Layoffs at Portland Bureau of Development Services

Eric

Administrator
Staff member
Apr 16, 2023
691
122
Although labor funds for many agencies are allocated through annual budgets (e.g., my federal agency), and don't generally change much year-to-year, there are also agencies whose funding comes primarily from fees charged for the services they provide. This fact is illustrated by recent news from the Portland Bureau of Development Services, which had to lay off several employees (with more expected) because of a recent decrease in permit revenues associated with declining building activity in the city. I was somewhat surprised to learn that 98% percent of the bureau’s budget comes from fees charged to developers for permits, which (unsurprisingly) makes the agency's financial wherewithal highly sensitive to development trends.

Portland's dip in building activity and the bureau's resulting financial woes can't be unique to Portland right now. I'm sure that the root cause of the issue - higher interest rates on construction loans - must be affecting building activity and therefore permit revenues nationwide. I'm wondering how representative Portland is in terms of declining building activity translating to a reduced labor budget - is it really typical for 98% of a permit office's budget to come from fees (maybe a question for @W3 Planning and Research?)? If Portland is representative of other building/planning departments, then it seems like we should also expect to see declining budgets - and customer service - at other offices across the county, especially if interest rates continue to rise.
 
Location
Portland, Oregon, United States
The reliance of agencies like the Portland Bureau of Development Services on permit fees highlights vulnerability to market fluctuations. With 98% of their budget tied to such fees, declining building activity poses serious financial strain. This could signal a broader trend affecting planning departments nationwide, impacting services if interest rates continue to climb.
 
The financial vulnerability of government agencies heavily reliant on permit fees, like the Portland Bureau of Development Services, is a matter of concern. The recent news about employee layoffs due to reduced permit revenues highlights the significant impact of fluctuations in building activity on the agency's financial stability. This situation might not be unique to Portland, as other cities across the country could potentially face similar challenges, especially if there's a nationwide trend of decreased building activity. The dependence on permit fees, as seen in Portland's case, could potentially result in strained budgets and reduced customer service in various planning and building departments.
 
I noticed a new update about further, and much more extensive, layoffs at the Portland BDS, as reported here. Looks like 56 additional employees (15% of the bureau's total) will now be laid off due to the recent downturn in development activity.
 
So this is an interesting question. Every building department should be funded by the general fund (operating fund in some jurisdictions). This is budgeted every year by the jurisdiction. Now the fees that come in should go back to the general fund. In other words, they are covering expenses for next years budget by this years revenues. How much of that expenditure that is covered is a discussion for the local jurisdiction to address. In my case, I have always believed that the budget should be completely covered by the costs of the permits (minus code enforcement activities) so that the tax payers aren't paying for developers permits. I ran my department at 100% cost recovery in that my yearly budget was recouped for the next year by this years permitting activity. When revenues do not match expenditures, that is where the budget needs to be adjusted. This is where staff may need to be laid off or reassigned to other areas, or permit fees need to go up. These things take time however and can't happen quickly, so that is why it is critical that your department administrator is actually watching the budget and revenues closely.

Downturns don't have to mean layoffs. A good administrator should always have long term projects ready to go if staffing slows down. Everything is cyclical. I would rather re-task employees for 6 months to a year on another project than have to lay them off and never get that qualified help back when the market recovers. I also look at the training time required to get an employee up to speed as a new hire. Why would I through that away for a small downturn in revenue? What other services can be provided to other agencies? That's the discussion that has to happen at the political level, but I always protect my employees and their liveliehoods!
 

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