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ODOT Director’s memo paints dire state transportation funding picture

Posted by on January 10th, 2012 at 10:37 am

Chart of ODOT’s Capital Program falling off a cliff in the next few years.

A memo from Oregon Department of Transportation (ODOT) Director Matt Garrett and ODOT Highway Division Manager Paul Mather to a state Senate committee back in November outlines a dire funding forecast they say will lead to a five percent staff reduction and a 50 percent reduction in ODOT’s construction program by 2015.

“ODOT’s funding challenges will have a number of important impacts on the state.”

The seven-page memo was sent to the Senate Interim Committee on Business, Transportation and Economic Development. In a level of candor and detail rarely seen from ODOT, it shows just how serious Oregon’s transportation funding problems have become.

“ODOT’s funding challenges will have a number of important impacts on the state,” reads the memo. To handle the situation, ODOT says they’ll “seek efficiencies and reduce services while minimizing the impact on the safety of the traveling public and the state’s economic health.”

ODOT Director Matt Garrett.
(Photos © J. Maus)

ODOT points to a number of converging factors that contribute to the funding crunch. The bold headings below are taken directly from the memo:

Debt service – Two major funding streams, the Oregon Transportation Investment Act (OTIA) and the Jobs and Transportation Act (JTA) yielded ODOT $2.9 billion in proceeds. While that money allowed the agency to build projects quickly, the payback is significant.

“By 2015, when all the JTA bonds are sold, ODOT expects to pay over $210 million a year out of the State Highway Fund for debt service… ODOT’s State Highway Fund resources are now essentially fully committed to debt service.”

Falling State Highway Fund revenue - ODOT estimates that Highway Fund revenues made in 2008 have fallen short by about $500 million due to the “economic downturn and reduced driving in the face of high gas prices.” Fortunately, the JTA bill filled that gap; but because ODOT’s share of JTA resources was bonded against and/or committed to projects by the legislature, “ODOT will not have any significant non-dedicated resources in the long term…”

Growing agency operations costs – “… agency operations costs have grown faster than revenue, largely because of higher health care and PERS costs,” reads the memo.

Federal funding at risk – This is an old story that you’ve likely already heard: The federal Highway Trust Fund is expected to go bankrupt sometime this year or next because politicians haven’t raised the fuels tax since 1993. Since raising the gas tax seems to be (unfortunately) about as politically toxic as figuring out new revenue streams, the result is that Congress will likely slash transportation project funding across the board.

In the memo, ODOT says they’re prepped for a 40 percent federal revenue cut, or about $150-175 million from current levels. ODOT knew this was coming and has already cut bridge, highway preservation and “modernization” budgets; but they might have to cut even more (including projects already on the state’s STIP project list).

Construction cost increases – ODOT says construction costs are up 120 percent since 2001.

Fuel efficient vehicles – Gas tax revenue makes up about 45 percent of ODOT’s State Highway Fund and it also makes up a majority of federal Highway Trust Fund dollars. With gas use peaking in 2006 and fuel-efficient cars gaining a foothold in the market, ODOT says that when new vehicles standards hit 54.5 mpg in 2025, the gas tax, “will no longer be a viable funding source.”

Lack of adequate and dedicated funding for non-highway modes – ODOT cites a lack of a long-term, dedicated source of funding for “non-highway modes” and a decrease in the ones they currently use. Also, the memo states, “non-highway modes are highly reliant on federal funds that are at significant risk of being cut.”

What is ODOT going to do in response to all this bad news? Their plan at this points seems to be a mix of staffing cuts and strategies to slow the deterioration of existing roadways.

The memo states that they’ll look to cut staff by five percent — or 225 positions — throughout the agency by 2015. The “brunt” of these reductions will be made to “project delivery” staff where the agency will look to cut 150-200 positions (a 30 percent cut, which is in line with the reduction in their construction program).

Speaking to the massive investment it takes just to maintain existing roads, ODOT will undertake a host of new strategies to “slow deterioration of highways” as well as bridges.

ODOT hasn’t yet proposed this as a
way to preserve bridges.

When it comes to bridges, ODOT says that since most of their bridges were built prior to 1970 (most during the Interstate Highway era), many of them will require “replacement or substantial repair” beginning in 2030 to the tune of about $5-6 Billion per decade. They’ll look to focus on “high priority” corridors, do more preventative maintenance, and narrow the scope of bridge projects.

