Today, the City Economist released the General Fund Forecast for fiscal year (FY) 2026-27, an important early step in the City's annual budget development process

The General Fund forecast is released each December and marks the start of budget development for the upcoming fiscal year. It provides an initial estimate of expected General Fund revenues and expenditures for the budget year that begins July 1.

View the December General Fund Forecast for FY 2026-27
View a memo summarizing the December General Fund Forecast
View the General Fund Forecast and Current Allocation Level (CAL) tables

What the forecast is - and is not

The forecast is an estimate of future revenues and the cost of continuing existing allocation levels. It establishes a starting point that will be updated and refined in the months ahead, as more information becomes available. City leaders will consider budget options and weigh policy priorities with input from staff and the public. The forecast is not a budget and does not include funding decisions.

Forecast highlights

• The December forecast currently estimates a $66.9 million General Fund shortfall next fiscal year, including:

  • $50 million one-time General Fund gap for FY 2026-27
  • $16.9 million ongoing General Fund gap for FY 2026-27
    

  This gap does not account for expiring one-time funding, including external grant funding for current year services.

• Both revenue and expenditure assumptions will continue to be refined as the budget process progresses. The full impact will be clearer as budget scenarios are developed and more analysis is released in February.
  
• The estimated General Fund shortfall reflects both revenue adjustments and cost pressures. Lower projected Business License Tax revenues, cost growth, and continued slow growth in property taxes are key drivers.

Drivers of the shortfall

The estimated General Fund shortfall reflects both revenue adjustments and cost pressures. The primary driver is lower-than-expected Business License Tax (BLT) revenue-a funding source that depends heavily on national corporate profits and federal tax and economic priorities. Additionally, slower long-term growth in property taxes and continued cost growth also contribute to the shortfall.

"Portland is not alone in facing these forecasted funding challenges," said City Economist Peter Hulseman. "Communities across the U.S. are seeing slower revenue growth and rising costs, and Portland's forecast reflects similar trends. The most significant decline is in Business License Taxes, and both the County and State have similar taxes and are facing similar forecast reductions. Where Portland differs is that the City's General Fund relies more on Business License Tax revenue than our peers and thus was more adversely impacted by recent Federal tax changes."

Next steps

The forecast will continue to be refined as more information becomes available throughout the fiscal year. In February, updated revenue estimates and forecast summaries will be available for all City funds. As Mayor Wilson requested when he released budget guidance last month, budget scenarios for each service area will also be available, providing estimates of current service level costs and potential scenarios for addressing gaps.

"This forecast sets the starting point for the budget, not the outcome, "said City Budget Director Ruth Levine. "It allows for an early look at the challenges the City will need to address as the fiscal year 2026-27 budget takes shape."

Track important FY 2026-27 budget development information and milestones

Learn about the City's budget process