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Facing further cuts, PBOT floats new revenue ideas at budget meeting

Posted by on November 14th, 2012 at 3:19 pm

PBOT Director Tom Miller at a meeting
of his Budget Advisory Committee
last night.
(Photo © J. Maus/BikePortland)

The budget outlook for the Bureau of Transportation is a bit better this year than it was last year; but things are still grim. I attended the first of three PBOT Budget Advisory Committee meetings last night to get the lowdown and words like “triage” were being thrown around. But amid the doom and gloom, there are some interesting developments to report that could brighten the picture.

The big takeaway from last night is that PBOT is prepping for a $4.5 million budget gap in fiscal 2013-14 (which runs July-June). Those cuts are to be ongoing cuts, which means coupled with last year’s huge cuts, the bureau is seriously hurting.

Here’s why these further cuts are necessary:

  • PBOT’s take from the State Highway Trust Fund has been downwardly forecasted by ODOT to the tune of $1.8 million.
  • PBOT’s retirement and health benefit costs have doubled from 2011 to 2012, and now require an additional $1.4 million.
  • PBOT has debt service obligations of about $1 million (primarily due to bonds taken out for Sellwood Bridge and Portland Milwaukie Light Rail projects).

To make the cuts, PBOT will use a similar process as last year. They’ll rank all internal programs on a spreadsheet and fund those first. Then, all leftover money will be doled out according to a map that lists the “streets of citywide significance.” That concept was hatched by PBOT Director Tom Miller last year and it prioritizes streets that, “are of the highest value for the transportation function” and that, “carry the most volume across all modes.” (I’ll have more on these details as the budget process moves forward.)

Miller led last night’s meeting and he went over several factors that are contributing to PBOT’s dire straits.

First and foremost, as many of you already know, the buying power (it hasn’t kept up with inflation) and the overall intake of gas tax continues to fall. And, as fuel efficiency improves and people drive fewer miles, the trendline of what the city brings in from gas tax doesn’t look pretty.

Furthermore, Miller explained that while the gas tax is one of the city’s largest sources of revenue, relying on it presents a conundrum:

“The more effective we become with providing Portlanders with choices, the more successful we are at helping transition people to other means of travel, the fewer dollars we have coming through the doors…. Our policy goals are a lot further ahead than the funding structures. That’s a challenge, that, as a community we have to reconcile.”

Another factor shrinking PBOT’s budget is fewer dollars coming from federal and other outside grant sources (“other people’s money” is how Miller described it). Miller said that figure was about $120 million two years ago and next year it’s slated to be only about $50 million. It’s worth noting that PBOT is unique among all city bureaus in that it’s largest sources of funding (outside grants and the State Highway Trust Fund) are completely out of their control.

With dwindling funds and a huge maintenance backlog and long lists of projects they’d like to do, PBOT needs a new revenue stream. Last year, before the budget talks started, PBOT (and their Budget Advisory Committee) received a mandate from City Council and the Mayor that they were not allowed to even consider new revenue streams. The politics were just not there.

PBOT has not yet received similar notice this time around (they’re “anxiously” awaiting official budget guidance from City Council). However, regardless of whether or not Council makes the same edict as last year, the ice around the conversation for new revenue seems to be melting. This is evident by the actions and words of both Miller and his staff.

Miller announced last night that a task force of financial experts is currently working on a report for PBOT that will detail a number of possible new funding streams. Among them: “performance pricing” for parking; a street fee; and a local increase in the gas tax.

“Performance pricing” is essentially dynamic pricing for parking spots where the price fluctuates based on demand. Miller shared last night how PBOT has already started this type of pricing around Jeld-Wen Field during Portland Timbers home games. When demand for the 455 metered spots around the stadium is highest, the price is $3.50 per hour compared to the regular downtown rate of $1.60.

In addition to the new revenue from performance pricing, Miller said a goal of expanding the program would be, “To send a signal to say, ‘Hey, you might want to take transit.’ It’s just a little nudge to think about a different transportation choice.”

Miller also hinted that the groundwork is being laid for another try at introducing a citywide “street fee.” This would be third time it comes up in Portland. As transportation commissioner in 2001, Mayor-elect Charlie Hales tried to make one happen in 2001. Then in 2007, then transportation commissioner Sam Adams also tried. Both attempts were pushed back after opposition from various interest groups (grocers in 2001, a petroleum lobbyist representing convenience stores in 2007) ; but with today’s political and funding environment, the third time is very likely to be the charm.

