A Fork in the Road

A yet-to-be-released audit slams the city's transportation spending—and gives Hales an opening for reform.

Sam Adams and Charlie Hales

Mayor Charlie Hales has promised to shake up the city bureau that is supposed to maintain Portland's streets—and the city auditor is poised to provide him with the muscle to do it. 

City Auditor LaVonne Griffin-Valade's office has prepared an audit of the Portland Bureau of Transportation's spending under former Mayor Sam Adams.

Sources inside the bureau who have seen the spending audit describe it as scathing.

The audit will scold the bureau and City Council for committing to new capital projects—including $86 million for the Sellwood Bridge replacement and $55 million for the Milwaukie light-rail extension—while not setting aside enough money for basic road upkeep. 

One PBOT official who has read a draft of the audit says it describes recent spending as "buying a widescreen TV while the roof is leaking."

Director of Audit Services Drummond Kahn won't discuss the findings of the audit, which he says will be made public in three to four weeks. But Kahn says the audit will look at how the bureau—with a $341.5 million annual budget in 2012—manages its discretionary spending.

A second audit this winter will examine how much street paving PBOT has completed in the past four years.

"The city needs to better prioritize its paving work," Kahn says. "We reported in 2006 that it costs far less to preserve existing streets before they decay than it does to do major reconstruction work on streets once they fail.” 

The audit is coming out just as the bureau is asking for more money and new ways to raise revenue to pay for basic street maintenance.

But the narrative that PBOT's spending has been poorly managed was so well-established during the election that Hales pledged a back-to-basics approach during his campaign. 

Hales forced out the bureau's director—longtime Adams ally Tom Miller—two days before Hales' inauguration Jan. 2. He also blocked the hiring of a public affairs manager at the bureau, a job Miller had reportedly planned to give to ex-Adams aide Amy Ruiz.

In the coming months, Hales will need to make bigger decisions about PBOT than naming the bureau's top brass. 

PBOT's discretionary spending—projected at $106 million in 2012—ranges from a third to half of the bureau's annual budget, and is funded mostly by the state gas tax and city parking fees.

The rest of the bureau's money comes mostly from federal grants and intergovernmental agreements, which fluctuate from year to year and stipulate how the money must be used.

WW reported in November that the bureau faces a $4.5 million shortfall in the coming budget.

A financial report Miller delivered to City Hall on Dec. 31 says PBOT needs new revenue sources for a stable budget. 

In the document, a 14-member task force resurrects the perennially contentious idea of a citywide street-maintenance fee, which would fund road repairs with a charge added to monthly water and sewer bills.

The task force's report—first revealed by The Portland Mercury in November—also suggests raising rates on parking meters to as high as $4 an hour during times of peak demand.

The panel says these new funding sources are necessary because the state gas tax, which provides much of the bureau's budget, isn't meeting projections. Per-capita gas purchases in Oregon hit an all-time low in 2011 (“Choo-Choo Changes,” WW, Nov. 7, 2012). 

"It is remarkable that the city has accomplished so much on such an antiquated revenue model," the report concludes. "Imagine what can be done with a revenue model that supports—rather than undermines—our community's goals."

The panel report concedes that funding the Sellwood Bridge and Milwaukie light rail came at the cost of street maintenance, but says City Council needed to invest in regional infrastructure.

"In honoring each request, however, the city dramatically limited its ability to invest in its own street network," the report says.

Hales declined to comment on the PBOT report. “He has not read it in detail yet,” Hales spokesman Dana Haynes tells WW. 

WWeek 2015

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