Portland’s mid-year budget woes are growing.

According to City Administrator Michael Jordan, the city’s homeless shelter system is short $11 million to cover anticipated costs this year. That money was expected to come from the Oregon Legislature, but was not included in the final state budget package.

The unexpected shortfall could further undercut Mayor Keith Wilson’s ambitious plan to end unsheltered homelessness by December.

Wilson sold his campaign promise — which relies on swiftly opening an array of overnight-only shelters across the city — with a pitch that most of it would be paid for by state and regional dollars. In June, the City Council adopted an annual budget that included the $11 million expected from the state to help fund the city’s $65 million shelter budget, which covers both overnight and other shelter programs.

But, with the state cutting costs to navigate its own budget shortfalls, the city will need to look into its own coffers to cover that money.

In a memo shared with city councilors Tuesday, first reported on by The Oregonian/OregonLive.com, Jordan said that filling the shelter budget gap requires a “reimagination” of city dollars.

Jordan suggested reducing staff at alternative city shelters — another name for the city’s outdoor village shelters — and significantly scaling back costs for planned day shelters and storage facilities for people living outside. He also suggested tapping into about $2.5 million from the city’s reserves. It’s not immediately clear how this will impact the mayor’s goal to open 1,500 new shelter beds by Dec. 1. Since beginning to open these new shelters in January, the city has only opened roughly 600 beds.

Earlier this year, Wilson seemed confident that the state would cover a portion of the shelter budget, even as the city navigated a tough budget cycle of its own. In briefings with the City Council, he said he discussed the issue with Rep. Pam Marsh, the Jackson County lawmaker who chairs the state’s Committee on Housing and Homelessness.

Marsh told OPB that she’s not certain why the $11 million didn’t make it into the state’s final budget plan.

“I’m assuming it was left on the cutting room floor because the budget was too lean,” she said on Wednesday. “Questions always come up around whether Portland can accommodate for funding cuts better than smaller jurisdictions. I wouldn’t be surprised to hear that was the case.”

City Councilor Loretta Smith has long been critical of Wilson’s shelter funding plan. She said Wilson’s reliance on the state’s dollars was “totally irresponsible.”

“He made it seem like he had a direct line of money,” Smith told OPB Wednesday. “But you don’t know what’s going to happen at the end of the session. You can’t be sure about anything. It’s absolutely ridiculous to say otherwise.”

Smith doesn’t think the city should spend any of its budget reserves on the shelter programs. She and other councilors have argued that the city shouldn’t be in the business of running homeless shelters, and that it’s the responsibility of Multnomah County to do so. The county currently runs more than thirty shelters, through a city-county agreement that relies on city dollars.

“We are spending hundreds of millions of dollars on homelessness and housing,” said Smith, who previously sat on the county board. “But we need to figure out how to fund other infrastructure too, like roads and parks.”

Multnomah County’s shelter system is also facing significant state funding cuts. In a recent budget presentation, the county said it’s navigating a $28 million shortfall in state funding. If it’s not addressed, more than 200 shelter beds could close.

City councilors will have the final say on how to cut costs to keep programs running. And cuts to shelter programs are only a piece of the budget puzzle. Last week, Jordan shared news of another significant, unanticipated budget gap: the city had received $12 million less than anticipated in business license tax revenue. Jordan announced a citywide hiring freeze, but the anticipated savings aren’t enough to make up for the shortfall.

City councilors will meet next month to discuss ways to adjust the city budget to account for these various funding shortfalls.

News Source : https://www.opb.org/article/2025/09/24/portland-mayor-shelter-program-faces-critical-budget-shortfall/