Pavement is the other area ODOT has marked for strategic savings. The memo spells out that ODOT’s own performance target for pavement condition is 78 percent at “fair or better” levels and that they’re currently at 86 percent. To maintain even the lower target, they’d need pave 690 lane miles a year — an interval of 15-20 years between resurfacing. However, with pavement funding below 1990s levels, they’ve got the cash for only 355 miles per year — that’s a 47-year resurfacing interval.

And we all know that letting pavement deteriorate beyond a certain point only ends up costing more in the long run.

To help preserve their pavement budget, ODOT says they’ll focus more investment on interstate highways, do more “chip-seal-type treatments” and possibly reclassify some low-volume (under 5,000 daily vehicles) state highways into low-volume roads (thus de-prioritizing them).

The situation at ODOT makes an interesting comparison to the budget crisis at PBOT. Some observers have withheld sympathy for PBOT’s situation, saying their own financial mismanagement and commitments to projects like the Sellwood Bridge and Milwaukie Light Rail have caused their undoing. But these new details from ODOT make it clear that, while PBOT deserves scrutiny, the factors at play are very real and they’re not Portland-specific.

Stay tuned for more budget coverage. I will try and upload a PDF of the full memo, but I only have the hard copy and will need to scan it.

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  • 9watts January 10, 2012 at 10:42 am

    “What is ODOT going to do in response to all this bad news? ”

    Advocate building the CRC!

    Recommended Thumb up 10

  • 9watts January 10, 2012 at 10:50 am

    Just to be clear about this fuel efficiency – gas tax revenue relationship, it is not so straightforward:
    “when new vehicles standards hit 54.5 mpg in 2025, the gas tax, “will no longer be a viable funding source.”

    Fuel economy standards (CAFE) have not changed since 1988. Real world fuel economy on the road has actually declined a good bit since then with the increased popularity of SUVs and other ‘light trucks.
    Gas tax revenues have no doubt dropped some lately, but that I am pretty sure has mostly to do with folks driving a bit fewer miles and not so much to do with fuel economy.

    Between 1974 and 1988 new car fuel economy doubled in this country, with almost zero effect on total gasoline consumption, at least up through the middle of the last decade. So banking on a tightened CAFE standard reducing gas tax revenue is not at least historically very astute.

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    • 9watts January 10, 2012 at 11:43 am

      Slight clarification: 2009 new car fuel economy data are essentially a tie with 1987 for best year since 1975. Whoopee.
      http://www.epa.gov/otaq/cert/mpg/fetrends/420s10002.pdf

      “The previous records for lowest CO2 emissions and highest fuel economy were in MY1987, and the recent improvements in CO2 emissions and fuel economy reverse an opposite trend from MY1987 through MY2004. Compared to the previous best year of MY1987, MY2009 CO2 emissions were 8 g/mi (2 percent) lower, and fuel economy was 0.4 mpg (2 percent) higher.”

      But this is just for a give model year. The fleet average is something else entirely.

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  • Lance P. January 10, 2012 at 10:57 am

    Goodbye CRC, hello reality. I’m just glad that everything went south before that monstrosity was built.

    On a side note, I personally hope to see $5/gal gas soon. Maybe only then will people start to think about how they get around. Then again, probably not. People will just blame it on someone else.

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    • matt picio January 10, 2012 at 12:16 pm

      CRC isn’t dead yet. The states and the feds may still try to ram it through, even though VMT is declining, the bridge isn’t necessary and there’s no money to pay for it.

      My prediction for 2012 – the new highway bill will keep funding for the CRC, and strip transit, cycling and walking to the bone. Hope I’m wrong.

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      • q`Tzal January 10, 2012 at 1:03 pm

        Isn’t that an image of post apocalyptic irony.
        I can see the video story boards now:

        A bridge standing tall and proud.
        A dedication plaque glistening in the near sunset.
        Gleaming metal, sturdy concrete, overpasses and connections spreading far and wide.
        As the camera pans we see an off ramp as pristine as the day it was built …

        … connecting to a network of surface streets of broken concrete with weeds growing through it and asphalt as rutted as a muddy logging trail.
        Empty houses, either burnt down or obviously striped of all valuable materials, fill the view as the camera zooms slowly out.
        Bright green plant life stands out at bodies of water as did not before and a bustling energy can be discerned around downtown.

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      • bikeyvol January 10, 2012 at 4:11 pm

        The funding for the CRC has been set aside already. I work in transportation – planning industry and was slightly surprised at the dollars they already have set aside for that project.

