Oregon’s transportation finance in crisis: Testimony to the Joint Ways and Means Committee.
On March 16, City Observatory’s Joe Cortright testified to the Oregon Legislature’s budget-writing committee about the financial crisis confronting the state’s transportation agency. The Oregon Department of Transportation’’s traditional sources of revenue are collapsing, and will certainly decline further in coming years. The agency is failing to maintain existing roads, and has a huge backlog of maintenance, safety, seismic and other needs that continue to grow. In the face of declining revenues and deferred maintenance, the agency is embarking on an unprecedented spending spree for expensive megaprojects.
ODOT has shown no ability to manage project costs, with every major project incurring massive cost overruns. The agency is moving to start construction on these projects and commit the state to paying for them without a financial plan in place. It claims it will use toll revenues to pay for megaprojects, but has no experience collecting or accurately estimating tolls. It is planning to take on billions of dollars in debt backed by the promise of tolls. It has used short-term borrowing—the government version of a payday loan—to get projects started while avoiding the independent, investment grade analysis that will be required to get long-term financing. Repaying the debt incurred for these projects will take legal precedence over all other state transportation priorities, leading to further cuts in maintenance and repair, and jeopardizing every other capital construction project in the state.
The Legislature needs to inject some prudence into transportation finance by requiring a “fix it first” policy, telling ODOT to live within its means, right-sizing bloated megaprojects, and securing independent expert financial adviceCortright_HB_5040_ODOT_Budget_2023March16