Executive Summary — Intro

Source: PDF p. 1395 · raw: 1395

Executive Summary The Portland Bureau of Transportation (PBOT) occupies a fluid and extremely challenging funding environment. Fallout from the COVID-19 pandemic continues to present PBOT with fiscal challenges that put significant, unforecasted pressure on the Bureau’s short-term budgets – including the loss to date of over $150 million of revenue compared to pre-pandemic projections. But, crucially, fallout from the pandemic has also brought to the fore longstanding structural funding challenges that PBOT has faced for some time. For years, PBOT has found that its operating costs grow significantly faster than the rate of general inflation due to escalating General Fund indirect requirements, health benefit and labor cost growth and large increases in the cost of construction materials; but its annual discretionary revenue has risen only 1.2% on average over the last five years. For the recent past as well as the foreseeable future, neither PBOT’s current discretionary state funding streams (principally State Highway Fund transfers); nor PBOT’s local revenue sources (mostly parking fees), will keep pace with the anticipated costs of maintaining PBOT’s current levels of service. Furthermore, other City priorities continue to put pressure on PBOT’s limited discretionary funding sources. To meet the City’s statutory budget balancing requirements, PBOT and City Council have recognized in recent budgets that the Bureau must cut its expenses or find new revenues. In fact, PBOT and City Council have taken significant steps to stop the bleeding – reducing ongoing discretionary expenditures by $42 million over the last six budget cycles. Even as these actions were taken, however, it was understood that they were interim steps, incapable by themselves of placing PBOT on solid financial ground in the longer-term. Most importantly, this forecast underscores the continued severity of PBOT’s situation. PBOT’s base forecast for FY 2026 affirms the necessity of significant expenditure reductions or new resources to meet the City’s five-year budget balance requirements. Specifically, PBOT’s discretionary revenue forecast shows that without the additional resources identified in PBOT’s budget request, $37.9 million in ongoing service and staffing reductions to the Bureau’s base budget will be required in FY 2026 to balance the five-year forecast (out of PBOT’s $144M annual discretionary General Transportation Revenue budget). PBOT’s proposed reductions would lead to service reductions across all GTR-funded activities and require the elimination of at least 145 positions. In addition to significant reductions in its General Transportation Revenue budget, the bureau is also facing reductions in its agreement with the Bureau of Environmental Services for maintenance of the sewer and stormwater system. These reductions total $3.5 million and the loss of 25 additional positions. Although these positions exist mainly in support of sewer and stormwater maintenance, they are utilized for snow and ice response efforts during winter storms. PBOT’s FY 2025 budget proposal takes critical strides towards addressing budgetary shortfalls. Nevertheless, PBOT must implement long-term solutions that address its structural challenges going forward. 2

Parent: Executive Summary