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        • John Lascurettes January 10, 2012 at 10:37 pm

          Care to give some sources to Jonathan at Bike Portland? I’m sure he’d love to follow through on that allegation.

          Recommended Thumb up 1

    • Steve B January 10, 2012 at 4:28 pm

      Stay attentive to this issue, it’s not dead yet. It’s actually going forward.

      Oregon has to deal with the fact that the numbers don’t add up. They never did, and now they’re even worse.

      Please tell your state reps how you feel, they may consider funding realities in the upcoming session.

      Find your Legislator quick and easy here:
      http://www.leg.state.or.us/findlegsltr/

      Recommended Thumb up 2

    • middle of the road guy January 10, 2012 at 6:01 pm

      Maybe much of that increase will be indirectly passed on to you.

      Recommended Thumb up 0

  • Julia January 10, 2012 at 11:03 am

    Looks like it’s time to get creative…or face reality when it comes to revenue generation.

    Recommended Thumb up 1

  • Tony January 10, 2012 at 11:13 am

    Progressive vehicle tax by weight.

    Recommended Thumb up 11

    • q`Tzal January 10, 2012 at 3:11 pm

      It’s funny. We have working fee schedules by weight and axles on AMERICAN toll roads.
      If we spread out the toll road concept to ALL roads the costs would be lower per user mile and they could be funded directly by the most abusive users: heavy trucks and aimless cruisers.

      I also get the feeling that if the transportation revenue stream was clear and direct enough that the “average person” could follow it the automobile would cease to be the king of the road.

      Recommended Thumb up 1

  • Oliver January 10, 2012 at 11:14 am

    It looks like the ‘smaller government’ folks have been crowing about is coming whether we want it or not.

    And as usual the reality is unlikely to measure up to people’s fantasy.

    “We wanted you to end welfare, not let our highways crumble and our forests burn. The subsidies I enjoy are good”

    Recommended Thumb up 0

  • Chris I January 10, 2012 at 11:16 am

    Time to switch to a maintenance first approach. No CRC, no 217 expansion, no I-5 widening through the rose quarter. Could this be a blessing in disguise?

    Recommended Thumb up 9

    • matt picio January 10, 2012 at 12:16 pm

      Also, no Hwy 224 expansion either.

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  • shirtsoff January 10, 2012 at 11:18 am

    Is that graph meant to be highly suggestive in its depiction to one of the great Cascade mountain peaks? I can’t be the only one seeing this.

    Recommended Thumb up 1

    • thefuture January 10, 2012 at 1:27 pm

      ‘Connect Oregon’ must have an office in Timberline Lodge.

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  • Paul Souders January 10, 2012 at 11:24 am

    This is part of a predictable trend in the declining return-on-investment on sprawl-based development. The Strong Towns blog has described this in great detail. (http://www.strongtowns.org/journal/2011/12/16/best-of-blog-the-growth-ponzi-scheme.html)

    “…the public yield from the suburban development pattern — the amount of tax revenue obtained per increment of liability assumed — is ridiculously low. Over a life cycle, a city frequently receives just a dime or two of revenue for each dollar of liability…new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations — which are not counted on the public balance sheet — are a generation away.”

    Well, yesterday’s “a generation away” is today’s “now.” This isn’t some philosophical lifestyle argument (“cars vs. bikes” or whatever), it’s about cruel unforgiving numbers. These numbers predict a day in which we’ll no longer be able to fund past obligations (“debt service”) through growth, and they predict it will look like this.

    An obvious reaction is to “de-build” existing infrastructure. If we’re on track to have a heart attack, maybe it’s time to lose some weight.

    Recommended Thumb up 8

  • Jeremy Cohen January 10, 2012 at 11:40 am

    I wonder what role ODOT has in restricting/eliminating the use of studded tires (or shortening the season or whatever). This would probably be a pretty quick way to reduce the cost of resurfacing some highways. Maybe that idea will get some traction (pun intended!)

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  • Andrew N January 10, 2012 at 11:52 am

    Hey Jonathan, you may have done this in the past and I missed it, but how about an article devoted entirely to potential new sources of revenue generation?

    This budget crisis seems like the perfect opportunity to enact new policies that reflect what we already know: that driving SOV’s is far from “free”; and that a serious attempt to capture more of the cost of driving also requires a corresponding increase in funding for our human-powered transportation network and our mass transit system.

