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As people drive less and cars ger more fuel efficient, Oregon's reliance on the gas tax will lead to a budget deficit by 2024.

Sometimes we can spot problems a long way off.

Today we see long-term financial problems coming for the Oregon Department of Transportation — if we don't act.

Like many financial problems, this one is complicated and multi-faceted. Still, it really comes down to this: Vehicles are increasingly fuel efficient, and that means drivers are paying less in gas taxes, our biggest revenue source. At the same time, our costs are increasing.

If we don't take action now, by 2024, we won't have the resources needed to safely maintain our transportation system and continue to provide services to Oregonians.

COURTESY PHOTO: OREGON DEPARTMENT OF TRANSPORTATION - Travis BrouwerThe fuel tax, along with ODOT revenues from DMV and the weight-mile tax paid by truckers, go into the State Highway Fund. Under state law, 59% of the State Highway Fund revenue goes to the state and the rest to the cities and counties.

The State Highway Fund can be used only for road-related programs. It pays for day-to-day highway maintenance and operations, new projects and bond payments for recent system improvements. It also pays for operating other parts of the agency, like the DMV that issues driver licenses and vehicle registrations.

ODOT's deficit is in the funds we have available to operate the agency and do basic road maintenance such as patching potholes, plowing snow, and removing debris. Thanks to House Bill 2017, the major transportation funding passed by the Legislature three years ago, ODOT has a robust construction program planned into the future. But that new law provides little funding for maintenance and operations. Almost all the money from HB 2017 is dedicated to specific projects on the transportation system. The bill set aside a small amount for maintenance but nowhere near what's needed to cover future costs.

We project the deficit will grow to over $200 million by 2025. Balances in the State Highway Fund can help cover these shortfalls for a while but, if we do nothing, we'll exhaust those balances before the end of the 2024 fiscal year.

The economic downturn from the COVID-10 pandemic has worsened our picture. People are driving less, so gas tax revenues are even lower. Our costs are growing as well as we see higher prices for everything from materials and maintenance vehicles to increases in health care, salaries and employee pensions.

We're working to take proactive measures to address this shortfall before we run out of money and find ourselves in a crisis. Each step we take comes in consultation with the Oregon Transportation Commission and, as needed, the Oregon Legislature.

Our agency leadership identified these strategies.

  • Focus limited resources on the most critical programs.
  • Become more efficient. As just one example, our switch to LED lighting in the Portland area will save $700,000 to $800,000 a year.
  • Direct our highest level of service to the highest priority work.
  • Seek additional resources, such as additional federal funds for specific programs.
  • These strategies will serve as our guide, but we're in the process of looking at further short- and long-term solutions that will lead us to a healthy financial structure. For example, we save money by periodically refinancing bonds at a lower interest rate. This month we're closing on a bond refinancing that is expected to save Oregon taxpayers up to $50 million in interest payments.

    ODOT is in a hiring "frost" that limits hiring to critical positions, and we plan to reduce the number of employees through attrition rather than layoffs. We've also asked everyone at ODOT for cost-cutting ideas, and we're already working through suggestions.

    We started watching these fiscal trends eight years ago. In 2012-2014 we went through an agency "right-sizing" to help. And over the last year, we have been developing a plan rather than waiting and facing more cutbacks.

    This process will not be brief or painless. We have hard choices ahead about our priorities and service levels, but at all times we will remain true to our mission to maintain a reliable and safe multimodal system that connects people and helps Oregon's communities and economy thrive.

    Travis Brouwer is ODOT's Assistant Director for Revenue, Finance and Compliance. Questions can be directed to 866-Ask-ODOT

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