Despite being safe from a citywide 5 percent spending cut, Portland’s fire chief says the fire bureau is still staring down an $11 million budget shortfall. As a result, Portland Street Response could lose a third of its already constrained budget.

During a budget workshop last Tuesday, Portland Fire Chief Ryan Gillespie said Portland Fire & Rescue (PF&R) expects to overspend its roughly $175 million budget by about $11 million in the 2024-25 fiscal year, unless the city intervenes with a cash infusion. Bureau leaders say most of the budget gap is due to rising overtime costs, impending retirements, and inflation.

Gillespie says if the city is serious about prioritizing improved emergency response times, it needs to cough up more money for the fire bureau.

“If we received ($11 million) we would not have to make any cuts to our emergency operations,” Gillespie told Portland City Council.

The city is trying to avoid a deficit in its 2024-25 budget by asking all bureaus except for public safety services to shave 5 percent from their spending plans.

Why the fire bureau budget gap?

Chief Gillespie and other emergency management staff note about $6.2 million of the $11 million budget gap stems from funds allocated for retirees. Another $4 million comes from overtime expenses, and about $2.3 million from other personnel costs represent the largest strain on the budget.

Portland Fire Chief Ryan Gillespie  courtney vaughn

Overtime costs at the fire bureau increased in 2022, after contract negotiations led to a change in the structure of firefighters’ work hours. PF&R staff used to work 51.5 hours per week, but now 50.4 hours is considered a standard work week. That means staff are paid for overtime hours if they work more than the standard 50.4 hours. The bureau says the number of firefighters currently funded by the city isn’t enough to cover the needs, amid increased emergency calls, which has led to increased overtime payouts.

A 2023 staffing sufficiency analysis suggests the city could reduce its overtime expenses by budgeting for an additional 66 firefighter positions over the next two or three years. 

“Due to the projected number of retirements stemming from a firefighter hiring bubble 25 years ago, PF&R does not have the option to do nothing,” Citygate Associates wrote in its memo to fire bureau leaders last June.

Those anticipated retirements are now considered the biggest strain on PF&R’s budget.

As first reported in the Oregonian, in an effort to fill the funding gap, PF&R is proposing slashing $3.1 million from the $10 million budget of Portland Street Response, the city’s non-police, mental health alternative response program. Portland Street Response (PSR) is housed within the fire bureau. The program, which launched in 2021, now operates citywide, but with somewhat limited staffing and hours. PSR is partially funded by city general funds, cannabis tax revenue, and American Rescue Plan Act dollars, which will soon be depleted.

“The problem with fire is that there is not a lot of fat to cut outside its core mission,” Commissioner Rene Gonzalez, who currently oversees PF&R and PSR, told the publication.  

Fire bureau leaders gave the city three options: find $11 million for PF&R, leaving current service levels at the fire bureau and Portland Street Response intact; find $4 million for PF&R, leaving a $6 million budget gap to be addressed by slashing about $3 million each from PSR and two of the bureau’s two-person rescue apparatus; or do nothing and leave the fire bureau to cut $3 million from one of its fire stations, cut three rescue operations, and cut $3.1 million from PSR. 

The latest budget proposals show overtime costs contributing to PF&R’s budget gap are mostly generated by firefighters and EMTs, not PSR’s mental health workers. Still, the latest budget proposals show PSR is likely to feel the pinch of the fire bureau’s fiscal woes.

An audit released by the city earlier this year suggested that PSR and a similar community health program were “caught in a no-win situation” due to an overall lack of clear program guidelines or goals for success. Auditors suggested the fire bureau either find a way to expand the programs and provide the right resources, or “find the appropriate home for them.”

The audit report noted Chief Gillespie was “reportedly open to sending Portland Street Response to Multnomah County or a nonprofit contractor” even though the program could qualify for Medicaid reimbursement if it expanded to 24/7 service. In response to that audit, Gillespie and Gonzalez indicated their commitment to the long-term success of PSR, but said they’re in no hurry to ramp up the program, either. 

“The need to ensure these programs are structurally sound, grounded in articulable, actionable goals, and financially cost-effective can no longer be ignored,” Gonzalez wrote in response to auditors last month.

The proposed cuts to PSR come as the program is already struggling to cover the number of calls for help it receives. The program faced a hiring freeze last year amid budget scrutiny over purchases of essentials like tents, tarps, food and basic clothing that were distributed to unhoused people during response calls. Last summer, Gillespie told the Mercury that PSR grew too fast, too quickly. “The mission for PSR isn’t entirely clear, internally and externally,” Gillespie said shortly after being tapped to lead the fire bureau.

PSR has yet to meet its initial goal of providing city-wide, round-the-clock, behavioral health support. That’s drawn ire from PSR supporters. Last year, an independent group called Friends of Portland Street Response was formed, largely as a mechanism to pressure city leaders like Gonzalez to expand funding and resources for the program. 

The group says Gonzalez’s office has repeatedly canceled meetings with them, and shown no interest in helping PSR serve more people in need.

One option pitched to save PSR from funding cuts? A controversial handout from the Portland Clean Energy Fund. City Commissioner Carmen Rubio is proposing using money from accrued interest dividends in the PCEF program to bail out PSR. That idea has garnered disapproval from climate advocates who note PCEF was created for specific, climate-related purposes, not to be used as a bailout for failing city bureaus.

It’s also led Gonzalez to suggest PCEF use more of its funds to bail out the fire bureau and pay for all the city's public safety programs. 

The idea has yet to be approved.

The city is expected to revisit bureau budget decisions this spring, with a final budget slated to be voted on this May.