Portland’s city economist and budget staff told councilors on Oct. 22 that a shortfall in business‑license tax collections was a principal driver of reduced one‑time resources in the fall Technical Adjustment Ordinance, and staff outlined a proposed, earlier timeline for the 2026–27 budget.

Business‑license tax shortfall

City Budget Director Ruth Levine briefed councilors that “BLT came in 12,700,000 below forecast” for fiscal 2024–25, a shortfall that contributes to the reduced available one‑time funds in the fall TAO.

City Economist Peter Holzman explained how the business‑license tax (BLT) works and why it can be volatile. He described BLT as a 2.6% tax on net income (profits) sourced to Portland consumption; the tax’s payments are concentrated among a small number of filers, which makes collections sensitive to changes in corporate profits and taxpayer behavior.

Holzman told the council that two broad factors drive BLT volatility:
- Underlying tax liability (what businesses actually owe based on profit activity); and
- Taxpayer behavior and timing (how and when businesses file, and whether refunds or credits reduce collections in a fiscal year).

He showed that the top 100 BLT payers account for a large share of total collections and that periodic large refunds and extended filings can shift revenue from one fiscal year to another. Those timing effects, together with a more subdued near‑term national profit outlook, make BLT less likely to be a reliable near‑term growth engine for the general fund.

Other revenue and outlook notes

- Property taxes remain the largest single general‑fund revenue source and are less volatile than BLT, but assessed‑value growth has its own constraints driven by county assessments and state constitutional limits.
- Several discretionary revenue streams besides BLT are expected to be largely flat or to show modest growth in the near term.

Proposed budget calendar and process changes for 2026–27

City staff proposed accelerating parts of the budget timeline so the council, mayor and community can deliberate earlier in the cycle. Key elements of the proposed calendar:

- December–February: more upstreamed briefings and engagement with council and community so members understand the fiscal context and priorities before the mayor’s proposed budget is developed.
- February: a city administrator’s enterprise report that assembles scenarios and highlights tradeoffs (staff left open whether that report should include explicit recommendations). The report would not be a legally required balanced budget; it would be a tool to inform community and council deliberations.
- April 20 target: staff said April 20 would be the earliest feasible date to publish the mayor’s proposed budget after the internal technical work is complete (staff acknowledged this is a tighter timeline than prior years but said it is achievable with prioritized technical work).
- May–June: state law drives the final adoption calendar; staff emphasized that earlier public and council engagement should reduce pressure in the short window between publication and council action.

Why the calendar change matters

Several councilors said they want more time to absorb materials, to hold committee deliberations and to convene community engagement before the mayor’s proposed budget is released. The city administrator and budget office emphasized a multi‑year improvement effort: better briefing materials, clearer decision‑package information and earlier enterprise coordination among bureaus and mayoral deputies.

Quotations

- Ruth Levine: “BLT came in 12,700,000 below forecast.”
- Jonas Birri on schedule constraints: staff said the assessment is that “April 20 would be about the earliest possible date to have the mayor’s proposed.”

Next steps and follow‑up

Staff committed to providing written responses to council questions within a week, circulating additional budget and encumbrance detail, and returning to finance committee and council with TAO and process items. Councilors signaled they will continue committee work between now and February to refine priorities and possible amendments to the TAO and the 2026–27 budget framework.