ODOT is still failing to come to grips with the reality that it doesn’t have the funds to proceed with bloated megaprojects.
ODOT’s financial problems stem largely from a handful of megaprojects that have exploded in cost, and for which the revenues have evaporated.
Oregon’s legislature rejected a proposed $14 billion transportation funding package on June 28, but the Oregon Department of Transportation seems determined to move ahead with largely un-funded megaprojects.
Staffers at ODOT were unaware (or simply in denial) that the “Big Beautiful Bill” eliminated hundreds of millions in funding for the Rose Quarter project.
The Oregon Legislature adjourned on June 28, without passing a hoped for $14 billion transportation “package,” and in the wake of this failure the agency has announced it will lay off hundreds of its employees. At the same time, it maintains that it will push on with its highway expansion mega-projects–even though costs have blow through budgets and the agency lacks money to complete them. After years of denial, the Oregon Department of Transportation has driven at high speed into a financial brick wall.
Instead of owning up to this fiscal reality, ODOT is savaging its own workers, falsely claiming that it has no option but to layoff hundreds of workers, even though its revenues will be higher in the coming biennium than in the past
The present fiscal crisis is one of the agency’s own making, driven primarily by costly mega-projects. The agency has systematically reallocated funds to big capital projects, some of which were never authorized by the Oregon Legislature. At virtually every opportunity, ODOT has used its discretion to take money that could have been used for maintenance or operations, and use it to advance expensive projects for which it lacks funds. For example, the agency just shifted $100 million in bridge maintenance funds to paying for cost overruns on the I-205 Abernethy Bridge.
In the face of failing to get legislative funding for these mega-projects, ODOT has said nothing about cancelling, postponing or shrinking them, and instead, claimed that it has no choice but to lay off its workers.
It is breathtakingly irresponsible to insist on moving forward with billion-dollar a mile projects while cutting back on essential safety services like plowing snow, painting fog-lines on road shoulders and preventative “chip-seal” maintenance that will avoid much higher long term costs. This is especially true when ODOT doesn’t have the money to finish any of these mega-projects.
ODOT has repeatedly blundered ahead with mega-projects even as the revenue evaporates. Two years ago, ODOT claimed it would pay for the I-205 Abernethy bridge with toll revenues, but when Governor Kotek effectively cancelled tolling in 2023, the agency didn’t dial back construction. Instead, the project took money that would have been used for the I-5 Rose Quarter project–increasing that project’s financial deficit.
The Rose Quarter Project is now primed for its own financial death spiral. Last year, the Biden Administration turned ODOT down flat in a request for $750 million in federal “Infra” funding for the project. The Trump Administration’s “Big Beautiful Bill” just rescinded an estimated $400 million of the $450 million that was granted to the project. At the same time, ODOT admitted that project costs have increased from $1.9 billion to $2.1 billion–and one ODOT commissioner says that the cost could reach $2.5 billion. And the Legislature failed to pass HB 2025, which would have provided more money for this and other projects.
The clear message here is that ODOT cares more about consultants, and expensive mega-projects than it does for maintaining hundreds of miles of its road system, prudently investing in cost-saving preservation actions, and hanging on to hundreds of dedicated and expert employees. While the agency is handing out layoff notices to its own employees, no one at consultants WSP, or David Evans and Associates or any one of the dozens of other contractors who have shared in more than $130 million spent on Rose Quarter consultants or $200 millions spent on the I-5 bridge–neither of which have secured the funding for construction–is facing layoffs. In fact, ODOT and WSDOT are pushing forward with plans to pay another $450 million for additional “preliminary engineering” of the Interstate Bridge Replacemnt (IBR) project.
ODOT is effectively using its own employees as hostages to negotiate for more money–which if past actions are any indication, it would inevitably plow into these mega-projects, not into the basic maintenance and operations of the road system. When it encounters additional cost overruns and revenue shortfalls, it will again divert money that could be used for maintenance to pay for these megaprojects.
Here’s an analogy: Imagine a family’s single breadwinner, Dad, got laid off from his job, and told his wife that she’d have to keep driving the 20 year old Subaru with bad brakes and bald tires, that the kids would have to walk to school barefoot, but that he was going to go ahead and buy himself a new $85,000 pickup truck, because that’s what he was thinking about doing before he lost his job.
Putting cost overruns on the credit card
ODOT has created this problem by pledging state transportation revenues to pay for bonds that it uses to finance these mega-projects. It went ahead with the I-205 Abernathy Bridge based on its claim that it would cost just $248 million and that it could pay for the project with tolls. When the cost ballooned to more than $800 million and tolling went away, it diverted funds from other sources, including maintenance money, and simply chose to borrow most of the rest of the shortfall–with the effect that it reduces future ODOT revenue that could be used to pay for operating and maintenance costs. They are technically correct it saying they now have a legal obligation to repay those bonds, but it was a plainly reckless decision by ODOT to obligate its future revenues to pay for a project that it had no other money to repay, and that it cost vastly more than anticipated. That recklessness, not an imaginary shortfall in revenue due to EVs or fuel efficient cars that is responsible for ODOTs financial problems.
Clueless or in denial?
As City Observatory wrote on July 2, the passage of the “Big Beautiful” bill by the House of Representatives doomed the $2.1 billion I-5 Rose Quarter project, because it rescinded hundreds of millions of dollars in grants ODOT was counting on to pay for the project.
In early press accounts, ODOT spokespeople claimed that “everything was fine.” According to Oregon Public Broadcasting, it wasn’t until five days later that they realized their funding was in jeopardy.
In an email Monday [July 7], project spokeswoman Rose Gerber acknowledged for the first time the bill “appears to eliminate federal grant funding” that would account for around $450 million the state had banked on to complete the I-5 Rose Quarter Improvement Project.
The acknowledgement that federal grant money is in question amounts to a sudden detour for ODOT. Despite widespread speculation that the Congressional budget bill would tank the grant, Gerber insisted as the Senate passed it last week there was “no indication that the grant dollars are not available for construction.”
If anyone at ODOT had been paying attention to the US Congress, they would have known that the funding was in jeopardy for the past six weeks. The official legislative history shows the House-passed version of HR1 (the big beautiful bill) on May 22 had Section 60019, which rescinded unobligated funds for the Reconnecting Communities Program. The amendments presented to the Senate on June 28, and adopted on July 1, had exactly the same provision. There’s no way ODOT should not have known about this provision.
It speaks volumes that the agency pretty much immediately announced layoffs when the Legislature failed to pass a mulit-billion dollar state tax increase, but asserted that it is business as usual, full speed ahead, with an as yet un-funded billion-dollar-a-mile highway widening when the federal government takes back an estimated $400 million that was to pay for part of the project.
ODOT still claims that it plans to proceed with a ground breaking in August on a tiny sliver of the project: spending $60 million to fix drainage and seismically upgrade one off-ramp from the Fremont Bridge onto I-5. As KGW-TV notes,
Either way, the project as it currently stands will run out of money with a majority — or possibly the entirety — of the freeway cover still unbuilt.
Plainly, ODOT’s strategy—even in the face of what it characterizes as catastrophic layoffs—is to spend $60 million just to get the project started so that it can later argue that the state needs to spend another $2 billion to “finish the job.” As usual, this represents a dysfunctional agency’s willingness to do anything, to say anything, to advance their mega-projects. Leaders who are serious about fiscal responsibility or accountability shouldn’t go along