Portland City Hall debt: Still climbing
One of the many projects I had going on the old blog was keeping an eye on the constant borrowing of money by Portland City Hall. By the time I signed off in April 2013, I had gotten pretty familiar with the city's finances. At that time, I estimated that between shockingly unfunded pension liabilities and massive borrowing from banks and other bondholders, the city was in hock for $6.7 billion, which amounted to $11,317.88 for each and every person living in the city.
With the help of my wonderful tech expert, Jake Ortman, there was even a clock in the sidebar of the blog so that readers could watch the number go up every few seconds.
It was back in the days when Sam Adams and Randy Leonard were running the City Council, and boy, did the Sam Rand Twins love putting toys on plastic. Over about six years, the debt clock number went from around $8,000 a head to territory up north of $11,000.
Back on the blog trail now, seven years later, I thought it was time to revisit those figures, and as luck would have it, the city made it easy, baring its finances to prospective buyers of general obligation bonds just a couple of weeks ago. That doesn't happen all that often, or at least it didn't when last I was watching. The official statement, which is like a prospectus for banksters lending money to a local government, is posted here, at least for a while. (In this latest borrowing, the city got about $176 million, mostly to "build affordable housing" – that is, create more pork for the real estate and construction dudes who totally run this town. Those guys care about poor tenants like I'm a candidate for Pope.)
Inside the document, readers get to see where the city stands, credit card-wise. And the news isn't good. Fortunately, the city's bond debt hasn't changed much in seven years, but its unfunded pension liability has skyrocketed. The City of Portland is now looking at $847 million of unfunded liability to the statewide PERS system, and a jaw-dropping $3.5 billion (not a typo), completely unfunded (not a typo), pension liability for police and firefighters. When we last checked in in '13, those numbers were around $173 million and $2.5 billion, respectively.
So what's that mean per person? The population within the city limits has increased a bit during our hiatus, and that counteracts the increased liabilities to some extent. Like the city, we'll accept the population figures given by Portland State University, although as I recall they tend to be a little higher than what the federal Census Bureau comes up with. Within the city limits, Portland State says there were 657,100 residents at last count, in July 2019 (up at a compound annual rate of 1.25 percent since 2013). Dividing my current estimate of roughly $7.84 billion of debt by that number of people, the debt per resident works out to $11,931.25. And so since the debt clock was shut off in 2013, the debt per resident has increased by $613.37, about 17 percent over seven years.
That's not as bad as I expected it to be. But the sad part is that the $613 increase is basically all from the pensions. To pay off the city's share of the unfunded state PERS would take 195 percent of the city's payroll expense for a year. In other words, to put enough aside to pay benefits to the retired employees, you'd have to lay off every current city employee for two years.
And to have a $3.5 billion unfunded pension debt for the police and fire departments – friends, that is nothing short of scandalous. If a private employer tried to do anything like that, there'd be jail time.
Meanwhile, the next year or two is not going to help the city's cash flow, to put it mildly. There's a bunch of new borrowing coming down the pike soon. The bond statement says that the city is planning to go out for a $100 million emergency line of credit any day now. Even if the city draws down only two thirds of that, it will add $100 per person onto the debt clock. And beyond that, there are more bond deals on the runway waiting to take off:
That $700 million for the water system is going to hurt. It's another $1,050 or so on the debt clock for you, and me, and everybody else who might need to use water. People are doing so well these days – it shouldn't be a problem, should it? Then another $120 million for the water empire early next year: another $182 a head.
The city's putting us all in hock. As always, it bears watching. So let's note our current benchmark – $11,931 a person – and light a candle.