Portland City Budget Deficit, Transportation, the Street Maintenance Fee and its Oregon History

Chadd Hippensteel January 30, 2012

Table of Contents City of Portland Budget Current Context Implications for Portland Transportation Street Maintenance Fee A Definition and Portland History Oregon History and Municipalities Fee Assessment Methods Revenue Collection and Dedications Marketing and Political Concessions

2 2 3 4 5 6 7

Current Context The 2012-2013 Portland budget is facing a budget deficit of $14-28 million, depending on what happens between December 2011 and April 20121. City Council has asked all city bureaus, the smaller legislative bodies that control department budgets, to prepare 4,6, and 8% cuts2. The proposed budgets are due today, January 30, 20123. From now through March, the City Council, Mayor and appropriate Bureaus will work to review these proposals4. The Mayor will propose a final budget in April of 20125.
Timeline 1.16 The timeline below depicts the Portland City Budget Process over the coming months.

Implications for Portland Transportation The Portland Bureau of Transportation (PBOT) has proposed a $16.2million initial and ongoing decrease in the city the city transportation budget7. This number is on the high end of the Mayors budget requests it represents a 6.9% reduction from the 2011-2012 budget of $234.5million8.

1 City of Portland, Oregon. Budget 101: Fiscal Year 2012-2013. www.portlandonline.com/communitybudget. Pg. 13 2 City of Portland, Oregon. Budget 101: Fiscal Year 2012-2013, Pg. 15 3 City of Portland, Oregon. Budget 101: Fiscal Year 2012-2013, Pg. 18 4 City of Portland, Oregon. Budget 101: Fiscal Year 2012-2013, Pg. 19 5 City of Portland, Oregon. Budget 101: Fiscal Year 2012-2013, Pg. 19 6 City of Portland, Oregon. Budget 101: Fiscal Year 2012-2013, Pg. 16 7 Slovic, Beth. Portland Transportation Workers City Hall Roundup, http://blog.oregonlive.com/portlandcityhall/2011/11/portland_transportation_worker.html. 11/16/2012. Pg 1. 8 City of Portland, Bureau of Transportation. FY 2011-2012 Budget Briefing. http://www.portlandonline.com/omf/index.cfm?a=344272&c=54657. April 5, 2011. Pg. 2.

Cuts to the PBOT budget could come in the form of reduced jobs and ignored street maintenance9. As many as 80 jobs would be cut and the backlog of city transportation would grow10. There were $422 million worth of outstanding resurfacing, restructuring and other critical infrastructure operations in 200811. This figure includes a $144million cost associated with deficient bridges and a $119million associated with repairing sidewalks12 13. Deferring current transportation maintenance projects could put Portland in an even bigger financial crisis down the road. As street maintenance is ignored over time, the costs to renovate increase almost exponentially.
Chart 1.114 The chart below outlines the theory of deferred street maintenance.

Street Maintenance Fee: A Short Definition and Portland History The City of Portland could adopt a street maintenance fee (SMF) to offset the proposed $16.2million in budget cuts. A street maintenance fee is assessed via flat fee or a trip-generation algorithm15.

9 Slovic, Beth. Portland Transportation Workers City Hall Roundup, Pg. 1 10 Slovic, Beth. Portland Transportation Workers City Hall Roundup, Pg. 1 11 Southwest Community Connection, Compromise Reached on Street Maintenance Fee, http://www.swcommconnection.com/news/story_2nd.php?story_id=120111210797542200. January 23, 2009. Pg. 2 12 City of Portland Bureau of Transportation, Asset Status and Condition Report, http://www.portlandonline.com/transportation/index.cfm?a=287907&c=47266. July 2008. Pg. 3. 13 City of Portland Bureau of Transportation, Asset Status and Condition Report, Pg. 16. 14 City of Portland Bureau of Transportation, Asset Status and Condition Report, Pg. 7. 15 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding. http://www.apwawa.org/forums/OregonCities2007TUFReport.pdf. January 2008. Pg. 1

