In Depth Case For An Audit

Why I Want to See What We Got From Our Spending

One of the questions I have been asked is, “Why do you think an audit would be useful?”

To me, it comes down to two things: probability and the size of the city.

As a group gets bigger, the number of places money can go grows with it. More employees, more contracts, more buildings, more technology, more programs—it all becomes harder to keep track of. Efficiency tends to slip over time, not because people are bad at their jobs, but because complexity has a cost.

We see this happen in large companies all the time. Businesses invest money, review whether those investments are producing value, and when they are not, they pull those investments back and put the money somewhere that performs better.

Government should be willing to do the same thing.

Over the years, we have done a lot of spending, but we have not done nearly as much taking back. We build on top of old decisions, sometimes good and sometimes bad, and rarely stop to ask if they are still serving the city the way they were intended to.

That is what I hope an expanded audit will help us do.

It lets us look under the hood of city spending and begin asking what is working, what is not, and where taxpayers could be getting better value for their money.

Could it turn out there are very few bad spending decisions? Absolutely. If that is what the audit finds, then that is good news because it means the city has been managing taxpayer dollars well. I would gladly accept that conclusion.

However, given the size of Portland and just how many different places our money goes every year, I think the odds of finding opportunities to improve are fairly high.

Why Expand the Audit?

Before anyone asks, yes, this kind of audit would cost money. Expanding the scope beyond the Annual Comprehensive Financial Report (ACFR) is not free, and I do not want to pretend otherwise. The ACFR is primarily a financial statement audit. It tells us whether the city’s financial statements are presented fairly and accurately.

What I am proposing goes much further.

I want us to examine:

• Personnel costs and compensation
• Contracts and contract performance
• Procurement practices
• Technology spending
• City-owned real estate
• Organizational efficiency
• Program performance
• Administrative overlap
• Opportunities to better explain restricted funds and other financial decisions to the public

That takes more than accountants. It requires professionals experienced in finance, procurement, operations, information technology, construction, human resources, and performance auditing. For a city the size of Portland, I think a reasonable estimate for this kind of expanded audit would likely fall somewhere between $5 million and $10 million.

Could it cost less? Possibly. Could it cost more? Certainly, if the city wanted a years-long review of every bureau and every contract. For what I am proposing, however, I think $5–10 million is a fair planning estimate. That is also why every example below assumes the audit costs as much as $10 million. I would rather overestimate the cost and still show a positive return than underestimate it and overpromise.

Three Planning Scenarios

These are exactly that, planning scenarios.

They are not promises, guarantees, or predictions.

They simply show what different levels of success could look like if an expanded audit identifies opportunities to improve how Portland spends taxpayer dollars.

Scenario A – Conservative

1% of the annual budget identified for reallocation and another 2% in future budget savings.

This is my most conservative estimate. Using an annual budget of roughly $8.5 billion, that would identify approximately $85 million that could be redirected toward higher priorities. Even if the audit itself cost a full $10 million, taxpayers would still come out roughly $75 million ahead. That alone would make the audit worthwhile. The larger benefit comes from future budgets. If spending became just 2% more efficient, future budgets would gain roughly $170 million in additional flexibility every year. That gives Portland breathing room without asking taxpayers for more money.

Scenario B – Moderate

3% of the annual budget identified for reallocation and 5% in future savings.

This is where I think we are most likely to land. Portland has undergone significant organizational changes over the last several years. Departments have been reorganized. Operations have been centralized. Programs have expanded. Contracts have been awarded. No organization gets every decision right, especially one this large. Probability tells me there are places where we can improve. Under this scenario, approximately $255 million could be redirected toward higher priorities. Improving future spending by 5% would create approximately $425 million in additional budget flexibility going forward. Even after paying a hypothetical $10 million for the audit, taxpayers would still gain roughly $245 million immediately available for better uses. Personally, I believe contracts are likely to be one of the largest opportunities. Governments are very good at creating contracts. They are not always as good at going back years later and asking whether those contracts are still delivering what taxpayers are paying for.

Scenario C – Best Case

5% of the annual budget identified for reallocation and 7–8% in future savings.

This would be an exceptional outcome. It would mean finding duplicate spending, outdated contracts, underused city property, programs that have outlived their purpose, or administrative costs that can be reduced without reducing services. Under this scenario, approximately $425 million could be redirected toward today’s priorities. Future budgets could become 7–8% more efficient, creating well over half a billion dollars in recurring budget flexibility. Combined, the value of money redirected today and savings realized over future budgets approaches one billion dollars.

That is enough to make meaningful investments in public safety, parks, infrastructure, small business support, emergency response, and many of the priorities Portlanders have told me matter most.

Would I expect this outcome?

No.

Would I welcome it?

Absolutely.

Why Isn’t the ACFR Enough?

The Annual Comprehensive Financial Report (ACFR) is an excellent document. In fact, I encourage everyone interested in city finances to read it.

(24-25 ACFR.)

The ACFR answers an important question:

“Where did the money go?”

The expanded audit I am proposing asks additional questions.

• Did taxpayers receive the value they expected?
• Are contracts still producing results?
• Are there duplicate administrative functions?
• Are city-owned properties being fully utilized?
• Are technology purchases overlapping?
• Are programs still accomplishing the goals they were created to achieve?
• What restrictions exist on different funding sources, and are those restrictions clearly explained to the public?

The ACFR gives us the rough financial picture.

A performance audit gives us the operational picture and the details of what we are getting for the money we spend.

I believe Portland deserves both.

Final Thoughts

I am not proposing this audit because I assume the city has failed. I am proposing it because I believe Portland is worth understanding.

If the audit confirms that our spending is efficient, then taxpayers can have greater confidence in how their money is being managed. If it finds opportunities to improve, then we should have the courage to act on them.

Either way, Portland wins on that.

Good government is not about assuming waste. Good government is about asking hard questions, following the evidence wherever it leads, and making sure every taxpayer dollar works as hard as the people who earned it.

It also gives us an opportunity to change the conversation around government spending. If we can build a level of transparency that people genuinely trust, then we will have tackled one of the biggest political problems facing cities and states today. We won’t eliminate disagreements over spending, and there will always be difficult decisions to make, but we can give people confidence that those decisions are being made openly, honestly, and with accountability.

I believe we can do that. It will not be easy, but I think it is worth doing.

That is the kind of transparency and accountability I want to bring to City Hall.

I want Portland to be an example of what can be, and I believe this is one of the ways we get there.