Portland potholes

A vehicle drives over a pothole on N.W. 23rd Ave. in December 2014. Portland's roads have deteriorated as a City Council funding target has gone unmet since 1988.

(Don Ryan/The Associated Press)

Portland leaders blame the poor condition of city roads on many things: stagnant gas taxes, powerful business opponents and the cost of police, firefighters and parks.

They could also blame themselves.

The City Council has ignored its own spending guidelines for the past 27 years, redirecting nearly $200 million targeted for transportation projects to unrelated efforts, according to an analysis of city financial documents by The Oregonian/OregonLive.

Instead of tending to Portland's crumbling roads, the City Council approved nearly dollar-for-dollar spending on arts programs, downtown beautification and school bailouts, among other so-called "special appropriations," the review found.

As a result, Portland streets have plummeted into disrepair, with more than half now rated in poor or very poor condition. And because roads cost exponentially more to rebuild than maintain, officials missed a crucial window: Repair costs have spiraled from a relatively manageable $38 million in 1988 toward a staggering $1 billion.

"I'm not trying to second-guess everybody for the past 20 years. That's not fair for me to do," said U.S. Rep. Earl Blumenauer, D-Ore., who as a member of the City Council in 1988 championed Portland's transportation funding policy. "But I think doing a better job of keeping current would have avoided some of that long-term deterioration."

Now Portlanders not only drive on rutted roads, they're in the financial cross hairs.

Portland Mayor Charlie Hales and Commissioner Steve Novick want to charge residents and businesses upward of $40 million a year to pay for transportation projects. Under the latest but in-flux proposal, residents faced annual bills of $36 to $144, depending on income.

Hales and Novick are also seeking leeway in spending decisions, the same flexibility that allowed the City Council to divert money from fixing streets in the first place.

Paving way for dedicated money

Portland has long faced paving problems. In 1988, the City Council tried to do something about it.

The city's first comprehensive audit of street conditions reported a $38 million backlog in needed paving, nearly 1 1/2 times the transportation office's annual budget at the time.

Documenting the problem "should help focus attention on the need for a multi-year plan to eliminate the backlog," wrote Mary Nolan, then the transportation maintenance director.

Transportation officials argued that their typical revenue sources – the federal government, parking revenues and gas taxes – weren't enough.

They suggested tagging a chunk of utility license fees – money that phone, electric, gas and telecommunication companies pay for the privilege of placing equipment along public roads – for their office. Utility fees, then and now, go into the city's general fund, over which the City Council has full discretion.

The idea "was extremely controversial and extremely competitive," Felicia Trader, who directed Portland's transportation office at the time, said in a recent interview. "Other needs of the city didn't have dedicated funds."

Officials considered two options: Guarantee that 28 percent of utility fees go to Portland's transportation division or set a "target" of 28 percent. The City Council, including Blumenauer, who oversaw the transportation office and pushed the idea, voted unanimously for the target.

"It's almost like every elected official's dream," then-Commissioner Dick Bogle said, according to meeting minutes. "It almost gives us our cake and eating it too with the fact that we have a target, but still we can shift and move that target as other needs dictate."

Never close

As it turned out, the City Council never hit the target. In the first eight years, the City Council sent $29.3 million – or 12 percent of utility fees – from the general fund to the transportation division.

"I thought that the target would be respected," said Blumenauer, elected to Congress in 1996. "Literally every year I was on council, it was a battle to come close to it."

Had the City Council dedicated the full 28 percent, nearly $200 million more would have flowed to transportation projects over the years.

It's impossible to calculate how much of that would have gone to paving and maintenance. But transportation officials proposed spending 25 percent of the new money on paving efforts in the 1989 budget, according to city documents. Conceivably, about $50 million more – or about $2 million a year -- could have been dedicated to paving over the decades.

And that $2 million a year could have reduced today's backlog by $200 million to $500 million because every dollar spent on maintenance can save $4 to $10 in later repairs, said Steve Townsen, Portland's top transportation engineer.

Novick, who has overseen the Portland Bureau of Transportation since 2013, listened to The Oregonian's findings.

"I wish that when Council departed from that policy, it had publicly said, 'We know what this means for the roads and we're willing to live with it,'" he said.

Paving or arts?

The City Council did find plenty of money -- some $225 million -- for other things.

