Lars Larson Interviews Cortright on Special Session

On August 26, three days before a legislative special session to consider raising transportation taxes and fees, radio talk show host Lars Larson interviewed City Observtory’s Joe  Cortright.  Here is a computer-generated transcript of that interview.  Audio is available on SoundCloud.

Welcome to the Lars Larson show on the Radio Northwest Network, and a welcome to Joe Cortright, who’s an economist from CityObservatory.org.  Joe, I’m glad to have you back, because you know these financial issues better than just about anybody I know. Welcome.

Thanks. Good afternoon, Lars.

Okay, so the special session is coming up. Is any of this tax increase necessary? Or could ODOT solve its financial problems without . . .

I think the alarming thing about this is that ODOT’s financial crisis is entirely of its own making and its own decision to commit literally billions of dollars to just a handful of billion-dollar-a-mile mega projects, the Rose Quarter freeway widening,  the Abernathy Bridge rebuild and the Interstate Bridge project. And it’s those projects, and not not some claim that we’re driving too many electric vehicles that is really responsible for ODOT financial problem.

In fact, is it fair to say, Joe, because I want to call the lie out: I hear constantly, I’ve been hearing literally for decades, “Gas tax revenues are down.” And then I understand that 2024 had record gas tax revenues. They have never collected so much money from gas taxes as they did just last year. And yet they go out and tell the public, our revenues are down. Well I might say, well, they’re not increasing at the rate you’d like them to increase, but it’s literally a lie to say that gas tax revenue is down, is it not?

That’s true, and I would just say it’s gas and diesel together. Motor fuel revenues are about $100 million higher, big round numbers, than they were in 2020 and in part, that’s because the legislature in 2017 approved a 10 cent a gallon gas tax increase that was phased in over a number of years.The point is they do have more money than they did before.

So with that more money, and the other question that I’ve been pushing at is that ODOT says we don’t have any money. They have committed hundreds of millions of dollars to projects that I would argue, and I think you might agree with me, are dead already. They just haven’t. Haven’t, finally died just yet, like Rose Quarter, which appears to be dead, and it was supposed to start construction soon. And like the IBR, which I think it’s supposed to start construction next year, and they don’t even have half the money they currently estimate the project at. Is that, are those things accurate? And if they’re not correct me, please.

Well, first of all, they’re refusing to admit they’re dead. They’re saying they’re going to go ahead with the Rose Quarter project, even though that was one that was sold as costing $450 million, and the current price tag is up over $2 billion, and they’re missing most of that money. And the dirty little secret in Salem that nobody is talking about is that the Interstate Bridge cost estimate, which has been as much as seven and a half billion dollars. That estimate is three years out of date, and they’ve been saying for 20 months now, “we’re working on a new estimate.” And you just know that as soon as they adjourn the special session, we’ll probably find out that there’s another billion or $2 billion that we need to come up with for that project.

And they also know, because you and I have talked about the tolling idea, at least the bridge project, not the Rose Quarter necessarily, is dependent on tolling. And yet they know there is massive, I think, overwhelming, public opposition to tolling, and the numbers don’t play out because, as you pointed out on this show, there used to be almost 150,000 people day, or crossings daily on the Interstate bridge. It’s now 127,000 so it’s down by 20% or so, and that, if you they slap a toll on it, it’s going to drop by another 50,000 crossings, and you’re going to have 75,000 people, about half the number, crossing the Interstate bridge, and you’re going to turn I 205, into a parking lot. So it’s so the bridge tolls will not generate the money that they hope to generate. I think they know that. You think that’s accurate?

They have always exaggerated the traffic levels on the I-5 bridge, but you’re right. They’re down about 10% from where they were a few years ago, and they’re way, way below the growth rate that they have been scaring everybody with, saying that we need vastly more capacity. There are fewer people crossing the I-5 bridge today than in 2005.

So what’s the way, in your view, as an economist, for them to solve this problem this weekend? Because, you know, they’re trying to do this outside of public view, or when the public is paying attention to Labor Day weekend and not paying attention to what the folks are doing down sale.

Well, I think they need to do is they need to adopt a “fix it first” policy. That is, they need to be spending the money not on starting big new projects, but on taking care of the basics.  What ODOT has consistently done is plead poverty:  claim they can’t fill potholes, can’t plow the roads, and meanwhile, diverted literally hundreds of millions of dollars into starting these projects. The Legislature didn’t approve any money, any additional money, for the Abernathy bridge. ODOT said it would cost about $250 million. It’s cost $815 million. And even though ODOT says money is restricted and they can’t use it, they somehow found more than $800 million for a project that the legislature didn’t appropriate anything for. So it’s really a question of having ODOT really emphasize preserving the investment in the system.

So why is ODOT behaving this way? Why are they doing it? In other words, do they consciously come in and say, we’re going to lowball this thing. We’re going to get them to say yes, and once we’re started, they won’t be able to stop us, and we’ll just come in and demand the money. Is it that effectively a form of extortion, or are they really that incompetent that they would misjudge the cost of a project that was supposed to cost 250 and now it’s at 815 and it’s not done yet. Is it going to stay at 815 or go higher?

Well, that’s really a false alternative. It’s a combination of both. I mean, I think there is some question about competence, but there are a whole bunch of people who like to see projects get built. I think engineers would much prefer to build bridges than fill potholes. And there are a whole set of people, construction companies, labor unions, consultants, who all have an interest in big projects. And in fact, the consultants all make more money when the cost of the project goes up, so they have no incentive to minimize costs. And there’s a great study from—and I know it’s liberal–the Brookings Institution, which says excessive reliance on consultants is one of the main reasons that states experience cost overruns, and Oregon’s costs are higher than the typical state in the United States.

And you believe they’re going to go ahead with Rose Quarter and the Interstate Bridge, even though nobody has any idea where the money?

That’s what they’re saying. It beggars belief that they’ll find the money to do it, but they’re not acknowledging the reality that they don’t have the money to build them.

Absolutely, Joe, I’ve got to go break away, but that’s Joe Cortright. He’s one of the economists we absolutely depend on for a view of what lawmakers are going to try to do to you raise your taxes by $5 or $6 billion this Friday, while you’re not paying attention.

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