Why should popular, valuable Portland initiatives wither away from a lack of funding when there’s a city treasure trove available to bail them out?
That appeared to be the question on Commissioner Carmen Rubio’s mind when she offered Portland Street Response (PSR) a life raft in the form of $3 million from the Portland Clean Energy Community Benefits Fund (PCEF) earlier this week. But clean energy fund advocates are hesitant about using money from the program— approved by voters in 2018 to pay for carbon reduction projects with measurable community benefits— to cover the tab for unrelated city initiatives.
Rubio’s proposal came amid budget talks that put PSR, the non-police crisis response program housed in the Portland Fire & Rescue (PF&R) bureau, at risk of dire funding cuts. Under the plan, PCEF money would be diverted to PSR from interest dividends, not the main pool of PCEF funds. City officials say the fund, which collects a 1 percent tax on local large business sales, is expected to generate about $12 million in interest this year.
While $3 million could keep PSR afloat until leaders find a more sustainable funding stream, it’s a meager fraction of what PCEF is expected to earn from the big business tax over the next five years. Fund leaders recently announced the program would have about $1.2 billion to spend between now and 2028—$540 million more than original projections estimated. This newfound bounty, combined with the hungry eyes of bureau leaders with much less disposable income, teed up PCEF to be a fiscal lifeline for programs in need.
However, even as many PCEF supporters also want to see PSR fully-funded, some fund stakeholders and local climate justice advocates are concerned approving this money would take the program down a slippery slope. Already, PF&R Commissioner Rene Gonzalez has asked that PCEF’s generated interest fill in more of his bureau’s budget gaps, funding more than just PSR.
It’s a politically tense time for Portland commissioners, three-quarters of whom (including Rubio and Gonzalez) are running against each other for mayor in 2024. Though commissioners are expected to prioritize their current position above other campaigns, critics wonder if they’re more concerned with their political futures than serving Portlanders right now. Supporters of both programs hope that, mayoral race aside, commissioners will do what’s best to fund PSR while maintaining the integrity of PCEF.
Portland Street Response in trouble
Portland Street Response is at risk. The program, which started as a pilot police alternative program in the Lents neighborhood in 2021 and expanded citywide in 2022, is partially funded through ongoing general fund resources.
But about half of its roughly $10 million budget for 2023-2024 fiscal year comes from one-time funding sources, including American Rescue Plan Act dollars. Relying on temporary funds isn’t sustainable and makes it difficult for program leaders to plan into the future. And Gonzalez, who currently runs the bureau PSR is housed in, has not been seen by program supporters as its biggest ally.
Last week, the Oregonian reported that Gonzalez proposed cutting PSR’s budget by about $3 million in order to fill an $11 million PF&R budget shortfall. Much of the budget deficit can be attributed to firefighter overtime pay, partially due to contract negotiations in 2022 that changed the work week hours and overtime pay for fire personnel.
Once Rubio shared her idea to fill PSR’s budget deficit with PCEF funds, Gonzalez appeared to have another idea. In a letter to other members of the city council, Gonzalez suggested that, “now that a different standard is apparently being applied,” to PCEF funds, the program should use all $12 million in generated interest to fund public safety.
Whether or not Rubio will be on board with the idea remains to be seen. In a Thursday email from her mayoral campaign team, Rubio emphasized her support for funding PSR, but didn’t mention any further plans to allocate PCEF interest revenue to public safety.
“Portland is facing major problems, and that is why we set up the PSR, so that our police can focus on critical public safety issues, and the PSR can focus on helping our neighbors in crisis. Our number one priority is keeping our city and our community safe,” the email states. “I am concerned with a proposal to cut more than three million dollars from a vital public safety program. Now is not the time to cut back…We are writing the next chapter for Portland — revitalizing our city and strengthening our community — and we can’t do that without public safety.”
But the proposal has already received pushback, raising red flags for PCEF leaders who were already worried about the clean energy program backfilling existing city bureaus and initiatives.
Setting a precedent
In a July interview with the Mercury, PCEF Program Manager Sam Baraso said the fund was intended to create “additive” investments in carbon emissions-reduction projects, particularly those aimed to benefit marginalized communities at the front lines of climate change. Baraso said the PCEF team is making sure they’re able to show every investment they make will provide “additional community benefit and additional emissions reductions.”
In December, after an updated revenue forecast revealed the fund had an additional $540 million in projected revenue over the next five years, Rubio outlined a new spending plan allocating $282 million to six city bureaus. One bureau, the financially precarious Portland Bureau of Transportation, would receive $112 million to spend between now and 2028, effectively providing it with a bailout to avert the worst effects of its budget crisis.
PCEF leaders have pointed out that whether the fund has $750 million or $1.2 billion to spend over the next five years, it still won’t be enough to get carbon emissions down to where they need to be in order for Portland to meet its climate goals in an equitable way.
“PCEF funds are needed to fund climate justice and action work,” PCEF Committee Co-Chair Megan Horst told the Mercury. “In fact, PCEF’s fund value, while increasing and not fully allocated yet, is nowhere near the amount we need as a city to advance our climate action goals and needs.”
According to a 2023 study, it would cost about $18 billion for the fund to complete all its identified local clean energy projects targeted to benefit frontline communities, and approximately $49 billion to complete all identified projects for the city at large. These numbers call into question whether or not PCEF really has the wiggle room to save other city programs in their time of need.
During recent PCEF committee meetings, Horst and other members have brought up their concerns about the fund offering ongoing support to struggling city programs.
“I’m really worried that we’re setting precedents that PCEF is now just an [ongoing] source of funding for the city, when we were designed to fund community organizations…if there’s extra money, why aren’t we talking about community organizations being part of that?” Horst said at a January PCEF Committee meeting. “We’re talking about 100 million more a pop to city agencies when we know our nonprofits are struggling on shoestring budgets.”
When news broke of Rubio’s suggestion, local climate justice advocates shared their reticence for the PSR funding proposal.
“The Portland Clean Energy Fund is NOT a money tree that we can just take from to fill budget gaps, even for something as important as Portland Street Response,” Candace Avalos, director of the environmental nonprofit Verde and 2024 city council candidate, wrote. “PCEF dollars are to respond to the historic environmental injustices our communities have faced!”
Some view Rubio’s proposal as a political move to benefit her mayoral campaign— not necessarily what’s best for the city.
“Commissioner Rubio is undermining the Portland Clean Energy Fund to try to win political favor for her mayoral bid,” Climate attorney Nick Caleb wrote on X. “She has appointed herself as the spokesperson for over 60% of Portlanders who voted to create the fund. PCEF was designed to *not* be used to backfill budget deficits.”
Horst told the Mercury that members of the PCEF committee were not informed about the plan to provide $3 million from the fund’s generated interest to PSR, and members haven’t had a chance to discuss it yet.
“I have concerns about the process here. The established process in City Code is that the PCEF committee makes recommendations to City Council,” Horst said, adding that the committee will make a decision about the process for doling out unallocated funds at their upcoming meeting on February 15. “We hope that City Council and staff and others respect the process.”