Last night, Miller referred to the street fee as a, “Fee for access to the public right of way,” and various staffers around the table pointed out that 20 jurisdictions around the state already have such a fee in place. But don’t expect it to happen for at least another year or two. Miller said, “My presumption is that a brand new council won’t take on the heavy lift,” and added that it won’t happen unless a “Broad coalition of support exists to push it into the finish line”

The financial task force’s report will also include the recommendation to increase the local gas tax. Given that a 5-year moratorium on local gas tax increases (due to the Jobs and Transportation Act legislation that passed in 2009) is over in 2014, I won’t be surprised if PBOT jumps on this one.

Given these new revenue ideas, Miller said he’s developing two separate budgets. The “Plan B budget” would be one that, “provides a balanced, conservative, sober budget with no new revenue at all.” Miller’s “Plan A budget” would be “built on some new revenue” just in case Council gives PBOT the green light to consider it.

I sense a growing chorus among PBOT management that real funding reforms are on the horizon. They are speaking about them in more detail and with more urgency and confidence than I’ve ever heard. In the past, this stuff was talked about as if it would never actually happen. Now, it’s not if, it’s when and how.

“Frankly,” Miller said at the end of the meeting, “It’s time to reinvent how we fund transportation. That’s the bottom line. It’s not an easy conversation, but it’s one that has to be had.”

Stay tuned.

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Ethan
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Ethan

This “Future City” isn’t going to be funded with unicorns, rainbows, or gas taxes. We will have to pay for it ourselves.

Jeff Bernards
Guest
Jeff Bernards

Studded tires cut road life by 50- 65% in the Portland area, it’s time the conversation revolved around some conservation measures (remember climate change!). Just raising more money to subsidize 10% of road users who feel it’s there free choice to use studded tires is ridiculous. If were going to have a conversation about the roads, let’s include “ALL” road users and abusers.

J-R
Guest
J-R

There is no such thing as the State Highway Trust Fund. Search for ODOT budget on Oregon’s website. It includes a great graphic of revenues and expenses, including the transfers to cities and counties.

Contrary to popular belief, vehicle fleet fuel economy is about the same as in 1980. The lack of money to do transportation maintenance and projects has more to do with inflation – especially construction cost that have increased faster. It’s not about increased fuel economy.

I will support any amount of gas tax increase, but not a street access fee. When my car is in the garage, it’s not causing the need for street improvements. A gas tax is a nearly perfect user fee and those with gas hogs, which produce more carbon emissions, should pay more.

BURR
Guest
BURR

This is why sharrows on arterial streets are such a necessary interim measure; it’s going to be a while before PBOT has the resources to build anything but the smallest experimental/demonstration cycle tracks.

Granpa
Guest
Granpa

Carbon tax, not gas tax. Include a per unit excise tax on the coal that will be moved through our area by the gigaton.

A.K.
Guest
A.K.

“Last night, Miller referred to the street fee as a, “Fee for access to the public right of way,” and various staffers around the table pointed out that 20 jurisdictions around the state already have such a fee in place.”

Can you explain what a street fee is? This explanation doesn’t really give any idea of what it is, who has to pay it, or how it’s collected.

Also: “PBOT’s retirement and health benefit costs have doubled from 2011 to 2012, and now require an additional $1.4 million.”

That is crazy! Who is controlling that budget? Costs doubling every year is not sustainable.

BURR
Guest
BURR

You know that there are already cities in Oregon that have local sales taxes to cover these sort of things, too.

9watts
Guest
9watts

“With dwindling funds and a huge maintenance backlog”
So why exactly did City Council approve $400M for the Rose Quarter un-jamming? I realize that some or perhaps most of that money wasn’t from PBOT’s budget, but still.

Gary Charles
Guest
Gary Charles

A.K.
Also: “PBOT’s retirement and health benefit costs have doubled from 2011 to 2012, and now require an additional $1.4 million.”
That is crazy! Who is controlling that budget? Costs doubling every year is not sustainable.

That really jumped out at me as well. I’d like to know more about it and what the future projections for health and retirement benefits are.

rwl1776
Guest

“Last year, before the budget talks started, PBOT (and their Budget Advisory Committee) received a mandate from City Council and the Mayor that they were not allowed to even consider new revenue streams. The politics were just not there.” That’s because the tax payers have nothing left!

