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By Ian K. Kullgren March 7, 2011

Sam Adams says Portland’s finances show a one-time $22 million surplus

Despite these hard economic times, the city of Portland is doing just fine. It’s doing so well, in fact, that it’s running a budget surplus. At least, that’s what Mayor Sam Adams has been telling residents.

The news seems to have first cropped up in Adams’ own blog on Dec. 8, 2010: "In last two years, because of our more conservative revenue forecasting, a federal accounting rule change & tamped-down spending (ex: no CPI raises for city staff) results in $21 million one-time surplus."

In recent weeks, Adams has been using the line with some frequency. In a question-and-answer with Willamette Week published Feb. 16, 2011 he said, "You asked me what I was proud of. And we have a budget surplus. A one-time budget surplus. We’re in a very different position than most major cities in the United States and most of the governments around us."

He repeated the claim in more detail during his State of the City address on Feb. 18, 2011. In fact, he repeated it twice:  "Let me repeat. Next year we begin with a $22 million, one-time, general fund surplus."

If that’s true, it’s a pretty good reason to be self-congratulatory. After all, like Adams said, most other budgets aren’t looking so good these days. Take, for example, the multibillion-dollar shortfall the state is facing going into the next two-year budget cycle.

But, we wondered, is it true? Could Portland really be running a surplus when all we hear about are deficits? So, we decided to  check out the mayor’s State of the City claim that Portland is starting next year with a $22 million one-time surplus.

In order to see what the city’s finances look like, we turned to a 5-year budget forecast that was released in December.  

The document, on first glance, seemed to back Adams up. Resources for the upcoming budget should be somewhere in the neighborhood of $398 million while required expenditures are estimated at $376 million. Take the latter from the former and you get a budget surplus of $21.7 million.

If you keep reading, though, the numbers get murky. For instance, Table 1 mentions an additional $10.5 million in "continued unfunded ongoing" expenditures. Basically, that category is made up of things that traditionally get funded but aren’t "required." You throw that into the equation and suddenly the city’s surplus is halved ($11.2 million to be precise).

The confusion doesn’t end there. Continue on to Table 2, and the report offers a separate scenario. Again, we start with a $21.7 million surplus, but then, it says, there are two new categories to consider: "new one-time" expenses and "additional on-going spending." Those two bits add up to $15 million. Take that from the $21.7 million surplus and the city is left with $6.7 million.

What’s more, the forecast goes on to say that the city really shouldn’t spend that $6.7 million. See, the city budgets with five-year forecasts. The idea is that the budget being crafted this year will pave the way for a zero-balance budget five years down the road. In order to get to that zero balance, the city needs to hold onto that $6.7 million, according to the report. So, the forecast concludes, the city’s surplus might not even exist.

City of Portland economist Josh Harwood puts it this way: "We're not in crisis mode. We're not short-selling the house, but we're not buying a new car either."

Until the details of the budget are hammered out, it’s difficult to tell what surplus -- if any -- will remain. According to the December analysis, that remaining balance could be as high as $21.7 million or as low as, well, nothing. We gave the mayor’s office a call to see if we’d missed something.

"The number is accurate," Roy Kaufmann, the mayor’s spokesman said, referring to the $21.7 million figure. But "it does not take into account the one-time spending."

"We're too early in the budget process to know ... how that all is going to shake out," Kaufmann added. "I think that the point that the mayor was making was demonstrating to city residents how Portland was being fiscally responsible and fairly fiscally conservative since he was elected, even before he was sworn in."

That may be true, but if it’s too early in the budget process to know how the one-time funding is going to shake out, it seems to us that it’s also too early to be trumpeting a surplus at all -- let alone a pretty optimistic one of $22 million.

We rate Adams’ claim that Portland has a one-time surplus of $22 million as Half True -- the statement is partially true, but it leaves out some pretty important details.

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Our Sources

Interview with Roy Kaufmann, spokesman for Sam Adams, March 2, 2011

Interview with Josh Harwood, city of Portland economist, March 2, 2011

December 2010 Five-Year Forecast for city of Portland

Willamette Week, "Sum of Sam," Feb 16, 2011

Just Call Me Sam, Mayor Sam Adams’ blog, Dec. 8, 2010

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Sam Adams says Portland’s finances show a one-time $22 million surplus

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