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February 20th, 2013 NIGEL JAQUISS | News Stories
 

Making It Up As They Go

As Kitzhaber pushes the CRC, the plan to pay for it is both fact and fantasy.

news1_3916ILLUSTRATION: Jonathan Hill
The Columbia River Crossing project is on a fast track in Salem, sent racing toward approval by its biggest backer, Gov. John Kitzhaber.

The governor—pushing a complex project with gaping financial holes—might someday wish things had gone at a more deliberate speed.

On Feb. 18, a joint House-Senate panel voted 14-2 to send a bill authorizing $450 million for the CRC to both chambers of the Oregon Legislature.

The $3.5 billion CRC promises to end congestion where Interstate 5 crosses the Columbia River. The project would also extend light rail to Vancouver and rebuild a series of highway offramps and exchanges, many of which would help the Port of Portland.

The Oregon bill counts on Washington state matching it with its own $450 million, and the federal government would need to pony up $1.25 billion.

The remainder—about $1.3 billion—would come from tolls, which commuters on the existing Interstate 5 Bridge could start paying as early as 2015.

But in July 2011, State Treasurer Ted Wheeler destroyed the project’s financial underpinnings: that there would be enough traffic to meet estimated toll revenues.

Since then, there’s been no new tolling information, yet a legislative committee, flying effectively blind, OK’d the bill.

The committee was carefully stacked. Of 16 members, most favored the bridge. Only two had been on record as harboring doubts. And four were freshman lawmakers put in the position of and saying aye, lest they cross the governor, Democratic leaders and major business and labor interests on their first big vote.

And legislative leaders sent the bill out without the requisite stop at the Ways and Means Committee, where the expert staff might sniff out the financial challenges underlying it.

Rep. Tobias Read (D-Beaverton), a co-sponsor of the CRC bill, says there are plenty of safeguards in the measure: quarterly reporting to lawmakers from the project and requirements that Washington state and the feds put up their money before Oregon sells bonds.

“We’ve put in many triggers that must be met before we can go forward,” Read says. “It’s not as if we’ve approved the bill and ended our involvement in the project.”

Here are the hard facts that remain—and questions no one seemed willing to ask—about what would be the biggest public works project in Oregon history.


CRC proponents have broken their promise to provide updated traffic and tolling numbers. 

The numbers have always been bad for the CRC: Traffic counts by proponents to justify the project have been way off for years. It’s traffic that translates to tolls, and it’s tolls that will pay off most of the project’s debt.

As Wheeler showed, the numbers didn’t add up, and the CRC’s projections were off by $500 million to $600 million. 

Since Wheeler’s report, the gap between the CRC’s traffic projections and the actual number of trips over the existing I-5 bridge has widened: Traffic is running 19,000 vehicles per day behind CRC estimates.

In October, Kitzhaber’s people promised that the state would offer fresh tolling numbers by January. 

But legislators were never given the promised report.

“It’s not done yet,” says CRC spokeswoman Mandy Putney, “but it’s expected in the next few weeks.”

By that time—thanks to Kitzhaber and Democratic leaders—any bad news will come too late to change the bill.

Kitzhaber spokesman Tim Raphael says his boss is not worried, given the bill requires an investment-grade financial analysis for the project to go forward.

“The governor is comfortable with the safeguards in the bill,” Raphael says.


The bill’s $3.413 billion cap on the project’s total cost is meaningless.

The sorry history of giant state construction projects has one recurring feature: Legislators are told a project has a maximum price—guaranteed.

Within a few years, legislators are often forced to roll back the spending “caps” because of cost overruns, mismanagement and delays. Lawmakers go along, lest the money already sunk into a project be “wasted” by putting a stop to the madness.

“It’s a sleight of hand,” says Gerald Fox, a retired transportation engineer who has testified against the CRC. “There’s no way to tell how much the project will actually cost.”

It’s a history shared by megaprojects elsewhere. Boston’s Big Dig cost more than five times its original $2.8 billion budget and finished eight years late.