The voters just agreed, or those that voted YES agreed, to the $35 Arts tax, a $449 million schools bond measure (the biggest ever) and a Library bond measure, so there is nothing left in our shallow pockets. I know my property taxes are going up $950 or so a year…..money I will have to come up with by cutting MY budget.

If you voted yes on the library budget, would you have still voted yes had you known these facts?: “The Multnomah County Library is one of the most expensive public libraries in the U.S.—costing twice the national average.

During the 12 years when the county has cut $50 million in basic services, the library has steadily grown.

American Library Association statistics from 2011, the most recent available for comparison, show it cost $81 per county resident to run the library. That’s more than double the national average, and systems of similar size are spending about $38 per person. The only cities roughly Portland’s size with more expensive libraries are San Francisco and Cleveland.” http://www.wweek.com/portland/article-19508-when_stacks_attack.html

dwainedibbly
Guest
dwainedibbly

Somebody from the Oregonian or KATU is bound to jump on the “license plate for bikes” bandwagon.

Jeff Bernards
Guest
Jeff Bernards

Maybe 20 years ago the city raised the cost of water to raise money and encourage conservation, well it worked. Everyone conserved water and the city again had a budget shortfall. What did they do? Raise the rates again so it would have a positive impact on the budget. The gas tax is no different, yes we conserved, driving less and smaller cars. To solve the budget problem you add more to the gas tax to fix the budget shortfall. THE GAS TAX IS THE BEST USER FEE FOR CONSERVATION AND DRIVING LESS. Subsidized oil and driving is undermining real driving behavior and transportation options attractiveness. A carbon/gas tax is past over due to help fight climate change.

Joseph E
Guest

Raising the gas tax and raising parking prices in areas with limited parking are both good ideas, even if the money was refunded directly to taxpayers. Every other developed country has gas taxes 4, 10 or 20 times higher than ours, because spending tons of money on imported petroleum is terrible for the economy. Gas taxes: http://cloudfront.mediamatters.org/static/images/item/economist.jpg

In neighborhoods with limited car parking, free or underpriced street parking leads to drivers circling around for an empty spot, and encourages people to stay parked all day instead of moving their car to someone with more parking. More market-based parking prices will be good for local businesses and even good for drivers. The money should go back into the local commercial district, for new sidewalks, street trees, cleaning, etc.

PBOT should be funded out of the general city fund, directly. No need to tie funding to a specific tax.

Peter W
Guest
Peter W

One issue with funding might be the framing of the tax and how the idea is sold to voters. Consider for example the ‘Major Streets Transportation Improvement Program’ in WashCo which has generated around half a billion dollars via property taxes. It sounds like an ‘improvement program’ rather than a tax, and they traditionally got buy in by giving people a tangible list of projects that’d get funded.

Obviously the problem with decoupling the cost of driving from the act of it, however, is you remove a key disincentive.

Another possibility folks could think about is a ‘Climate Safety and Streets Improvement Program’ which could be funded through gas sales and use the money to a) improve streets, b) support transit and c) lower people’s energy bills by installing solar, weatherproofing homes, etc. Perhaps if there were a tangible list and people felt like they were getting really great things via the program, it’d be more likely to be supported.

anon1q2w3e4r5t
Guest
anon1q2w3e4r5t

Yeah, so let’s spend money on a bike sharing program. The people are going to be pissed when they realize how money was wasted on Portland’s bike sharing program. The people are going to be even more pissed when they realize how the bike sharing program is going significantly set back Portland’s livable city/streets movement. The people are going to be beyond pissed when they realize….nah I’ll save it for 2013.

Jack
Guest
Jack

Now that all the parking meters are electronic, “performance parking” should be in continuous effect with expected demand (as continuously monitored and projected with software) driving price. I’m sure there’s no shortage of people who will pay more for parking if the price goes up, and those who don’t want to pay more will turn to other options. Everybody wins.

Elliot
Guest
Elliot

“It’s time to reinvent how we fund transportation. That’s the bottom line.” – Tom Miller

I had a good chuckle at this one since revenue (in this case, funding) is recorded as the top line. Obviously I support the spirit of what Tom is saying. 🙂

Andyc of Linnton
Guest
Andyc of Linnton

Well, I’m all for a new source of revenue, whether it’s a “street user’s fee” or something similar. I bet if that for now we raise the gas tax as well, PBOT would actually obtain a lot more revenue for the foreseeable future. I mean, I still drive the car what seems like ALL THE TIME, because the alternatives to driving in this city either take years to implement or have what seems like very weak organizations backing them(and yes, I know we’ve done a lot in the city, its just really still not enough. Downtown still has no auto free road save that alley at Ankeny). Plus Trimet keeps scaling back, so I’m still driving as much as I did 5, 6, 7, 10 years ago, maybe more.

