A Growing Financial Crisis
Portland’s efforts to tackle homelessness are facing a significant financial setback. According to City Administrator Michael Jordan, the city’s homeless shelter system is short $11 million needed to cover anticipated costs this fiscal year. City leaders had expected the money to come from the Oregon Legislature, but it was ultimately excluded from the state’s final budget.
The gap threatens to undermine Mayor Keith Wilson’s central campaign pledge: to eliminate unsheltered homelessness by December. His plan depends heavily on rapidly opening a network of overnight-only shelters across the city.
Reliance on State Funding Falls Through
When the City Council approved Portland’s $65 million shelter budget in June, the figure included the anticipated $11 million in state support. Wilson had repeatedly assured council members that state and regional dollars would cover a large portion of the city’s expanded shelter programs.
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But Oregon lawmakers, struggling with their own budget constraints, did not include the funding in their final package. That leaves Portland scrambling to fill the gap from its own coffers.
City officials first learned of the shortfall in June but did not inform council members until this week. The delay has sparked frustration and intensified debates about the mayor’s strategy.
Possible Cuts on the Horizon
In a memo shared with councilors Tuesday, Jordan outlined possible measures to close the funding gap. They include:
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Reducing staff at alternative outdoor village shelters.
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Scaling back costs for day shelters and storage facilities for people living outside.
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Drawing $2.5 million from city reserves.
Even with these adjustments, the impact on Wilson’s ambitious goal remains uncertain. Since January, Portland has opened about 600 new shelter beds — less than half of the 1,500 beds Wilson pledged to have ready by December 1.
State Officials Weigh In
Rep. Pam Marsh of Jackson County, who chairs the Legislature’s Committee on Housing and Homelessness, told OPB she wasn’t sure why the money failed to make it into the budget.
“I’m assuming it was left on the cutting room floor because the budget was too lean,” Marsh said. She added that lawmakers often question whether Portland is better positioned than smaller jurisdictions to absorb state funding cuts.
Pushback from the City Council
The shortfall has amplified criticism from Councilor Loretta Smith, a longtime skeptic of Wilson’s approach. She argued that the mayor was reckless to rely so heavily on state dollars.
“He made it seem like he had a direct line of money,” Smith said. “But you don’t know what’s going to happen at the end of the session. You can’t be sure about anything. It’s absolutely ridiculous to say otherwise.”
Smith also opposes using city reserves to support shelter programs. She maintains that operating shelters should be the responsibility of Multnomah County, which already manages more than 30 shelters under a city-county partnership funded partly with city dollars.
“We are spending hundreds of millions of dollars on homelessness and housing,” Smith said. “But we need to figure out how to fund other infrastructure too, like roads and parks.”
County Facing Its Own Cuts
Multnomah County’s shelter network is not immune from financial trouble. County leaders recently revealed they are dealing with a $28 million shortfall in state funding. Without intervention, the county warned that more than 200 shelter beds could be eliminated.
This dual shortfall — city and county — has raised concerns about whether the Portland region can maintain existing shelter capacity, let alone expand to meet growing needs.
Broader Budget Struggles for Portland
The shelter system is only one piece of Portland’s broader financial challenges. Last week, Jordan disclosed another budget blow: the city collected $12 million less than anticipated in business license tax revenue.
In response, the city has imposed a hiring freeze across departments. However, officials acknowledge that the freeze alone will not generate enough savings to cover all the unexpected gaps.
The city’s mid-year budget adjustments are now shaping up to be some of the most consequential in years, as leaders juggle multiple shortfalls with limited tools.
Political Stakes for Mayor Wilson
For Mayor Wilson, the shelter funding crisis comes at a pivotal moment. His campaign centered on a promise to dramatically reduce unsheltered homelessness through expanded overnight shelter capacity. He has presented shelters as a humane and immediate step toward stabilizing individuals while longer-term housing solutions are pursued.
The shortfall threatens to derail that promise, raising questions about whether Wilson over-promised during his campaign. Critics like Smith argue that the mayor’s reliance on uncertain outside funding reflects poor planning, while supporters say the state’s decision to withhold funds undercuts a bold attempt to address Portland’s most visible crisis.
What Comes Next
The City Council will meet next month to debate how to close the $11 million shelter budget gap alongside other financial issues. Possible solutions include cuts to programs, tapping reserves, or seeking new revenue sources.
Advocates warn that reducing shelter staff or scaling back day centers could have immediate consequences for people living outside, especially as winter approaches. On the other hand, fiscal conservatives argue that the city cannot continue diverting money from core services without jeopardizing other priorities.
For now, uncertainty looms. With only a few months until Wilson’s self-imposed December deadline, the city has less than half the promised shelter beds in operation and faces a widening budget hole. The outcome of next month’s budget deliberations could determine not just the future of Portland’s shelter system but also the credibility of Wilson’s mayoral agenda.
