Budget update - February 2024
A Public Works Budget Work Session was held Feb. 8, 2024 with presentations by PBOT, the Bureau of Environmental Services, and the Portland Water Bureau. View the full presentation or download the slides below:
How is PBOT funded?
The Portland Bureau of Transportation’s (PBOT) annual budget is approximately $509 million, roughly 12% of the City of Portland’s approximately $5.5 billion budget. About 75% of PBOT’s funding comes from restricted sources. These are funds that must be dedicated to specific programs and services such as federal grants for specific projects, permit revenues, and Transportation System Development Charges (TSDCs) that cannot be used for other purposes. This also includes revenue from Fixing Our Streets (the voter-approved 10-cent gas tax) which is dedicated to specific projects and programs.
Only 2% of PBOT’s resources come directly from taxes paid into the city’s General Fund.
PBOT's budget, explained
PBOT manages $19.7 billion in assets. PBOT's overall budget is approximately $509 million. Discretionary resources (General Transportation Revenues) go towards basic maintenance and operations of the transportation system and are only 28% of the bureau’s budget.
Our General Transportation Revenues (GTR) are the discretionary revenue that we can use for basic maintenance, operations, and programming. PBOT has $142 million in GTR, but some of that is allocatedto debt payments (such as paying off Portland's portion of the Sellwood Bridge and the Portland-Milwaukie Light Rail line) and other required commitments. Our truly discretionary revenue is about $100 million.
Discretionary revenue sources have significant structural challenges
General Transportation Revenues (GTR) come from two primary sources: The State Highway Fund—which is made up of fuel taxes, DMV fees, and weight mile fees—and parking revenues, which come from on-street meters, permits and citations.
Both of these primary funding sources, however, have baked-in structural issues and limitations:
- Fuel taxes are decreasing over time as cars become more fuel efficient—This is a positive for helping to achieve our carbon reduction goals, but it contributes to our revenue challenges.
- The State Highway Fund is also controlled by the state legislature, so cities don’t have the ability to influence how much money goes into it or how much money comes out of it to cities.
- Parking rates are set to advance parking management goals, not tied to revenue needs and not indexed to inflation.
- There’s a basic problem with depending on parking revenue – the more successful we are in achieving our multimodal mode shift goals and getting people to drive and park less, the less revenue comes into the bureau.
These challenges have been clear, and growing slowly over time, for quite a while. They are not simple to solve, and Portland is not alone in dealing with them – cities, counties, states and the federal government are all grappling with these issues.
Challenges have become acute
The Covid-19 pandemic exacerbated these underlying revenue challenges and they now present a very urgent problem.
The pandemic has led to changes in travel behavior that have caused a major decrease in parking revenues. Parking revenues remain significantly below pre-pandemic levels. Additionally, we have seen reductions in the Portland population and vehicle registrations which means unexpected reductions in our share of the State Highway Funds.
Inflation is also part of the challenge, and it’s worth noting that construction costs have increased more dramatically than others – road construction costs have increased nationally more than 50% since the end of 2020. (The biggest factor in this is materials cost.)
Basically, what was previously a growing concern is now a full-on crisis.
Significant budget cuts over the last four years already impact all of PBOT’s work
- Between FY 2020-2024 PBOT has cut approximately $20.4 million (16%) in services from our General Transportation Revenues-backed expenses
- By the end of the current 2023-2024 fiscal year, PBOT will have drawn down all our $63 million in reserves.
- Budget cuts across the board significantly impact assets, safety, equity, and sustainability.
- To date, reductions have required the bureau look for efficiencies, focus on belt tightening, and cut smaller amounts from many different areas. However, the impacts are real and they are making it harder to deliver on community expectations.
Public polling, understanding what Portlanders want
In a Fiscal Year 2023-24 budget note, Portland City Council directed PBOT to revise its current strategic plan (2019-2024) to clearly define and prioritize core operational bureau services. PBOT staff reviewed the plan to both align it with citywide goals and reprioritize the actions, going back to 2019, to determine what can be done by the end of 2024.
In July 2023, PBOT also conducted a series of polls to better understand community priorities. This was to understand how people rate PBOT, assess the public’s perception of our transportation system, identify their transportation priorities, and gauge their support for potential revenue increases.
This included a representative poll conducted by DHM with 600 respondents, as well as surveys sent out to PBOT listservs and employees with 6,300 and 300 responses, respectively. All three of these groups identified maintenance as their top priority, safety as their second, and planning for future needs and funding third.
This survey was also sent to volunteer members of several advisory committees. The three respondents on the Freight Committee named Maintenance as their first priority, congestion as their second, and planning for future needs and funding. Meanwhile, nine members of PBOT’s Bureau & Budget Committee, 14 from the Bicycle Advisory Committee, and eight from the Pedestrian Advisory Committee identified safety as their top priority, transportation options as second, and climate as third.
The bureau is using this polling, along with council feedback, to guide budget decisions.
For insights into the poll conduct by DHM Research, read their report here:
Significant cuts in FY 2024-25 budget
Looking ahead to July 1, 2024, PBOT is anticipating the bureau’s FY 2024-25 budget will require over $32 million in additional service and staff reductions.
The voter-approved 10-cent gas tax, Fixing Our Streets, as well as the Heavy Use Vehicle Tax, are up for renewal in May 2024. If they are not renewed, this would add another $20 million in service reductions annually to PBOT.
PBOT leadership presented to city council on these potential cuts and their impact in a work session Tuesday, Sept. 26, 2023:
- Watch the 2-hour city council work session here
- Download the presentation here:
The impact of these losses will continue to be felt across Portland, slowing down service and reducing the bureau’s ability to invest in safety and maintenance work across the city.
Less General Transportation Revenues (GTR) means less funding for PBOT’s Maintenance Operations, reducing the bureau’s ability to maintain city streets, bridges, and other transportation assets. Less maintenance means that these assets will continue to fall into disrepair and will add to Portland’s ever-growing transportation maintenance backlog – the highest in the city – of approximately $4.4 billion.
Unless city leaders find a solution, the public will likely see dramatic and visible reductions to transportation service.