The Oregon Department of Transportation recently admitted that, after going on a construction spending spree in the 2000s, it is now going broke. This chart does a pretty good job of displaying the collapse in the agency’s construction budget:
At this point, virtually all of the agency’s revenues are committed to debt service and basic road maintenance. There’s almost no money left for new construction.
One of the chief causes for the revenue shortfalls: in the state’s words, “People are driving less.”
Here’s what the agency has to say about recent driving trends:
For six decades after World War II an expanding economy increased the average miles driven per person virtually every year. But in recent years the regular increase in vehicle miles traveled (VMT) has stopped, and VMT growth has slowed or gone negative. While debate about the causes of this continues, research indicates that demographic trends—including Baby Boomers retiring and less driving by the younger generation—has reduced the link between VMT and economic growth.
I count this sort of honesty as a rare treat. I mean think about it: Oregon’s transportation officials now admit that, even after a decade of massive highway spending, demand for all of that new road capacity is evaporating!
And I have to give ODOT even more credit for acknowledging other structural problems with the transportation budget, including…
- “Construction cost increases over the past decade: “Construction costs more than doubled between 2001 and 2008.” Wow!
- The “Lack adequate and dedicated funding for non-highway modes” that has kept funding for non-highway modes “episodic.” (That’s transportation-speak for “Flaky and meager.”)
- Debt service: “In 2001 the OTIA program authorized ODOT to use bonding for highway projects for the first time…And while ODOT is paying off that debt, the state will have a lot less money to spend on new projects.”
Yet it seems that ODOT’s leadership has learned little from its lost decade, and remains committed to massive, debt-fueled highway expansions. Exhibit A: the agency is still trying to reanimate the corpse of the Columbia River Crossing—which would double the number of lanes across the river—despite growing evidence that tolls would divert much of the traffic to another bridge, making much of the added capacity superfluous.
By pursuing the CRC, ODOT is doubling down on the strategy that has already landed the agency in its current funding mess.
Maybe ODOT’s leadership has a long-term agenda with its support for the CRC: bringing the state’s transportation budget crisis to a head, in order to build political momentum for a massive new highway funding package. Yet if Washington’s experience is any guide, this strategy could prove to be a dud. WSDOT’s budget has many of the same woes as ODOT’s; but despite agreeing on the basic contours of a lopsided, road-heavy transportation package, the Washington House and Senate quibbled about details, and the legislation foundered.
But even if the Oregon legislature could avoid that political quagmire, there’s every reason to believe that reviving the highway spending spree of the 2000s would just land the state right back where it is now: broke, with flat or declining traffic, not enough money for road and street maintenance, and critical shortfalls in funding for the transportation modes that are actually on the rise: transit, biking, and walking.
All of this makes ODOT’s brutal honesty a little less refreshing. After all, what good is self-awareness if it doesn’t change what you do?
John Gear
And it’s not just the CRoCk, they are pushing an absurd Bridgasaurus Boondogglus in Salem to try to restart sprawl in Polk County.
During last weeks Snowpacalypse, the “oversight” team for the Salem fantasy bridge met, and it was pointed out to them that, according to weather models that worked like odot’s traffic forecasting models, it was sunny and 70 degrees outside.
If they try to get a record of decision based on an environmental impact statement which includes a need statement built using models that are dramatically and consistently wrong, I think they’ll be sued and they might well lose. Although the EIS process is about procedure and not substance, there’s a strong argument that intentionally using known bad inputs for your modeling and a model that can’t even replicate the past means you haven’t done the analysis at all.
Rob Gould
Connect Oregon also uses funny figures in regards for the need for airport expansions which are pushed by local Chamber of Commerce folks who somehow think a bigger airport will solve their economic problems.
Joe Rowe
Clark! Thanks for this great detail.
The headline should read:
ODOT overspending creates shortfalls in jobs and transit alternatives.
ODOT and lawmakers do not talk about the unborn jobs that will result from their big promiscuous projects.
For example: If we stopped the 5 mile CRC freeway costing $5-$10 billion we would be able to create far more jobs spread over thousands of miles, fixing transit and freight problems helping many more people. If we keep the CRC freeway we will create a few jobs short term and pay to abort many more jobs over a longer time period. The CRC is going to put all our debt into one basket; the CRC is a gift to solve a rush hour problem for suburbanites and land developers North of Portland.
Lawmakers will give an extremely large bonus to Nike in exchange for 500 jobs. At the same time Lawmakers take direct action to destroy jobs if you do the long term math on debt. How can we stimulate the economy when ODOT goes deeper into debt service? The gas taxes to pay for this promiscuity will come from the gas tax and that’s a huge burden on poor people. Like it or not, this massive sink hole will defund schools and social services.
