Transportation funding comments – Part 3

This isn’t exactly a Guest Post, rather further interesting comments with a different perspective, which I solicited and reproduce with permission. I read on Old Town blog by Larry Norton about a June 2007 speech given by Mark Rosenbaum, Chair of the Portland Development Commission, to the Portland Rotary Club. I recommend you read the entire Old Town post, either before or after this one. Larry wrote, “PDC will be pressured to make those infrastructure investments that would normally come from city general funds”, which seems relevant to this discussion. PDC money is definitely a pot that needs to be lifted if we are all going to understand the components of the funding shell game – and perhaps to agree that the sum total under all the pots needs to be augmented. I asked Mark to provide a copy of his speech and to give me permission to post the relevant parts – which he did. Note that I transcribed the following excerpts from the speech using a pdf file that didn’t allow copying-pasting, so I may have made secretarial errors. Emphasis mine.

In December of 2006, the City published its Asset Status and Conditions Report. Participating in preparation of this were the Office of Management and Finance, Fire, Police, Parks, the Portland Development Commission (PDC), Portland Office of Transportation, and the Water Bureau. The report revealed an annual maintenance funding gap of $84 million.

The report states: “In 2003, Asset managers from the City’s infrastructure bureaus formed a City Capital Maintenance Committee, to collaborate on asset management issues and prepare an annual report on the City’s physical assets.” A major finding of the annual asset reports 2002-2006 is that a substantial annual funding gap persists. The gap is defined as the difference between the funding needed to address infrastructure needs at a defined condition or level of service, and the funding that is currently available.

As the asset managers have refined methods and updated data, the estimates of annual funding gaps have gone up, not down. Running a constant funding gap or underinvesting in capital maintenance is not a sustainable business practice. With this trend, we can expect lower levels of service and frequent system failures.

I do not blame the City Council. This funding reduction is the result of reducing federal dollars, a leveling of city gas tax receipts as a result of our fuel efficiency, coupled with high levels of construction-related inflation. The net impact is to put pressure on PDC to make investments for infrastructure, investments which formerly would have been made through City Council General Funds.

There is no doubt that one of the major factors contributing to Portland’s success is its prior investments in mass transit.

Over the next few years, Portland’s leaders are considering additional investments in the following transportation-related improvements:

a) Gateway and Lents MAX lines that are under way
b) Eastside Streetcar
c) Milwaukie MAX line with light rail bridge across the Willamette
d) Eastside Burnside-Couch couplet
e) Westside Burnside-Couch couplet
f) Westside Light Rail
g) North Macadam transportation requirements

When we built the first Banfield MAX line, the federal government paid 83% of the tab. The next MAX line to Beaverton they paid 73%, and for the Gateway/Lents MAX line they are paying 61%. For commuter rail to Wilsonville they will pay 50%. I think you see the trend.

There will be very creative sources discovered to cover our local contribution for the projects under consideration: federal grants, State of Oregon grants, Local taxing districts. But also a look to PDC to use tax increment financing. The need for local matching dollars will be very high. The need to identify funds for the ongoing operation and maintenance of the new transportation needs will be important as well.

I focus on this issue because it will be a major aspect of PDC’s future budgets and of any urban renewal area’s extension or creation. I am concerned about the trade-offs, and happy that City Council is considering infrastructure funding packages to be brought to the citizens in 2008. For if we fund infrastructure substantially with PDC dollars, we will have the bones for development but severely limited dollars to invest in job creation, small and midsize business expansion, or workforce development. I am concerned about the tradeoffs of investing in transportation to the detriment of investing in people.