PORTLAND -- The budget shortfall for Portland could shrink slightly, from $25 million to $21.5 million, for the 2013-2014 fiscal year, according to a city report.

Reasons for the improved economic outlook include a lower consumer price index for the region, lower health care premium costs than expected, and an increase in the real market value of Portland property, said City of Portland Economist John Harwood.

Final forecast figures have yet to be compiled, Harwood said. But he said the budget forecast, scheduled for the end of April, will be better than expected.

While the budget preview is good news, the city still faces a shortfall and we still cannot use deficit funding, said Portland Mayor Charlie Hales. The new projection, if accurate, softens the impacts of the decisions we face.

Hales and the Portland City Council were still working to craft the budget, and spokesman Dana Haynes said the process could last until May.

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