Audits reveal ODOT projects from 2017 funding package are over budget and behind schedule

In 2017, Oregon lawmakers passed a transportation package that was expected to generate $5.3 billion. Eight years later, revenue forecasts show funding has fallen short of projections, leaving the Oregon Department of Transportation with an ongoing budget crisis. Audits have revealed that ODOT is failing to meet accountability measures set up in the legislation, and many of its projects are behind schedule and over budget.

Anastasia Mason recently investigated the 2017 package for the Statesman Journal. She joins us to talk about what the findings could mean for ODOT as it prepares to make another big funding ask this legislative session.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. In 2017, Oregon lawmakers passed a transportation package that was expected to generate $5.3 billion. But a recent audit and other reports have found that the Oregon Department of Transportation has brought in less revenue than anticipated, has many projects that are behind schedule and over budget, and has failed to meet its accountability measures. Meanwhile, lawmakers are in the middle of crafting a new transportation package.

Anastasia Mason has been writing about all of this for the Statesman Journal, and she joins us now. Welcome to Think Out Loud.

Anastasia Mason: Hi, thank you so much for having me.

Miller: Can you remind us what lawmakers promised with that $5.3 billion transportation bill that they passed in 2017?

Mason: House Bill 2017 was a large package and it had a whole bunch of different goals. I would say that the main ones were to boost funding overall for the Department of Transportation, complete a list of specified projects and kind of maintain accountability for all of that at the same time. The way to fund things was through several new and increased funding mechanisms. So you had the increase in the gas tax that went up by 10 cents in different bumps, increases in the weight mile tax that big trucks pay, taxes on purchases for cars and bikes, changes in registration fees and then payroll tax that went towards public transportation. So a lot of different measures that were going towards a lot of different things to keep track of.

Miller: How much of the work that was tied to this funding has actually been done?

Mason: There are a handful of projects that have not yet been completed. Many of those have faced increases in costs. One of those would be the Center Street Bridge in Salem, which was a seismic retrofit project that hasn’t started construction yet. Another pretty notable one is the Rose Quarter Project, which wasn’t actually on the list of main projects, but it had funding designated from the bill.

Miller: And where does work on that Rose Quarter improvement project – one of the most high profile pieces of all – stand?

Mason: So it’s been several years, a lot of different changes and a lot of challenges, different ideas about how this all should come together. But the project should start construction later this year. It has right now about $875 million in funding. About $450 million of that came from a federal grant. And then the overall estimates are saying that it could be up to $1.9 billion. So there is a gap. Funding is just for the first part of construction, which sometime this year is likely.

Miller: You had one of the articles in your recent series about the big increase in project costs. We have heard for the last couple of years that inflation has led to major increases in the cost of just about everything – and I understand that includes highway projects, materials and labor. What else is behind the rise in costs?

Mason: In addition to inflation, I think one of the big ones was changes in scope. I reported that auditors, they found that for the HP-2017 projects, when they looked at those last summer, many of them that had price increases also had changes to their scope. So kind of going back to the Center Street Bridge, because that’s a big one for us in Salem, when they were doing that initial work they found that the soil on part of that wasn’t good for what they had initially planned. So that kind of forced a change in scope, which also impacts, obviously, how much things are going to cost.

Miller: I want to turn to the issue of accountability. You did deep dives into ODOT reports and a recent audit. The overall picture is really disturbing. You found that ODOT and lawmakers failed to set up efficient tracking of revenue for the legislation, deliver projects on budget and on time, complete cost-benefit analyses, and maintain clear and updated information on projects and funding. What went wrong?

Mason: Well, that’s a pretty big question. I think there’s definitely a large combination of different factors that kind of came together on this. And I think that one of them was kind of issues with oversight and maybe who is supposed to be keeping track of different things. When you have such  a large project or a large package with so many different aspects, that’s difficult to track. And I think part of it was also the way that the revenue was split up, just by the bill. So, the breakdown is kind of complicated. You have 30% counties, 20% to cities, 50% to ODOT.

And then ODOT’s cut is further split up with money for Metro projects and school safety, and then split up even more into where they can spend their money on things like building new bridges or maintaining the roads that we already have. I think a place that really caused problems for delivering things on budget and kind of keeping things going was how that money was split, because it did make it challenging to kind of keep things straight, if that makes sense.

Miller: You tried to answer just a seemingly really basic question. What is the status of the 42 projects listed in House Bill 2017? What kinds of challenges did you run into?

Mason: So, a couple different challenges. I would say probably the first one is that when you’re looking at the bill side-by-side with the list of projects on ODOT’s website, just kind of a simple thing is that the wording is different. So you might have a project that has a city name in it, or just the name of a highway or a name of a road in the bill, but then the way that it shows up on the website or is commonly referred to on things is different. So even just that basic, trying to line things up next to each other can be kind of complicated, because it’s not like a one-to-one match.

I think another challenge with tracking those is that some of those were locally delivered, so the funding was through the bill, but it wasn’t necessarily ODOT that was running those. So information on those is kind of spotty because you don’t have the department that’s responsible for overseeing that and maintaining that, in that same way as they do those other projects.