    Recommended Thumb up 1

  • RH January 10, 2012 at 11:57 am

    I really hope this stirs the pot for abolishing the CRC. That monster needs to be slain….a long time ago. Current bridge should be tolled like Seattle is now doing with the 520 bridge.

    Recommended Thumb up 6

  • Bikesalot January 10, 2012 at 12:35 pm

    Time to get that ban on studded tires. It is shameful to let the pavement get torn up that rapidly.

    Recommended Thumb up 7

  • Andrew Holtz January 10, 2012 at 1:03 pm

    One part of the problem is that what we pay isn’t closely related to what we use.

    The state needs a weight-mile tax for all vehicles (since those are the factors most closely related to wear & tear on roads). The tax should be set to cover most (if not all) of spending on roads. It would require a significant jump in what drivers pay directly… so it should be coupled with an equivalent reduction in the property and income taxes that are currently used to subsidize motor vehicles.
    (The fact that commercial vehicle owners pass their costs on to customers means everyone would be contributing something to the community benefit of the road system, even if they don’t personally drive.)

    But this sort of change isn’t likely to happen until major advocates such as AAA, freight, construction and other business step up to educate people to the little-known fact that drivers don’t really pay most of the cost of roads now.

    Recommended Thumb up 5

  • Ryno Dan January 10, 2012 at 1:03 pm

    It seems to me that ODOT is just part of the giant subsidy for conventionally powered sovs. I cheer the demise of it’s budget. I have no desire to find “new sources of revenue”. No more “safety” improvements, no more road widening. No roads more than 2 lanes wide, and all city roads with speed limit 25mph. Toll the bridges (especially the sellwood), remove the on-street parking, etc, etc, etc. Thanks for the coverage !!

    Recommended Thumb up 1

    • bikeyvol January 10, 2012 at 4:14 pm

      By removing the state transportation department, you’re effectively cutting off local funding for bike-ped projects… just thought to remind you.

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  • q`Tzal January 10, 2012 at 1:22 pm

    It’s sad. Our nation’s transportation planners out thought by slime mold.

    A Map of the US…Made of Slime Mold
    Physarum polycephalum, a type of slime mold, grows tendrils in search of food and withdraws extraneous arms to focus on the most efficient paths between sources. Although the American map is just an illustrative model made for Popular Science, researchers in the U.K. have used slime mold to create similar replicas of local roads and railways, backed up by computer models.

    It seems like we allow the dream of equality to pervert road planning in to meaning that all destinations are deserving of equal funding no matter how distant or low traffic.

    We have too many roads and not enough high capacity transit modes for both people and freight.

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  • -J January 10, 2012 at 1:28 pm

    In addition to ditching the CRC project, it seems that there should be even greater urgency to ban studded tires! It pains me to hear the sound of studded tires on our roads here in Portland, and the people who buy them are wholly uneducated about their actual performance in inclement conditions. From their own FAQ, ODOT spends over $11 million a year fixing roads and bridge damage from studded tires, so this should be an easy one….

    Recommended Thumb up 0

  • q`Tzal January 10, 2012 at 1:59 pm

    OK, time to stick my head in a hornet’s nest:

    Rails are much more efficient in energy use and maintenance costs.
    Therefore rail lines are good for bikes and bike infrastructure.

    Yeah rails everywhere!
    Bring ‘em on!

    Recommended Thumb up 4

    • Chris I January 10, 2012 at 2:22 pm

      And Amtrak Cascades trains have bike racks. Imagine being able to travel to every major city in Cascadia by train in the same amount of time it would take to drive. You could roll your bike on and off without having to tear it down and box it up.

      Recommended Thumb up 1

      • q`Tzal January 10, 2012 at 2:52 pm

        I’d much rather have Evacuated Tube Transport like we see mentioned here:

        China Working towards 600 Mph Maglev Trains Through Very Low Pressure Underground Tubes
        A vactrain is a proposed, as-yet-unbuilt design for future high-speed railroad transportation. This would entail building maglev lines through evacuated (air-less) or partly evacuated tubes … The lack of air resistance could permit vactrains to use little power and to move at extremely high speeds, up to (4000-5000 mph (6400–8000 km/h)…

        Also the video (by ET3) is educational and shows how they are in the process of trying to get this off the drawing board any way possible.

        A cost comparison chart of traditional rail and Evacuated Tube Transport is interesting: http://www.et3.com/rail.asp.
        I’d only upsize the main tube diameter so that the intermodal freight containers can be slid right in without repacking.

