A spat over city funding for Portland’s economic development agency is turning into a fight over the agency’s independent governance.
Two city councilors, Mitch Green and Jamie Dunphy, proposed last week to eliminate $11 million in general fund dollars earmarked for Prosper Portland by Mayor Keith Wilson in the upcoming fiscal year, which starts July 1.
Their amendment would order Prosper to backfill its budget with funds from its so-called Strategic Investment Fund, which pays for loans across the city and real estate acquisition.
But Prosper Portland, unlike city bureaus, operates under the supervision of its own board of five commissioners. While the commissioners are appointed by Portland’s mayor — and confirmed by the City Council — its executive reports to the commission, an arrangement that has insulated the agency from the City Council’s direct oversight.
Portland city attorneys on Monday cast doubt on the council’s authority to move money around within Prosper.
A memo issued to councilors by City Attorney Robert Taylor and two deputies on Monday noted that the council acts as Prosper’s budget committee — but that Prosper commissioners don’t have to take its direction when it comes to how the agency spends the money.
The city attorneys were asked whether councilors could “direct Prosper to reallocate strategic investment funds to backfill the reduced general fund,” according to a copy of the memo obtained by The Oregonian/OregonLive.
While the council, acting as the budget committee for Prosper, can add “notes directing Prosper how to use the money moved from the SIF fund to the Prosper General Fund,” the Prosper Board of Commissioners “may choose not to adopt them in the final budget,” according to the city attorneys in the memo.
Prosper Portland’s interim executive director, Shea Flaherty Betin, said in an email to boosters for the agency’s work — later obtained by The Oregonian/OregonLive — that the agency’s board would likely make sweeping cuts instead of dipping into the investment fund.
That, he wrote, was because the agency would view it as unlikely the City Council would restore the funding in future budgets. In the email, he named popular programs — including the Office of Events and Film and a new Office of Small Business — that could be slashed or eliminated and urged recipients to lobby the council on the agency’s behalf, a public display of advocacy that would be unusual for most city bureau heads.
Prosper Portland’s board chair backed Flaherty Betin’s stance in a letter to the council, calling the proposed amendment “financially unsound” and arguing it would “set a harmful precedent.”
“Prosper Portland’s Board rejects the suggestion that it would go along with Councilor Green’s and Councilor Dunphy’s band-aid proposal that would deplete the Strategic Investment Fund to backfill these cuts on a short-term basis,” wrote Prosper Portland Chair Gustavo Cruz.
Dunphy said during a work session last week that Prosper Portland’s unusual independence is part of the problem, calling it “an arm’s length structure that lacks direct electoral oversight.”
In a memo to fellow councilors on Monday, Dunphy and Green reinforced that stance, suggesting they wanted to bring economic development work firmly back within the purview of City Hall.
“This amendment is not just about funding — it’s about starting the conversation to realign economic development within the city’s central responsibilities and democratic oversight,” the Green-Dunphy memo stated. “Economic Development is a core city service. It must be subject to the same strategic planning, budget prioritization, and electoral accountability as other service areas.”
In a statement, City Council President Elana Pirtle-Guiney said she did not support the Dunphy-Green proposed amendment.
“While this approach is tempting on the surface — we are all looking for creative ways to save Portlanders from looming program cuts — our legal team and community members confirm that it won’t play out the way my colleagues hope,” Pirtle-Guiney said in a statement.
She said long-term conversations about Prosper’s role in economic development were warranted, but that councilors needed to get through the budget season first.
Various local entrepreneurs and their advocates came to Prosper’s defense over the weekend on social media, prompting Dunphy to accuse Prosper of a disinformation campaign against his proposal.
“It is WILD to watch a supposedly public agency spread disinformation to get a whole community worked up and protect their own bottom line,” Dunphy wrote in a social media post. “Prosper Portland is sitting on a $50m slush fund that they did not earn and want Portland to cut parks maintenance and permitting staff. Wild.”
The proposal elicited a forceful reaction not only from Portland’s business community but also other government leaders.
Curtis Robinhold, executive director of the Port of Portland, which operates Portland International Airport, said zeroing out the economic development agency’s general fund allocation “would devastate the City’s ability to sustain economic development work at a time when we face ongoing economic and federal policy uncertainty.”
Oregon House Democratic Leader Ben Bowman acknowledged tough tradeoffs are required during budget season.
“But in a time of budget cuts, defunding economic development programs that help generate revenue is like a snake eating its own tail when it gets hungry,” Bowman said in a statement. “It’s only going to make the problem worse.”
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