How is PBOT funded?
The Portland Bureau of Transportation (PBOT) manages about $21 billion in assets, with an annual budget of approximately $586 million, roughly 7.1% of the City of Portland’s 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.
Less than 2% of PBOT’s resources come directly from the City’s General Fund, made up of revenue from property taxes, utility license fees, and business income taxes.
PBOT's budget, explained
Discretionary resources (or General Transportation Revenue) go toward basic maintenance and operations of the transportation system and are only 25% of the bureau’s budget.
PBOT has $149 million in discretionary resources, but some of that is allocated to debt payments (such as paying off Portland's portion of the Sellwood Bridge and the Portland-Milwaukie Light Rail line) and other required commitments.
The revenues that remain for discretionary investment total about $90 million.
General Transportation Revenue (GTR) comes from two primary sources:
- The State Highway Fund – made up of fuel taxes, vehicle registration fees, and weight mile fees.
- Parking revenues – from on-street meters and parking permits.
Structural challenges
Both of PBOT’s primary funding sources have structural limitations:
- Fuel taxes lower over time as cars become more efficient. This helps our goal of reducing carbon emissions but contributes to our revenue challenges. Moving forward, overall fuel tax revenue is forecast to be flat.
- The State Highway Fund is controlled by the state legislature. Cities have limited ability to influence how much money goes into it or how much money is dedicated to cities.
- Parking rates are set to achieve goals of parking management. That is, these rates are not set to drive revenue and were not even indexed to inflation until 2024.
- Parking revenue dropped significantly during the pandemic. Permanent changes in travel patterns mean we also have not seen a return to pre-pandemic levels of parking.
- Relying on parking and fuel taxes conflicts with our multimodal goals. The more success we have in shifting people away from traveling solely by car, means less revenue for PBOT. We defund ourselves.
Rising costs
In addition to these structural challenges, costs continue to rise due to numerous factors:
- PBOT’s buying power has declined due to inflation. This including significant increases in transportation labor and material costs.
- ADA legal requirements, new design best practices and environmental requirements.
- Traffic control and significant right-of-way and utility conflicts in an increasingly dense environment. (e.g. utility conflicts, pedestrian detours)
- An increase in extreme weather events. PBOT leads the city’s response to snow and ice, flooding, and landslides.
- Increased livability issues in the right-of-way. This includes graffiti, trash, abandoned vehicles, and camping, etc.
Challenges now acute
Between fiscal years 2020-2025 PBOT has cut approximately $42.2 millionof General Transportation Revenue–backed expenses. These significant cuts to our discretionary revenue impacts all our work.
Furthermore, since fiscal year 2019-2020 PBOT has completely depleted its $63 million in reserves. PBOT has also borrowed $35 million from other fund balances to maintain existing programming. Borrowed funds will need to be paid back over the five-year forecast.
Budget cuts significantly impact assets, safety, equity, and sustainability. They make it harder to meet the community’s expectations. The impact is felt citywide, from slower service to reducing PBOT’s ability to invest in safety and maintenance work.
Less GTR means less funding for PBOT’s Maintenance Operations. This reduces the bureau’s ability to maintain city streets, bridges, and other transportation assets. Less maintenance means these assets will continue to fall into disrepair and will add to Portland’s ever-growing transportation maintenance backlog of roughly $6 billion, the highest in the city.
More specific examples of impacts from these challenges:
- Paving program cut in half
- Residential street sweeping program eliminated
- Reduced funding to respond to community safety requests such as traffic calming and other small safety improvements
- All downtown ornamental streetlights in severe disrepair with no funding to repair and/or replace them
- No ongoing funding for bridge repair or rehabilitation
- No financial reserves for winter weather, unplanned asset failure, or other emergencies.
Unless there is a more sustainable funding solution, the public will likely see dramatic and tangible reductions to transportation service.