Then another challenge was that you have these multiple different websites from the department. There was a document that listed statuses for the projects that had differences from the list of HP-2017 projects on their website. And then they had a separate web page that was mapping projects and that also had different information. So it was a challenge to kind of figure out which one had the most updated information and of how to follow those around.

Miller: One of the lines that you noted from the audit: “It would be comical if we weren’t talking about billions of dollars of public money, ODOT staff cited the inability to understand exactly what its own funding model is doing, as a limitation to know whether it is working or not.” What does that mean?

Mason: So that quote specifically, it’s referencing some problems with the highway cash flow model. And among other things, essentially what that does is it helps with forecasting upcoming expenditures, when they’re planning out like checks and timelines for the upcoming years. Seemingly, what happened, according to the audit, is that the model got maybe tripped up by the way some projects were being labeled. And as a result, it spit out some funding numbers that were not correct, or expenditure numbers, or things that impacted how much federal funding would go to projects, and just the way things were allocated.

Auditors, when they were talking to ODOT staff, they had trouble figuring out how old that model actually is, and they were saying likely sometime in the ‘90s, maybe. But because there aren’t current people on ODOT staff who helped make that model, it’s difficult to figure out how it is actually working and how to go in and fix or adapt that.

Miller: And am I right that at least one ODOT official said it could cost tens or maybe hundreds of millions of dollars just to fix this aspect of the funding model?

Mason: I don’t know that they were referring to that funding model specifically. In reference to the accounting system, yes, they were, and it would be a significant expense but likely something that seemingly the department does need to address.

Miller: Has ODOT made any meaningful changes in terms of this accountability? I mean, I’m mainly wondering if there’s any reason to believe that they would be better stewards of money going forward or better able to track money going forward?

Mason: Yeah, some changes have already been made, especially referring to that model. The audit has some recommendations, but also they have made, from my understanding, some changes so that they’re not using it or using it in the same way they were previously. But I know that some of the other things, like with cost-benefit analyses and tracking the way the funding was allocated, those were things that maybe should have come and been established earlier once the bill was passed. So I’ll be curious to see that with this upcoming package, how those early steps are implemented.

Miller: Meanwhile, ODOT has told its parent commission that it is facing a serious fiscal crisis in the coming years. Can you just give us a sense for the scale of it?

Mason: Yeah, there are a few different numbers floating around in terms of what are the correct way to label the amount of the crisis. But one that ODOT has put out is that they need about $354 million just to maintain the current service levels for the upcoming years. They’ve also said that they have a funding gap of about $1.8 billion annually. Then for some of those major Metro projects – things like the Rose Quarter and the Abernathy Bridge – it seems like there’s about $3 billion there that is still needed.

Miller: What has the agency said that this gap would mean in terms of layoffs or service cuts?

Mason: I think in the worst case scenario, some of the things that they’re looking at would be cuts to potentially 1,000 jobs, 1,000 positions, slower response times for things, and then also the potential to close some of their maintenance stations. So all things that would certainly have an impact on services.

Miller: Do you have a sense for how lawmakers are taking these reports about accountability and performance into account as they consider how to build the new transportation package?

Mason: Well, I think certainly it’s something that lawmakers are discussing. Recently, they had announced that Senator Bruce Starr, who’s one of the co-vice chairs of the Joint Committee on Transportation, he’ll be leading a group to come forward with an accountability proposal, some recommendations for how this new package can really hold itself accountable and kind of the legislature’s role on that. That is supposed to be coming sometime in March, so we’ll see how that plays out.

Miller: If you had to guess, how big an increase in the gas tax would you predict lawmakers are likely to come up with when all is said and done?

Mason: Yeah, I mean, I don’t personally have a prediction. I’m kind of waiting to see how things progress going forward, but I have heard some different numbers. I would note that earlier this week, a 9 cent increase – so from 40 to 49 cents – was recommended, as part of the highway cost allocation study. And that would be to help balance out the amount that cars and trucks are paying towards the system, but that would not really go towards addressing some of those budget issues. So obviously, other increases besides the gas tax are things that we’ll likely see.

Miller: As I’ve been reading your coverage and others, it seems that the focus going forward is going to be more on maintaining the infrastructure we already have, statewide, as opposed to fancy new projects. Is that going to be a harder sell, though, politically?

Mason: Yeah, different legislators have told me that certainly this is a challenge, but it seems like it’s going to be kind of a necessary thing, to focus on funding the maintenance of the roads and finishing out those projects that have been started.

Miller: Anastasia, thanks very much.

Mason: Thank you.

Miller: Anastasia Mason covers state government for the Statesman Journal.

Contact “Think Out Loud®”

If you’d like to comment on any of the topics in this show or suggest a topic of your own, please get in touch with us on Facebook, send an email to thinkoutloud@opb.org, or you can leave a voicemail for us at 503-293-1983. The call-in phone number during the noon hour is 888-665-5865.