airport — has also contributed to higher motor vehicle rental tax revenue. These positive developments have helped offset some of the County’s slowing property tax growth and rising costs.
Despite the improved outlook, Renfro cautioned that the situation could continue to change depending on economic developments, including a potential recession or any shifts in federal or state funding. And the County will still need to make difficult decisions to balance the budget.
Commissioner Meghan Moyer asked Renfro about the biggest area of vulnerability for the County moving forward.
“It’s really the business income tax,” he said. “The profits of large financial institutions on Wall Street and large energy companies are going to have a much bigger impact than anything that’s happening locally.”
Economic conditions play a crucial role in shaping the County's budget. Renfro outlined the main uncertainties driving the County’s financial outlook:
- National economic trends: National employment levels, corporate profits, inflation rates, and interest rates all influence the forecast.
- Local economic conditions: Local employment growth, income levels, real estate market trends, and travel patterns also have a major impact.
- Tax revenue volatility: Revenue from property taxes, business income taxes, and other sources can fluctuate depending on economic activity.
Portland’s stalling development trends, expected to remain low for the foreseeable future, remains a major concern.
“You can look in the skyline and see that there’s not a lot of cranes in the skyline,” Commissioner Julia Brim-Edwards said.
Commissioner Vince Jones-Dixon asked Renfro about ways to spur growth and increase revenue, including streamlining the local permitting process.
“We should be doing anything we can to incentivize, increase development especially residential and multifamily,” Renfro said.
The budget process involves several steps, including opportunities for public input. This commitment to transparency and public engagement ensures residents have a voice in shaping the county's financial priorities. Residents are encouraged to participate in public hearings and provide feedback on the proposed budget.
The Chair’s draft of a County budget will be released April 24, 2025. Following that, the Board of Commissioners will work for several weeks — including dozens of public work sessions and three community hearings — to complete the budget. The final budget will be adopted on June 12, 2025.
Learn more about the budget calendar, including public budget hearings, on the Budget Office webpage. There will be three public hearings on the budget, please consider attending:
- Wednesday, May 14, 2025
- 6 to 9 p.m.
- 501 SE Hawthorne Blvd, Portland, OR 97214
Details for additional meetings May 21 and May 28, 2025 will be posted shortly on the Budget Office Events page.