I’d love to hear what others think. Joe
Food for Thought
Good stuff, Clark.
A point of clarity: the implied pointing of the finger at ODOT Director Matt Garrett is misplaced.
ODOT’s agency leadership clearly understands, and has long understood, its financial challenges. Jim Whitty is a good person to talk to about this. ODOT’s true leadership is the legislature. Have a look at the percentage of anticipated gas tax receipts earmarked for specific projects in the last gas tax increase. As at the federal level, transportation spending in Oregon has gone extremely political.
Funding ODOT to think – and act – for an increasingly multimodal transportation environment is almost inconceivable in this environment. Your article is extremely valuable. I hope this addendum makes it a little bit more valuable.
Sarah
I agree with foodie- I think ODOT gets it, its the politics behind the funding that propels the massive projects forward.
I am increasingly worried that with the shifting populations of low income people to outer suburbs that generally have less investment in transportation(whether it is walkable areas or transit) will make a difficult transportation system even worse. If people have to get to their job in PDX, but can only afford housing in areas far away with limited transit, they will drive-if they can afford it.
I went on an organized bike ride last summer in my neighborhood in the burbs. A BTA representative happened to be there and I asked them what sort of plans we could do help increase bike transit in the burbs. I was less than impressed with their answer(which was suburbs are pretty much too difficult to deal with and we have too much to work on in PDX proper).
I don’t think these types of mega-transportation projects will change unless we can get thinkers to really focus on how to re-discover the burbs(the ones built from 1960s-1980s) and figure out how to re-imagine them contain our current wants/needs. This will reduce the pressure(and cost) to live in PDX proper, folks can live near their job and still have the amenities(walkable neighborhoods/bikeable commute, etc) they desire.
Vernon Huffman
ODOT is hooked on projections of increased driving, even in the face of contrary evidence. Rather than acknowledging that transportation is responsible for 35-40% of the state’s carbon emissions, ODOT’s plans for dealing with Climate Change are focused on keeping us driving as the oceans rise and the weather becomes more extreme.
Such suicidal ideations require immediate and forceful intervention. We’ve got to insist upon Traffic Demand Management programs designed to make it more difficult to drive a car, especially a SOV, and much easier to use alternatives. We could replace roadways with railroads wherever there are concentrations of people. We could make every neighborhood more walkable and every city more bikeable. We could pass a stiff gas tax to help pay for the changes. But we’ve got to stand up and insist like the survival of our species was at stake.
norm
The reason ODOT pushes for the CRC is for the new money that comes with it.
Reality is dawning. We need less ODOT.
Joshua Skov
Clark,
Good piece, and of course I agree with the main points, especially the translation of “episodic” as “flaky and meager” — well put.
But in one way, the tone is a bit off by omission of a key element. It’s worth pointing out that the OTIA III program wasn’t particularly optional: It involved rebuilding scores of 50-year bridges that were part of the initial construction of the interstate highway system. While one can debate the wisdom of the many capacity expansions over the past decade (I’m with you in seeing many of those car-centric investments as poor ones), most of the bridge program was probably inevitable. (And it had a fairly strong — for the transportation world — sustainability component.)
Keep up the good work.
Josh
Marsha
Operating under the radar. Check out WCX (West Coast Infrastructure Exchange) http://westcoastx.com/. Established by Gov. Kitzhaber and coordinated by Chris Taylor co-founder of Element Energy. The exchange is about private funding for infrastructure using state retirement funds and other venture capitalists for building roads, bridges, water and sewer systems. For example, back east toll roads such as the Illinois/Indiana Toll Road which were built with state and federal money is now owned by Spanish and Austrialian companies. Is this our future?
Rod Brown
Hi Clark,
Another good piece on the change in driving patterns. I have only one question: What’s wrong with using debt-financing when the underlying source of funding (a multi-year gas tax increase) is stable? Debt can be a good way to raise funds, so long as the amount of debt doesn’t exceed your future revenues. ODOT’s revenue stream from the gas tax increase seems nicely matched to what they borrowed. So it doesn’t seem as bad as you imply by calling it “debt-fueled.” That adjective seems more appropriate for debt that’s excessive compared to one’s revenue stream.
Thanks for shining a light on this important topic. Some day we’ve got to get the transportation establishment to reflect this new reality in their modeling and decision-making.
Rod
Clark Williams-Derry
Rod – There are 2 possible problems that I can think of.
First, bond financing costs more than pay-as-you-go, just because you have to pay the bond interest.
Second, “stable” financing has turned out to be less stable than people thought. That’s what happened with bonding in Oregon and Washington: gas tax receipts have come in below forecasts, and that’s squeezed the rest of the states’ transportation budgets.