The fees political appeal is its fairness whereas a gas tax only applies to those who consume gasoline, a SMF burdens all street goers equally16. The SMF was proposed for Portland in 2008, but was ultimately erased by Portland City Commissioner Randy Leonard. The SMF proposal was scrutinized by Leonard for being split into three separate legislative pieced by City Transportation Councilor Sam Adams. The SMF proposal was referred to a ballot vote after advocacy from gas industry leaders 17 18. Street Maintenance Fee: A Brief Oregon History Exactly 19 Oregon municipalities currently use a form of the SMF19. The name of this fee varies from Street Utility Fee to Transportation Maintenance Fee.20
Table 1.121 The table below lists the locations and names of the 19 Oregon municipalities that currently use a SMF.

16 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 1 17 Dworkin, Andy. Portland Street Fee Likely to See Vote. http://blog.oregonlive.com/portlandcityhall/2008/02/portland_street_fee_likely_to.html. February 6, 2008. Pg. 1. 18 Anderson, Jennifer. Council Looks at Street Maintenance Fee Again. http://www.portlandtribune.com/news/story.php?story_id=120190188683411600. February 1, 2008. Pg 1. 19 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 18. 20 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 18. 21 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 18.

The fee is generally assessed differently for residences and for businesses. Residences are usually split between single-family units and milt-family units22. Business fees are mostly calculated using a trip-generated algorithm23. Residential fee rates vary between $.90 and $7.49 a month24. Commercial fee rates vary widely rates are generated using square footage assessments, trip generation estimates, number of units and number of parking spaces25. Table 1.226 The following table lists the SMF fee methodology for all 19 Oregon municipalities.

22 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 1 23 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 1 24 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 20 25 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 20 26 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 20

The fee is widely collected via the water and sewer utility bill27.
Image 1.1 A picture of the Milwaukie Utility Bill complete with Street Charges in the bottom righthand corner.

The funds are all dedicated to transportation-related expenditures. The following table outlines the amount and purpose the SMF revenue for three Oregon municipalities.
Table 1.3 Corvallis, Medford and Milwaukie SMF revenue and dedications28.

Municipality Revenue Generated ( 06- 07) Corvallis $408,000 Medford $4,807,000 Milwaukie N/A Projected $500,000 for 07- 08.

Dedication Admin, Maintenance, Reconstruction. Operation, Admin, Maintenance, Repaving, Improvement, Reconstruction. Maintenance, Repair, Reconstruction.

Common marketing techniques for the SMF include: community presentations, widespread media attention and citywide mailings. The following links illustrate some of the marketing materials for Corvallis SMF initiative29:

27 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 9-15. 28 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 9-15. 29 League of Oregon Cities, Transportation Utility Fee. http://www.orcities.org/MemberServices/AZIndex/tabid/810/itemid/354/language/en-US/Default.aspx. Pg. 1.

Corvallis Community Newsletter- http://www.orcities.org/Portals/17/AZ/CorvallisStFeeArticle.pdf Corvallis FAQ Sheet- http://www.orcities.org/Portals/17/A-Z/CorvallisTMFfaq.pdf Corvallis Talking Points- http://www.orcities.org/Portals/17/A-Z/CorvallisTMFpoints.pdf Corvallis Press Release- http://www.orcities.org/Portals/17/A-Z/CorvallisTMFpr.pdf Corvallis SMF Presentation- http://www.orcities.org/Portals/17/A-Z/CorvallisStreetsPPT.pdf Corvallis Street Flyer- http://www.orcities.org/Portals/17/A-Z/CorvallisStreetFlyer.pdf Corvallis Introductory Article- http://www.orcities.org/Portals/17/AZ/CorvallisTMFnewsletter.pdf Corvallis Adoption Article- http://www.orcities.org/Portals/17/AZ/CorvallisTMFnewsletter2.pdf

Various political concessions were made to pass the bill, including: restructuring the fee so that it weighs more heavily on residences, pre-determining an end date for the fee, restricting the administrative use of the revenues, combining the fee with other types of taxes and fees (increased gas tax for ex.) and capping the amount paid by commercial entities30.

30 Foley, Stephanie. League of Oregon Cities, TUF Solutions for Local Street Funding, Pg. 9-15.