Just months into the new budget year, Portland is having financial difficulties.

In an email to city managers Wednesday, City Administrator Michael Jordan announced a freeze on hiring and overtime pay starting Oct. 1. In the email, first reported by The Oregonian/OregonLive.com, Jordan said this is because of an unanticipated budget shortfall for the current fiscal year, which began in July.

The news follows a challenging budget cycle in Portland – the first under its new form of government – where Mayor Keith Wilson made significant department cuts and tapped outside funding to fill budget gaps.

Jordan said the city won’t get $12 million it previously expected to receive through business license taxes. Other unintended expenses include the city needing to pay out a “large legal settlement,” Jordan wrote. In June, City Council approved $8.5 million in settlement funds to descendants of Black Portlanders who the city and Legacy Emmanuel Medical Center displaced from their homes in the 1950s. This settlement cost came in four times larger than city attorneys had initially agreed upon – city councilors voted to boost the payout after hearing public testimony.

The shortfall specifically impacts the city’s general fund, which is discretionary, meaning there’s some flexibility on how the money can be spent. Much of the general fund ​​pays for parks, police, and Wilson’s homeless services plan.

Jordan said the city is able to tap into its reserves to fill the immediate general fund gap, but that more cost savings are necessary to prevent further cuts down the road.

The city currently has 662 vacant positions, representing about 9% of all city staff. The majority of those vacancies are in the transportation and police bureaus. The Portland Bureau of Transportation also lost 50 jobs in July, after the state Legislature’s transportation funding bill went nowhere. Jordan’s order exempts the bureaus that oversee police, fire, and 9-1-1 operations from the hiring and overtime freeze.

Bureaus can also request exemptions on hiring and overtime for certain positions, “such as essential services, regulatory requirements or positions funded by stable non-General Fund sources.” For example, all jobs funded by the Portland Clean Energy Tax are protected.

Jordan estimates that the freeze will save roughly $6 million of general fund dollars. If the policy also impacted Fire, Police, and 9-11 departments, it could save around $3 million more.

Next month, City Councilors will vote on further measures to close the city’s budget hole.

The freeze will remain in effect until the start of next year’s budget, which begins on July 1, 2026. But Jordan said he will review the impacts of the freeze “every other month to determine continuation or adjustment.”

News Source : https://www.opb.org/article/2025/09/17/portland-city-administrator-hiring-freeze-budget-gap-shortfall-michael-jordan/