        Of course we’ll still need LOCAL transit but there are any of a number of more efficient current technologies that the auto companies are afraid of.

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      • was carless January 11, 2012 at 12:56 am

        You pretty much almost already can. PDX > Eugene in 2.5 hours vs 2 hours driving really isn’t terrible.

        Would be nice to have 125 mph regional trains like they do in the UK (cheaper than real HSR), but I have ridden Amtrak to California (way too long), Eugene and Seattle. Service is pretty nice, but they need to double the # of trains they are running – they sell out tickets too often.

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  • Doug Smart January 10, 2012 at 2:34 pm

    This looks like a link to the November memo on ODOT’s website. Not as good as a .pdf – the included graphic is unreadable – but the headings match those of the story above.

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  • Evan Manvel January 10, 2012 at 3:17 pm

    There’s a link to the clean PDF from my article I wrote on this subject in December.

    [Here's that link](http://bit.ly/s8Pflz).

    [Here's my article](http://www.blueoregon.com/2011/12/transportation-funding-hole/
    ) on Blue Oregon.

    Recommended Thumb up 1

    • Doug Smart January 11, 2012 at 9:26 am

      Clickable:
      Here’s the pdf.
      Here’s the article.

      Thanks, Evan!

      Recommended Thumb up 1

  • J-R January 10, 2012 at 3:44 pm

    The federal gas tax has been stuck at 18.4 cents per gallon since 1993. The Oregon gas tax was 24 cents per gallon in 1993. Oregon’s tax was raised to 30 cents per gallon in 2011. Just to match the construction cost index the federal rate should be 30.6 and the state rate should be 39.9 cents per gallon. If the rates had been adjusted every year, we’d have a much better, safer, multimodal system. It’s not a problem of fuel efficiency; it’s a problem of failing to adjust for construction and maintenance costs. Heck, even the cost of electricity to run signals and paint for marking bike lanes has gone up. Every thing but gas tax thanks to spineless legislators.

    Recommended Thumb up 1

  • Lenny Anderson January 10, 2012 at 4:17 pm

    ODOT asked for this with OTIA & JTA which funded construction from bonds instead of annual gas tax income. It would be instructive to graph the spending over the last 20 years to more clearly see the OTIA/JTA bulge.
    That said, its hard to image getting a gas tax increase just to pay the state’s share of CRC, but watch out. I would support a gas tax increase only if the constitutional restriction on use was repealed and the CRC was radically reduced in size and scope.
    Maybe OR could tax imported oil and use the money for all modes instead of just roads.

    Recommended Thumb up 1

  • middle of the road guy January 10, 2012 at 6:06 pm

    sigh. seems like most people wanting less road funding don’t directly use that infrastructure, espouse an “I know what’s better for you” philosophy and believe that their chosen mode of transport somehow makes them superior.

    Since they don’t directly use it as much, they may not be as appreciative of the value it provides. How many people that are against the CRC actually use the I-5 bridge on a regular basis?

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    • q`Tzal January 11, 2012 at 12:58 am

      Darn straight!

      History has shown repeatedly that the most economically prosperous states were those with the most effective, efficient and cheap transportation systems.
      Be it the Dutch shipping fleets in 1700′s,
      the road system established by the Roman Empire,
      the rail system and even the interstate highway system in the US.

      The interstate highway system WAS cheaper when oil and land was cheap. With ALL energy costs going up we need to be asking ourselves not that we should do without the CRC crossing but how we can make it as cheaply, as efficiently and with the best long term payoff for the predicted user base.

      For now, and probably the 10-20 years, that will probably continue to be personal autos and cargo trucks.

      Even if the US government mandated that all public transit would be free nationwide we would still have a glut of cargo trucks as our rail infrastructure is stuck in the 18th century.

      Transit lines, for both people and cargo, need to be established with exclusive right-of-way and separation from cross traffic to insure that our transportation system does not spit our economy back in to the 18th century.

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  • Art Fuldodger January 11, 2012 at 11:49 am

    from the ODoT memo:

    ” Given the current fiscal and political situation, transferring additional general fund
    resources into the Highway Trust Fund (which has already been done three times totaling nearly
    $35 billion)…”

    Just in case anyone still thinks that motorist user fees actually pay in full for the transportation system, & that the cost of bicycle facilities are subsidized by drivers…

    Recommended Thumb up 0

  • 007 January 11, 2012 at 2:11 pm

    Dear ODOT, keep throwing millions in the CRC black hole.

    Recommended Thumb up 0

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