Headwinds for highway tax hike

Democrats' efforts to position a big tax hike to pay for highway maintenance and other projects may be frustrated by ODOT's shoddy operations, Kotek driving up costs and "petulant children"

The bridge to nowhere. A ramp constructed by ODOT as part of an overpass of Highway 97 over railroad tracks has been in place since ODOT abandoned the project in 2017 after unexpected settling. All $17 million allocated to the project have been spent, and it would cost tens of millions to complete the project. (Photo by Andy Tullis/The Bulletin)

From the moment the Oregon Department of Transportation announced last year it faced a $1.8 billion annual funding gap ($421 per year for every man, woman, child and currently underemployed genderful spokesblob in Oregon) to maintain service levels, the legislature seemed destined for a fight about taxes during its current session. The Democrats who spent millions to regain a legislative supermajority, the sole benefit of which is the ability to hike taxes without a single Republican vote, are hesitant to go it alone.

The would-be transportation funding package remains conceptual only more than a month into the legislative session due in part to headwinds ranging from ODOT’s recent missteps to Governor Tina Kotek’s insistence upon paying off her labor union backers to the legislature’s own self-imposed chasellenges.

A tour de force account of ODOT’s failures from the Statesman Journal

In the run-up to this year’s transportation package debate, Anastasia Mason of Salem’s Statesman Journal has detailed just how badly ODOT has failed to deliver on the promises it made last time it came, hat in hand, to the legislature claiming state-wrecking poverty. Her really excellent reporting, made all the more remarkable by the fact that probably everyone in ODOT leadership is a subscribter to the Statesman Journal, established the following inconvenient truths:

What’s a missing $123 million - $173 million between friends?

An audit released in January found more than $100 million out of nearly $1.2 billion in HB 2017 [the 2017 funding package] was not properly recorded and records couldn't verify how ODOT used the money. Conflicting audit reports indicate the gap was either $173 million or $123 million.

ODOT has spent only $1.2 billion of the projected $5.3 billion raised by HB 2017’s increased gas taxes and fees eight years after passage.

Lawmakers directed ODOT to complete cost studies for the freeway project through the Rose Quarter in Portland and theInterstate 205 Abernethy Bridge. The two are estimated to cost a combined $2.3 billion — on the low end.

Legislative leaders have said they will focus this session on funding the HB 2017 projects that have been started. More than $3 billion may be needed to complete the remaining HB 2017 and Portland metro-area projects.

ODOT failed to deliver on accountability measures in HB 2017.

Lawmakers were concerned about oversight following a whistleblower lawsuit that triggered investigations into a division of the agency, said Lee Beyer, then a senator representing Springfield.

The accountability piece was intended to ameliorate “concerns about whether the department was operating well and whether the money was being spent as intended,” said Beyer, who was co-chair of the Legislature's Joint Committee on Transportation Preservation and Modernization, which crafted HB 2017.

The Statesman Journal found ODOT failed to meet cost-benefit requirements in the legislation and shared inconsistent figures and out-of-date information with the public, among other shortcomings.

While the would-be transportation package is likely to address primarily maintenance needs, ODOT’s failure to deliver on construction projects looms large.

Kotek negotiates against taxpayers with cost-hiking executive order.

In December, Governor Tina Kotek issued an executive order requiring any state-funded transportation project in which labor accounts for at least 15% of the project cost to enter into project labor agreements, a sop to labor unions who use project labor agreements to restrict the supply of labor and drive up its cost.

As reported by Oregon Journalism Project’s Nigel Jaquiss, a 2022 ODOT analysis of the effect of project labor agreements showed they increased project costs by 10-20%. Trade unions that stand to benefit from Kotek’s executive order gave her $1.2 million in campaign contributions in her 2022 gubernatorial race, according to Jaquiss.

For good measure, the executive order requires state agencies to “set targets for, track, and report” racial and gender participation in contracts “to ensure that state agencies are advancing gender and racial equity[.]” ODOT already lists equity as one of its three top priorities as an agency, just above “modern transportation system,” as pointed out by State Representative Ed Diehl (R-Stayton).

Source: ODOT

Tax-skeptical voters are “petulant children”

State Representative Mark Gamba (D-Milwaukie), a member of the Joint Transportation Committee that will process a transportation funding package if one arises, mentioned to an Oregon Public Broadcasting reporter early this month that he thinks Oregonians who vote against tax increases for infrastructure projects are acting like “petulant children.”

Gamba, the former mayor of Milwaukie, went on to explain that he misunderstands public sector finances in Oregon, claiming that cities, thanks to those “petulant children'“ are getting “poorer and poorer.” Nothing could be farther from the truth. In 2015 (the year Gamba became mayor), the City of Milwaukie, population 21,500, received $36,887,028 in revenue; In 2023 (the year he left), it projected receiving over $100 million in revenue.

Similarly, statewide, Oregonians have seen state revenues - some of which go to ODOT already, and more of it could - skyrocket in recent years. Meanwhile, the returns Oregonians receive from their government, including ODOT, have declined. Oregon has the tenth highest gas tax in the nation, already, and Gamba’s comments probably don’t help diminish the petulance of his, uh, children, i.e. us.

What’s going to happen?

There are headwinds, but Oregon’s state government did not become bloated, dysfunctional and imperious by just looking at tax hikes. I interviewed the two Joint Transportation Committee Republican co-vice-chairs, Senator Bruce Starr (Polk/Yamhill conties) and Representative Shelly Boshart-Davis (Albany) about what prospects for a transportation revenue package.

Boshart-Davis was skeptical. “There is a huge credibility problem,” she said. “If it weren’t for Republicans and investigative journalism, we’d only be talking about how much we are raising taxes.”

Starr sees the debate as an opportunity to reform ODOT. “The majority recognizes they can’t ignore accountability,” he said. “There’s a larger opportunity to talk about how ODOT does business.” Indeed, shortly after I interviewed Starr, Democrats appointed him to improve accountability in the agency, suggesting they see Starr as a key player in a possible reform-for-tax-hikes deal.

Boshart-Davis pointed out that a quirk in Oregon’s Constitution likely is behind Democrats’ interest in attracting Republican support. The constitution forbids emergency clauses in tax hike bills, meaning there would be time for petulant children (my words) to organize a ballot measure to repeal it.

I requested interviews with the Democratic co-chairs of the committee, Senator Chris Gorsek (Gresham) and Representative Susan McLain (Forest Grove). Both responded but were unable to find time for an interview on my timeline for publishing this article.

The Joint Transportation Committee will hold an information meeting February 24, during which ODOT officials will testify about highway maintenance efforts.