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.”
(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.
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.