Portland, OR – Portland Mayor Keith Wilson unveiled his first city budget this week, navigating a $130 million shortfall by proposing sweeping layoffs, departmental cuts, and a heavy reliance on outside funding — all while betting big on expanded homeless services.

The $8.5 billion budget proposal represents a 4% increase over the current year, yet underscores the financial strain facing Portland. A mix of inflation, the expiration of pandemic-era federal aid, rising health and overtime costs in public safety bureaus, and weakening tax revenues have left City Hall grappling with tough decisions.

“A budget is a statement of your values,” Wilson told Oregon Public Broadcasting. “That’s what this budget is about. It’s restoring community health and safety.”

But restoring services means painful sacrifices elsewhere.

A Budget Built Around Homeless Services

At the heart of Wilson’s plan is a promise to open 1,500 new shelter beds by year’s end — a campaign pledge he has chosen to pursue despite its steep price tag. The city originally anticipated spending $28 million to expand shelter capacity, but an additional $38 million is now needed to keep existing shelter villages operating after Multnomah County declined to take them over as expected.

The $63 million total cost of shelter services would typically be daunting in a deficit year. But Wilson is banking on external support: $15 million from Metro and $10 million from the county are already committed, and the mayor remains confident that the Oregon Legislature will approve the remaining $36 million — even though that funding hinges on a May 14 state revenue forecast.

If the state money doesn’t come through, Portland could be forced to find alternative funding quickly. And even if it does, the funds are only guaranteed through July 2026.

Still, Wilson is optimistic: “If Portland shows success, we are going to create our own level of following,” he said.

Layoffs and Cuts Across City Government

To close the gap, Wilson proposes eliminating 180 city positions — including 63 in the Bureau of Development Services. That bureau has been hit hard by Portland’s construction slowdown, with fewer projects resulting in decreased permit revenue.

“The biggest cuts are in permitting because the activity is so slow,” Wilson said. “I’m incredibly disheartened about that because those are good people that have given a lot to Portland.”

Despite recently partnering with Governor Tina Kotek to waive building fees and encourage new housing, Wilson said he’s not concerned the layoffs will hinder future development efforts. “Are we going to be pushing and pressuring the system? Yes. But that’s how you create efficiency.”

The budget also includes 47 cuts to Portland Parks & Recreation. Trash cleanup, restroom maintenance, and landscaping would all be scaled back. Wilson defended these decisions as necessary to preserve youth and community center programming.

“To what extent are we willing to maintain our trees versus our kiddos?” he asked rhetorically.

Other proposed cuts include:

• Reduced summer youth programs and garden hours in 2026

• Delayed street paving, sewer repairs, and reduced street cleaning

• A $10 million reduction in administrative roles, including equity and community engagement work

• A freeze on merit and cost-of-living raises for managers, saving $4 million

Managers were also recently required to return to in-office work full time.

“I keep thinking about all the hits that our staff are taking,” Wilson said. “Not only that, but are they proud of the job that they’re doing?”

Preserving Key Services

While many departments are facing cuts, Wilson’s budget protects and even expands others.

He has preserved funding for SUN Community Schools, citywide youth sports programs, and community centers. He also wants to add staff to the city’s homeless outreach office, Portland Street Response, and Portland Fire & Rescue.

The budget adds 150 positions funded by the Portland Clean Energy Fund — a voter-approved program paid for by a tax on large retailers and used for climate-related projects. These hires are concentrated in Portland Parks & Recreation and the Bureau of Planning and Sustainability.

Wilson’s budget also maintains $11 million in funding to support the expanded staffing needs of Portland’s soon-to-be larger City Council and mayor’s office, a move approved earlier this year.

High Stakes, Uncertain Future

Wilson, a former business executive and political newcomer, is navigating complex financial terrain in his first public budget. Critics may point to the risks of relying on non-guaranteed, one-time funds. Supporters may see his prioritization of shelter and public safety as a bold investment in Portland’s future.

While Wilson acknowledges the strain his plan puts on city staff, he believes the long-term payoff will be worth it — and that the success of Portland’s shelter expansion could become a model for others.

“If this works,” Wilson said, “the money will follow.”