Today, I see East Portland still afflicted by the concerns raised in an audit from thirty-five years ago.
The very first audit I worked on reported the financial impacts of Portland’s annexation efforts. In the early 1980s the city initiated an effort to extend its boundary to add about 125,000 citizens. The multi-government initiative was framed to focus cities on urban services (police, fire, parks, water, sewers, streets) while the county focused on social, criminal justice, and state-mandated services.
Portland and Gresham are two separate cities, both almost entirely within Multnomah county. Between them was an unincorporated area of about 125,000 citizens served by special purpose districts and the Sheriff’s law enforcement. Gresham, Portland, and Multnomah county conceived a cunning plan in secret. It was supposed to end the reliance of all residents between the two cities upon the county and special districts for these urban services. In a series of moves Portland hoped to achieve these things:
- Install sewers throughout the area, replacing the septic tanks in order to reduce the threat of contamination to its secondary water supply from wells.
- Absorb the deputies who provided police services in the area, freeing up county general fund dollars
- Absorb the firefighters, their stations, and equipment from the service district
- Assume responsibility for the streets and, with them, obtain a large share of the county’s gasoline tax revenues
- Use those new gas tax revenues to free up city general fund dollars that had been used to pay for street maintenance
- Absorb employees and assets of all the small water districts operating in the annexed areas
- Assume responsibility for the parks
- Transfer any social services provided by the city to the county (Some programs, such as aging services and juvenile programs, had transferred earlier.)
Best of all, this expansion avoided city and county layoffs compelled by reduced revenues due to a deep recession in the early 1980s, high inflation, and an end to federal revenue sharing. Annexations would also increase Portland’s population to 500,000, a boost that would help it be recognized as a major city. Two years before the audit I had been working at the Multnomah County Sheriff’s Office with a front row seat to this “sorting out” of duties. I heard the promises made by public officials in public meetings, that residents would receive city-level services once annexations were complete.
Five years later, I was one of a large team on the audit, with each member analyzing the costs and liabilities of the expanded services. My area was transportation, and I also estimated the added revenues with the annexation.
We concluded that the city’s new revenues would pay for the absorbed services of the annexed area, but those service levels would be lower than in the city. To provide uniform service levels, Portland needed to divert some of its resources to the new areas because the county had fewer parks in the unincorporated area and its deputy staffing per capita was lower. The county’s policing level was only 1.68 deputies per 1000 population served compared with Portland’s 1.96 per 1000. Absorbing the deputies with the annexed area resulted in lower overall services, which was the reason the police chief would be asking for more officers in the upcoming budget sessions, addressed by the next audit I worked on.
We warned that major infrastructure investments would be needed in parks, sewers, and water systems. Portland would also be assuming some unknown long-term liabilities, such as the street system that lacked curbs and sidewalks, all of which would be further damaged by the planned sewer installation.
Since our audit, this former suburban area—built in the 1960s without the city’s more stringent land use planning or development requirements—also absorbed the lower-income and minority populations that would be displaced by gentrification in the early 2000s. Anyone traveling through the area now can see the conditions in the area known as east Portland are very different from the older sections of the city.
Residents in the area demanded more attention and resources, creating a worsening problem for Portland officials. Later, when I was the elected auditor, we prepared a special report on east Portland residents’ dissatisfaction with city services. We had been surveying residents for a dozen years and the east Portland neighborhoods gave low scores for their policing, parks, and transportation services. Then, in early 2009, many new council members were taking office and we issued a report on “Key Challenges for a new City Council” with a section about the east Portland service and infrastructure problems.
The problems persist even now, over four decades after annexations. Throughout the entire city, transportation issues are the most visible sign of deterioration. It is difficult to assign specific causes, but the inability of the city to maintain its streets could be partly due to the added responsibilities of maintaining hundreds of miles of substandard streets.
This audit is an example of the long-term view that auditors should take for their governments. Vast physical assets are one area that need attention and maintenance to avoid incurring long-term liabilities.
