Get ready for a stampede of interest groups at city hall this fall—all of them looking to fill their outstretched hands and open wallets after years of budget cuts. Once they recover, that is, from a mild case of whiplash.

Thanks to an improving local economy—but especially some newly strict spending protocols put in place by Mayor Charlie Hales—Portland City Council could have anywhere from $8 million to $11 million more to spend this year. That surprisingly sunny news comes courtesy of the city budget office's quarterly financial update (pdf), sent to city commissioner's offices earlier this week.

The budget office sent over a copy via a records request. Before last year, when the budget office was turned into its own bureau, such interstitial information was closely guarded by the mayor's office.

Back in the spring, the budget office had counted on the city having just $8 million in unspent funds at the end of the last fiscal year. Instead, the real number could be as high as $19 million. The good news also implies an upward revision of the city's ongoing revenues when the budget office turns in its biannual general fund forecast this December.

But while that extra cash might be a tempting source of political balm after a painful budget process this spring that saw the council close a $21 million spending gap, largely through cuts and layoffs, it comes with a catch.

The money is available only on a one-time basis—meaning it wouldn't be available to permanently restore pay cuts or things like police and fire jobs.

About half of it, $5 million, was freed up after bureaus, starting in March, put a hard brake on their spending on materials. Overtime savings and other moves, like not filling vacant jobs, freed up a few million more. A telecom tax meant to fund federal police reform will also give a about a million more a year than forecast. And, in the best news, hotel taxes and business license taxes—important barometers of economic health—reached "record highs," the report said.


So why all the cuts this spring, if things were so good? The report addresses that. If not for three things, it says, the city would have had a much better time hashing out Hales' first budget.

The county library district and federal police reform costs—both of them arguably external factors—added up to about 60 percent of the deficit. The rest of it, about $8 million, appeared after the council decided to permanently fund programs, like the social safety net, it had been propping up from year to year. (That decision was made during Mayor Sam Adams' last budget, in 2012, in part to help put the millions devoted to those programs out of the reach of whoever followed Adams into office this year.)

In essence (though, admittedly this sounds like a head-scratcher), even though last year's deficit was very real and needed to be solved, it wasn't caused by the economy. Really, the economy kept it from being worse.

"As the city looks ahead," the report says, "it is important to remember that the city would have been adding to its ongoing expenses rather than cutting the FY 2013-14 budget if the only thing affecting the forecast was the economy.... The underlying conditions have improved slightly."


How the council responds will be fascinating to watch. Hales has preached discipline. But with the city's fall budget adjustment coming up, commissioners have already been lining up with spending requests. Hales, for example, had Commissioner Dan Saltzman prepare a $1.7 million for one-time housing money. It was always a question where that money might come from. Now we know.

It also will be interesting to see how city unions respond to the good news. This news drops right in the midst of some gnarly labor contract talks. Negotiations with the Portland Police Association will be especially interesting to watch. The city, with federal reform mandates hanging over its head, is battling to secure several policy changes, on training and use of force and discipline.

That already gave the union great leverage to extract major pay concessions—no small consideration, given the fact that the police bureau's budget is the city's largest taker of general fund revenue. Good news, even if the only hard surplus right now is a one-time thing, will no doubt further embolden the PPA and others. Cops and firefighters haven't forgotten that Hales dipped into their piggy banks this year so he could keep utility rates low and pay for things like rent assistance for homeless Portlanders.