Multnomah County narrows FY2026 shortfall to $15.5 million but warns of larger multi‑year gap

Multnomah County budget staff told the Board of Commissioners on March 18 that the county's March five‑year general fund forecast reduces the projected fiscal year 2026 shortfall to $15.5 million from the $21.2 million shown in November, but cautioned that deficits widen over the forecast horizon without policy changes.

Jeff Renfro, who identified himself as a member of the county budget office, said the March update incorporates increased revenue assumptions and technical adjustments that shrink this year's projected gap. "We have to balance our budget. So we get to balance, and then we carry those changes through the five years of the forecast," Renfro said, adding, "we do think that fiscal year 2026 will be our toughest year."

At a glance: the presentation lists a set of specific forecast adjustments. The county increased the business income tax (BIT) assumption by $2.0 million and motor vehicle rental tax receipts by $1.5 million; it trimmed expected revenue from U.S. Marshal bed usage to 15 average beds; and it modestly lowered cigarette‑related revenues. Those and other technical changes produced a $4.7 million, or about 0.6 percent, net increase in expected current‑year revenues compared with the adopted budget baseline.

Why it matters: budget staff said the BIT outlook is the single largest source of volatility. Renfro described BIT collections as concentrated among a small number of firms, with the top 10 payers accounting for roughly 15–20 percent of total BIT revenue in a typical year. "It is one of the reasons that I talk about volatility," he said. The presentation included historical comparisons that show different recession types produce very different impacts on BIT collections.

Forecast details and key drivers - Business income tax: County staff said recent corporate profit strength justifies a modest upward revision to the BIT forecast, but Renfro said he is "hedging a little bit" because of national uncertainty in corporate profits and the stock market. - Motor vehicle rental tax: Collections have spiked with higher airport passengers; the presentation tied a large October increase to airport activity and noted some one‑time events (sporting travel) that produced spikes but said airport passenger trends drive most rental car growth. - U.S. Marshal beds: The forecast reduced assumed average bed usage to 15 from prior, higher estimates; staff said changes reflect lower marshal usage and some rule changes that allow longer transports and use of less expensive beds in outlying areas. - Tax title program: A state Supreme Court ruling and a subsequent state law change reduced forecasted tax‑title revenue from about $750,000 to roughly $50,000 going forward; staff said the assessor is monitoring developments. - One‑time funds and reserves: After required reserve adjustments, staff estimated about $37.3 million in one‑time resources available in FY2026; by board policy those would be split roughly evenly for facility/IT capital and other allocations (approximately $18.6 million and $18.7 million, respectively).

Risks and next steps Budget staff highlighted several risks: the concentration of BIT payers, the potential for changes in national economic conditions (including tariffs and inflation expectations), and the county's many open labor contracts. The presentation noted that Local 88 represents approximately 60 percent of the county workforce and that a prior period of many open contracts cost about $18 million in ongoing expenses.

Renfro described the forecast as both an economic outlook and a statement of risk management: "in a time of significant uncertainty, the forecast is going to be more of a reflection on our approach to risk and our planning to mitigate risk than it is me saying I'm really confident about what I think the BIT is going to be." He said the county will update forecasts again in May before the board adopts a budget in June.

Board reaction and process Commissioners asked follow‑up questions about dependence on specific industries for BIT, local development permit activity, how quickly permit pipelines turn into taxable development, and how the county would respond to material state or federal funding changes such as shifts in Medicaid. Christian Elkin, identified in the briefing as the county budget director, said the March forecast reflects the governor's recommended budget for state funding and that the county expects further adjustments as the state and federal processes conclude; the county will return to the board later in the year as needed.

The county budget office also reported $1.5 million in non‑earmarked contingency and two earmarks (public campaign finance and Hansen deconstruction) for the current year.

What's next: budget staff said they will continue monitoring economic signals, including unemployment claims and corporate profits, and will present a May forecast prior to the board's June budget vote. Staff and commissioners emphasized the uncertainty around labor settlements, tariffs, and national economic indicators as items that could force additional budget adjustments.