Letter from Chair Wheeler to county employees
As we watch the economic upheaval at the national level I know that you are concerned, as I am, about the impact on Multnomah County. While our national economic situation is more precarious than any time in recent memory, Multnomah County has faced a fundamental
imbalance of declining revenues and rising costs, such as inflation, for many years now.
Since I took office, fiscal stability has remained a high priority. Unfortunately, this has meant a number of staff and service reductions. As the national economic picture worsens, I expect that
even more cuts will become inevitable in the next budget cycle. These decisions are not easy, but we are committed to the belief that facing up to our challenges and taking clear, thoughtful
action will help us weather the economic storm. As we await further developments on the national scene, I wanted to share with you some analysis.
PERS: As The Oregonian reported last week, individual accounts will see impacts and variable accounts, as well as those in the Individual Account Program will see declines. But PERS reports that the health of their balance sheet remains strong. The system still has $1 in assets for every dollar in benefits it has promised.
Property Tax Revenue: The county general fund depends on property taxes. Default notices on home loans have doubled since last year. However, there haven’t been many
actual foreclosures and the mechanism of (Measure 50) property tax limitation will prevent any downturn in property tax revenue due to declining home values this year. A major slowing in new construction means fewer new properties on the tax rolls.
State Revenue: The State of Oregon is largely funded by personal income taxes and the unemployment rate for the state hit 6.5% last month, up from about 5.2% last year at this time.
State revenue accounts for about 20% of the total direct revenue in the county budget. State economists have forecast a $268 million reduction in the state budget and that number could grow in the next forecast.
BIT Revenue: The Business Income Tax accounts for approximately 15% of our estimated General Fund revenue and it is likely to decline as businesses are negatively impacted by recent
economic events.
Bond Rating: The economic situation has not affected the county’s bond rating. Property taxes are relatively stable, and declines in business income tax and recording fees were already forecast. Future borrowing costs may be affected but we won’t know that until we actually issue new debt. The coming budget year will offer many challenges. We will need to continue to cut expenses, just as we see an increase in people seeking our services. I will continue to try and find smart budget cuts and new ways to get more resources.
My confidence in Multnomah County’s ability to weather this financial storm is based on the resiliency and innovation of the county’s greatest resource - our dedicated staff. Please continue
the good work you are doing and to look even harder for creative opportunities for efficiency and cost-savings.
I will continue to monitor our response to the economic crisis and will keep you informed on any significant information I receive.
Posted on September 30, 2008
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