And take the Oregon Department of Transportation’s current fiasco: rebuilding a stretch of Highway 20 near Eddyville in the Coast Range with an initial $150 million budget. Seven years later, the project’s costs have soared to $366 million and it’s nowhere near done. The caps on that project popped off long ago.

The CRC is vastly more complicated: two side-by-side freeway spans 3,600 feet long, a new light-rail line and five highway interchanges, involving one of the most environmentally sensitive rivers in the U.S., in a project that will last a minimum of seven years.

Ex-Rep. Katie Eyre (R-Hillsboro), who lost her re-election bid last fall, remains a skeptic. Eyre—who lost business support because of her opposition to the CRC—says her former colleagues are delusional if they think the CRC bill offers protections against cost overruns.

“Oregon taxpayers will be on the hook,” she says, “and they ought to be aware of that.”


ODOT is broke.

That is, the very account from which this $450 million is supposed to come is already overcommitted.

Here’s what Matt Garrett, Kitzhaber’s ODOT director, said in testimony before a legislative committee in November 2011.

“Due to a variety of factors, ODOT is now facing significant long-term funding challenges,” Garrett said. “ODOT’s State Highway Fund resources are now essentially fully committed to debt service, the costs of running the agency, and maintaining highways, leaving virtually no state funding for new capital projects.”

This is the same ODOT director who is now telling legislators they should finance $450 million for the CRC out of that same “fully committed” bank account.

Over the past decade, legislators have greenlighted nearly $3 billion in new ODOT borrowing to build new roads or fix aging bridges. The CRC bill would allow for even more borrowing while the fund to pay for it goes deeper in hock at a time when its two biggest sources of revenue—the state gas tax and federal funding—continually lag behind budget projections.

Those highway projects already promised are spread all over the state.

As Sen. Fred Girod (R-Stayton), one of two no votes against the CRC bill, put it, “By sucking up money from other projects, this puts rural Oregon in jeopardy.”

There is, of course, one way to fix the problem: Legislators could raise taxes.

But…


CRC proponents are hiding a big tax increase.

Last fall, CRC proponents told lawmakers the most likely way to pay for Oregon’s $450 million contribution to the bridge was by raising gas taxes or vehicle-registration fees.

That’s exactly what Kitzhaber and Democratic legislators had planned to do.

In Feb. 11 remarks to the Legislature, Kitzhaber admitted his discomfort with shoving the necessary tax increase into the future. “I had hoped for a proposal that provided new revenue, but I’ve also said that’s a legislative decision,” he said.

So lawmakers are willing to approve $450 million for the bridge without the tax hikes to pay for it. Such a vote is being put off—until at least 2015.

“How to fund the Columbia River Crossing project is a policy decision that the Oregon Legislature and the Oregon Transportation Commission will make after this biennium,” ODOT’s Garrett says. “We hope the decision will lead to new, dedicated revenues beyond 2015.”


Kitzhaber and Oregon lawmakers are betting on federal money that may not be available.

The governor told legislators Feb. 13 that Oregon is in line for federal money needed to build the bridge.

Raphael, the governor’s spokesman, says Kitzhaber is confident the feds will come through.

“In every conversation the governor has had with Secretary of Transportation Ray LaHood, Secretary of Homeland Security Janet Napolitano and Federal Transit Administrator Peter Rogoff, they have emphasized the high level of federal support for the project and the importance of moving forward with Oregon’s financial commitment this year,” Raphael says. 

But the money CRC backers keep saying will appear has not. In a presentation to a Vancouver business group in January, CRC officials admitted $400 million they had counted on wasn’t included in a long-term federal transportation authorization.

“Four hundred million dollars was anticipated from the Federal Highway Authorization funds as a project earmark,” CRC officials wrote in a Jan. 3 letter to a Vancouver business group. “However, the recent Surface Transportation Authorization bill does not include project earmark funds.”

Joe Cortright, an economist and CRC critic, who also works as a consultant to Plaid Pantry stores, a company opposed to the project, says the federal money may never come.

“They are doing anything they can to get the bonds sold,” Cortright says of state leaders. “Then there is no way back.” 

 
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