Portland City Council on Oct. 22 heard a staff preview of the fall Technical Adjustment Ordinance — known as the TAO — that the city uses each year to “true up” the adopted budget to audited 2024–25 results. Budget Director Ruth Levine told councilors the supplemental ordinance “authorizes, and adjusts budgets for the current fiscal year. It cannot adjust any prior or future fiscal years.”

The TAO is intended mainly as a technical clean-up, Levine said, but staff told the council that revenues and spending patterns for 2024–25 left less one-time resource than in prior years. The most immediate effect is a shortfall between the city’s adjusted beginning fund balance and the adjustments required by encumbrances, transfers and other technical items: staff calculated about a $16.6 million gap in the general fund after making the listed adjustments.

Why it matters: the TAO ordinarily provides modest, one-time resources the mayor and council can use during the next fiscal year. With revenues weaker than forecast and carryover spending still in place from last year, the city is looking at tighter one-time capacity heading into the 2026–27 budget process.

What staff presented

- Purpose: Levine said the TAO’s primary purpose is to align the adopted 2025–26 beginning fund balances to the audited ending fund balances from 2024–25. She described the TAO as primarily technical: “that is really mostly a technical ordinance,” she said, and framed the fall ordinance as the right place to record the audited results and limited, policy-driven adjustments.

- Revenue driver: staff flagged business license tax (BLT) collections as the major reason for lower-than-expected resources in 2024–25; the budget office’s numbers show BLT came in below forecast, creating part of the shortfall that TAO must address.

- Required adjustments: staff listed transactions that must be recorded, including an $8.1 million general‑fund reserve transfer that was not made in 2024–25 and therefore must be executed now to meet the city’s financial policy on reserves.

- Encumbrance carryovers: the largest bucket of fall TAO adjustments are carryovers tied to purchase orders and contracts opened in the prior fiscal year. Those are amounts still committed to work or unpaid bills that must be carried into 2025–26 unless council directs otherwise. Levine described the city’s review process for carryovers and said the budget office verifies that encumbrances are tied to prior purchase orders and the same work.

- Notable carryovers called out in the TAO memo include amounts tied to Prosper Portland, Portland Solutions shelter work, parks levy projects and a notable carryover at the Portland Police Bureau related to red‑light cameras. Staff said detailed memos and exhibits list each decision package and linked purchase orders; they offered to provide purchase‑order lists to council offices.

Staff balancing proposal and choices

Budget office staff recommended using existing contingency buckets to close the roughly $16.6 million gap. The proposed approach includes:
- honoring the $2.2 million policy set‑aside tied to a prior budget note (Green 13);
- reducing a general‑fund overhead set‑aside by a modest amount based on updated calculations; and
- drawing the remainder from the compensation set‑aside.

Levine and the CFO emphasized that many items are legally required or are the result of prior council direction; they described a range of discretions where council could act, such as whether to approve specific encumbrance carryovers. Jonas Birri, the city’s chief financial officer, told councilors that “ultimately, council has ultimate authority” to accept, reject or amend TAO items, but that many adjustments reflect prior directions, contracts or accounting rules.

Council questions and follow-up

Councilors pressed staff on what items are strictly technical versus those with policy implications. Several members expressed concern about using the compensation set‑aside to cover encumbrances, arguing that the set‑aside is needed to pay ongoing payroll-related costs and known personnel expenses. Staff said they will provide additional, bureau-level detail on encumbrance carryovers — specifically which purchase orders represent bills that must be paid versus projects where work could be paused — and promised written responses to council offices in the coming week.

Staff timeline and next steps

- Staff told council the TAO will return to the finance committee, and then to full council for formal action. The finance committee chair urged members to submit planned amendments quickly so the committee can schedule and consider them before the council’s scheduled November action deadline.
- Staff will circulate detailed memos and purchase-order lists linking each carryover to the work it funds and will provide written answers to council questions within about a week, with additional rounds to follow.

Discussion vs. decision

Council’s review at the Oct. 22 work session was purely deliberative. No formal action, motion or vote occurred at the work session; any change to the TAO would occur through the forthcoming finance committee and council adoption process.

Ending

Staff framed the TAO as a technical true-up that nonetheless contains choices that affect which work is continued in 2025–26 and how one‑time resources are used. Councilors pushed for clearer, line‑by‑line documentation of encumbrances and said they wanted time to consider policy-level tradeoffs before the file returns to finance committee and full council.