The Portland City Council held a workshop Tuesday to discuss the challenges the city expects to face in crafting their Fiscal Year 2025 (FY25) budget, which include a decline in state and federal funds, staffing shortages, and financing the operation of the city’s multiple homeless shelters.
In a “FY25 Budget Primer” presentation prepared for the Tuesday workshop, City of Portland Finance Director Brendan O’Connell lists the “significant budget challenges” which could result in a substantial increase in property taxes.
The first challenge outlined by O’Connell is the risk of a decline in funding from the State of Maine for Portland’s General Assistance program, a municipal welfare program that provides residents with vouchers to help pay for housing, food, and other basic necessities.
In FY 2024, the State of Maine made a one-time $7.4 million General Assistance payment to Portland to help offset the city’s outsized welfare spending.
From Jan. 1, 2019 to June 30, 2023, Portland’s General Assistance spending — $109.3 million — accounted for 72.8 percent of all General Assistance spending in the state.
Additionally, O’Connell warns in his presentation that federal funds from the pandemic-era American Rescue Plan Act (ARPA) are set to run out by FY25.
Portland is expected to use the final $4.3 million of the ARPA funds by the end of FY24.
Another budgetary challenge outlined by the city’s finance director are dozens of unfilled staff positions across several city departments.
O’Connell states in his presentation that many of the city’s staff vacancies are 24/7 shift-based positions that are more costly when vacant, due to the shifts needing to be filled at overtime or with contractors.
The staffing shortages are expected to have a $4.5 million impact on the city’s FY25 budget.
Those positions include 911 emergency call center staff, snow removal, and homeless shelter attendants, among several other positions.
City of Portland wages are nearing $110 million annually, and the cost of a 1 percent increase in city wages is now in excess of $1 million, according to O’Connell.
Expansions in capacity at the city’s Homeless Services Center and City Family Shelter are also challenges O’Connell points to for the city in forming their FY25 budget.
A newly opened 180-bed shelter for single asylum-seeking migrants in Portland’s Riverton neighborhood has an annual operational cost of approximately $3 million, which is currently partially reimbursable from state funds, O’Connell states in his presentation.
In his presentation, O’Connell also will speak to how the FY25 will address the City Council’s outlined goals for the year, which include additional diversity, equity and inclusion (DEI) initiatives, addressing the housing affordability crisis, climate change, and exploring the establishment of an Office of Community Engagement.