Special appropriations

The City Council since fiscal 1994 has authorized more than $225 million in special appropriations from the general fund. Some of the major recipients:

$55 million –

Regional Arts & Culture Council

$31 million –

Portland Public Schools and other local school districts

$29 million –

Portland Development Commission economic development programs

$18 million –

Services to keep downtown safe and attractive

$14 million –

Other arts-related programs, such as the Portland Center for Performing Arts

$11 million –

Land purchases from Portland Public Schools

$5 million –

School police officers

$5 million –

Jail beds

$5 million –

Pearl District redevelopment

SOURCE: The Oregonian/OregonLive analysis of city budget documents

Records show the City Council has approved "special appropriations" from the general fund of about $10 million a year since fiscal 1994, when transportation officials say they quit getting utility fee money altogether. The department did receive general fund money, but most of it went to pick up the costs of running streetlights when the City Council let a dedicated tax levy expire.

In the 1994 budget, the City Council suspended efforts to catch up on paving as it cut $1 million for transportation programs. Yet the elected leaders dedicated $300,000 for city employee innovation and empowerment, $250,000 for an arts grant and more than $475,000 for downtown bike patrols, restroom cleaning, flowers along the light-rail and bus lines, and security at Pioneer Courthouse Square.

In the 1997 budget, then-Mayor Vera Katz said it was "inappropriate" to use general fund money for maintenance and "basic transportation services." But the City Council set aside $8.7 million from the fund for Portland schools, which have a dedicated funding source in property taxes. Parents hailed the extra money as a lifesaver.

In the 2000 budget, transportation officials then overseen by Hales, who was a city commissioner, called attention to a study that ranked Portland's road conditions ninth worst in the nation. The City Council increased its street preservation budget by $200,000 while authorizing $4 million more for schools, including summer school.

In the 2003 budget, the City Council eliminated $1.1 million for street maintenance but approved $631,000 for the Portland Center for Performing Arts and $941,000 for a transitional housing center for abused or neglected children.

Over the years, no group has benefited more from special appropriations than the Regional Arts & Culture Council, which until 1996 was called the Metropolitan Arts Commission and considered a city bureau. Since then, the City Council has directed more than $55 million to RACC, with an additional $14 million for other arts-related efforts.

"Holy mackerel. They always manage to find advocates," Gretchen Kafoury, a city commissioner from 1991 through 1998, said in a recent interview.

Even now, as Hales and Novick push for a street plan, the City Council's 2015 budget dedicates $3.8 million to RACC, $1 million to promote city employee innovation, $432,000 for college scholarships and $190,000 for a concert program.

Asked about the City Council's failure to put more money into paving, Vic Rhodes, transportation director from 1997 to 2002, said: "The only thing I can look at is their actions and say they had higher priorities."

Paul Romain, a gas lobbyist opposed to the street plan, said the City Council has its priorities backward.

"It should fund core functions first, then ask for special funding for any other projects that it deems necessary," he said in statement. "The question right now should be whether we need a special levy to fund arts or schools, not whether we need a special tax to fund the essential road system."

Learning from past?

Novick called Romain's position "pretty reasonable," agreeing that it's more important for the city to pay for roads than arts.

But he said past City Councils made difficult decisions about what to fund and that it's politically difficult to stop paying for a popular program once it's in the budget.

Hales, who declined interview requests for this story, said in a public meeting last week that picking apart past decisions won't fix today's problem.

But even now, Hales and Novick are keeping some spending options open.

Though money from any new street plan would have to be spent only on transportation projects, officials haven't made any promises on how much of the $40 million-plus would go to paving.

Transportation officials, in documents presented to the City Council, recommend spending 47 percent of the money on paving in the first six years. But again, that's a target, not a guarantee.

Taking uncollected fees and administrative costs into account, that would result in about $16 million a year for paving, double the current level. The rest would pay for projects such as sidewalks, bike lanes and safety improvements.

Novick argued that safety projects are vital. Spending in neglected areas, such as east Portland, would bring neighborhoods up to city standards instead of locking in long-standing inequities.

LaVonne Griffin-Valade, Portland's former auditor who issued two 2013 reports criticizing the City Council's stewardship of roads, said residents have reason to worry about paving.

"While it's good to see that members of Council may have finally gotten the message about the serious nature of the street maintenance problem," Griffin-Valade, who left office Dec. 31, said in a statement, "I can understand why the public might be skeptical that future Councils would continue to honor any commitment to attend to basic infrastructure first."

Even with 47 percent of the money spent on paving, the share of streets in poor or very poor condition would be on track to grow from 52 percent to 58 percent over the next decade.

Novick acknowledged that spending more money on paving would make a difference. But, he added: "We're not saying it's the only priority."

-- Brad Schmidt

bschmidt@oregonian.com

503-294-7628

@cityhallwatch