Portland is facing another challenging budget year, according to city economists.

According to the city’s revenue department, Portland is facing a budget shortfall of roughly $67 million next fiscal year, which starts July 1.

That’s more than double the size of the forecasted budget gap in last year’s city budget.

“Portland is not alone in facing these forecasted funding challenges,” said City Economist Peter Hulseman. “Communities across the U.S. are seeing slower revenue growth and rising costs, and Portland’s forecast reflects similar trends.”

Hulseman points to the federal government as the leading cause of the grim financial outlook. Specifically, he writes that reductions to corporate taxes included in the “One Big Beautiful Bill” have the “single biggest impact” on the city’s budget.

In all, the city expects a $20 million reduction in business taxes and about $8 million less in property taxes. Those taxes make up about 75% of the city’s general fund revenue. The general fund is the city’s largest discretionary pot of money, which pays for parks, police and other city services.

Along with the federal tax cuts, Hulseman points to stagnant population growth and declining housing and commercial development in Portland as a reason for the declining revenue.

Meanwhile, the city’s expenses tick upward. The city anticipates a 15% increase in health insurance costs for city staff in the coming year and a spike in the cost of other city needs, like software and risk insurance.

The announcement follows a year highlighted by blistering budget battles among brand-new city elected officials in its first year under a new government system.

Last November, Hulseman predicted a $27 million budget shortfall in the coming fiscal year, which began in July. By January, that number had grown to $100 million, due to declining tax revenues and other unanticipated city costs. City elected leaders filled the gap by making significant layoffs in some of the city’s largest bureaus and raising city revenue funds, like parking and rideshare fees.

It’s unknown if Portland can expect a similar trend this year. The city budget office will publish an updated economic forecast in February, ahead of city budget negotiations.

Mayor Keith Wilson, who writes the budget, is already anticipating cuts. Last month, he directed each city bureau to produce several budget scenarios for the coming year, including one that reflected a 10% reduction, to address “another difficult budget season.”

News Source : https://www.opb.org/article/2025/12/16/portland-oregon-budget-politics-financial/