The Multnomah County Budget Office on March 21 briefed the Board of Commissioners on the latest updates in the County’s five-year General Fund forecast — finding no changes for the current fiscal year. However, staff warned that a $3.9 million deficit starting in Fiscal Year 2025 could grow significantly larger amid ongoing uncertainty over property values and inflation.
The five-year forecast gives the Board of Commissioners the ability to assess and respond to the long-term financial impact of current and proposed policies and programs. The Board last received an update in November 2023.
Overall, the forecast found no net changes for Fiscal Year 2024, which ends June 30. A $3 million reduction in expected property tax revenues was offset by a $3 million increase in interest revenue.
“It's just a coincidence that they offset each other,” said Jeff Renfro, the County’s economist.
But the Budget Office reported that a $3.9 million deficit expected in FY 2025, (starting July 1, 2024), is now forecast to grow to $32.8 million by FY 2029 without Board action on revenues or expenses, or changes in economic conditions. Fluctuating property values and inflation continue to drive risk and uncertainty, as reflected in the November forecast.
FY 2025 General Fund Forecast
Personnel costs are among the County’s largest source of expenses — and the Budget Office adjusted its forecast for FY 2025 in light of changes driven by inflation and state law.
As part of their work in the short legislative session that concluded earlier this month, lawmakers approved House Bill 4045, which expands retirement benefits for certain public employees such as district attorneys. The ultimate cost of that legislation remains unclear, Renfro said, but the County is expecting higher Public Employees Retirement System costs starting in FY 2026.
Separately, the Budget Office had assumed cost of living adjustments for FY 2025 would increase County employees’ pay by 3.7%. Following the release of the December Consumer Price Index (CPI), the FY 2025 is now known to be 3.3%. The Budget Office will be reducing budgeted personnel costs in FY 2025 to reflect the actual COLA which will result in ongoing savings of $1.8 million. Renfro said these savings will be ongoing and will help reduce deficits later.
Chair Jessica Vega Pederson also noted that the Behavioral Health Resource Center is no longer included in the forecast as having a funding gap, as it was in the previous forecast.
“We’ve been working closely with our Health Department, and we’ve identified a path forward that makes this carve-out no longer necessary,” said Chair Vega Pederson.
FY 2025 General Fund Forecast One-Time-Only Funds
Renfro reported that since the last update, the forecast calls for $2.0 million more than was expected from interest revenue in FY 2025, meaning County will now have nearly $56 million in one-time-only funding to allocate in its next budget.
The $56 million includes underspending from FY 2023, updates in the FY 2024 forecast, and any actual revenue collections above the forecast from FY 2023. Per Board policy, half of that one-time funding — or nearly $28 million — must be allocated for facility and information technology projects, with the other half allocated for one-time-only programs and services.
Commissioner Julia Brim-Edwards suggested that the County will need to “have lots of conversations with the community” to help people understand the growing budget gap and other dedicated funds considering the constraint in the budget.
“These continue to be challenging and volatile economic times which is one of the things that makes this forecast so important and meaningful, is really to just really to get an understanding of the sense of where we are,” said Chair Vega Pederson.