I think if the model for a gas tax is in place, PBOT could up that significantly for the present time while they are attempting a new model for revenue for the future.

Tom
Guest
Tom

Jonathan Maus (Publisher/Editor)
J-R,
” People are also driving less. I

Portland Commuters Are Driving More, Taking Transit Less

http://www.opb.org/news/article/portland-commuters-are-driving-more-taking-transit-less/?google_editors_picks=true

9watts
Guest
9watts

But it is important to not lose sight of the first order issue: total fuel consumption by private auto. Per capita figures, while illustrative of individual behaviors, don’t capture the whole story.
As we learned here
http://www.sightline.org/wp-content/uploads/downloads/2012/08/gas-report_2012.pdf
total gasoline consumption for OR and WA has actually declined a bit of late, which–John Charles’ opinion notwithstanding–is excellent news.
Quoting from that report:
“Two concurrent trends have spurred the reductions in gasoline consumption: people are driving less, and vehicles have become more efficient. Of the two, declines in driving—particularly among northwesterners under the age of 35—have made the greater impact.”

Thomas
Guest
Thomas

Neighborhood parking permits aren’t exactly a new idea. Two decades ago I lived in Seattle and we had neighborhood “zones” parking permits. Basically if you wanted to park on the street, you had to have a permit. I don’t know whether Portland needs zones or not – but I would certainly support an on-street parking fee. And I’m talking about overnight parking – not just casual day use. This would be a nice counterpoint to the gentleman who wants to double tax bicycle commuters (at least the majority of us who also own cars.)

Jonathan – I think a number of people point to the fact that the revenue numbers for PBOT are not very clear. A nice fill-in article on this topic would be to really make transparent where PBOTs funds come from and where they go to. Some nice infographics to help paint a clear picture would be great. I’ve done my own perusing of the ODOT transportation numbers – and as far as I can tell, gas taxes are a small revenue source. It really confuses me when I hear PBOT say that this is their largest revenue stream. Is it really?? I’d love someone to sort this out and communicate it publicly.

Thanks for great reporting – keep up the good work!!

Tony Fuentes
Guest

A couple of things to recall from the 2007 discussions regarding transportation funding 1) a city gas tax was on the table for many months, it was removed toward the end of the process (then Commissioner Adams took it out of the package in November 2007); and 2) it may have been Paul Romain’s work representing the Oregon Petroleum Association that killed the street fee but there was a building concern about the inequity of the street fee within the small business community as well.

The small business concern stemmed from the tiered pricing that became part of the street fee ordinance adopted by Council in January 2008. The fee structure provided large businesses that generated more car trips (i.e. more demand for street use) with a dramatic trip fee discount. The result was that the cost of the street fee was going to fall disproportionately upon small businesses.

If a street fee proposal is developed again, I hope that one of the lessons learned from the effort in 2007/2008 is that the fee needs to be equitable.

On a different but related note, although the role of gas taxes is often highlighted in the PBOT funding scheme, I believe the role of local property taxes is worthy of its own discussion.

Every year that I have lived in Portland (since 2001) a larger and larger share of property tax revenue that would’ve gone to the city’s general fund is paying Urban Renewal Area debt.

When I arrived in 2001, about 16 percent of this property tax revenue that would’ve gone directly to the general fund was supporting URAs. Looking at my most recent property tax statement, 27 percent of property taxes going to the city are now paying for Urban Renewal debt. That is a dramatic share of revenue being shifted away from the general fund in favor of subsidizing private sector development in the URAs as well as capital intensive pubic projects, such as the Street Car.

Putting it another way, when I got here in 2001 over half of every property tax dollar went to the general fund, now less than half does. If you ever wonder why utility fees seem to be the go to sources for a wide variety of non-utility investments, this is the core reason why.

I don’t think any new revenue sources should be taken off the table for discussion. However, I hope that given the dramatic budget challenges facing all the city bureaus (not just PBOT) that the new Council approaches the revenue challenges with the full picture in mind, not just the needs or desires of any single agency. And I hope that we as a community encourage this review to take place.

Tony Fuentes
Guest

If you want a comprehensive snapshot of the city’s financial position, this 2011 report from the Auditor’s office outlines the reality:

http://www.portlandonline.com/auditor/index.cfm?c=53775&a=358191