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Gov. Tina Kotek issued an executive order last month that will make highway projects more expensive, reduce bidding competition, and benefit a relatively small number of workers—who happen to be strong supporters of hers—at the expense of many Oregonians.
Who says so? Kotek’s own agency, the Oregon Department of Transportation.
On Dec. 19, the governor ordered that all future large state highway contracts include a “project labor agreement,” or PLA. PLAs require state agencies, such as ODOT, to negotiate union contracts for their projects.
Kotek’s office said in a statement that her order would result in “lower costs” as well as “ensuring that our projects are adequately resourced.”
Trade unions cheered the announcement. “This is a huge win for Oregon, and for Oregon’s skilled trades workers,” said Robert Camarillo, executive secretary of the Oregon State Building and Construction Trades Council. “This executive order solidifies Gov. Kotek’s commitment to improving Oregon’s infrastructure while continuing to build Oregon’s skilled workforce.”
The executive order is now the subject of fierce statewide debate that mirrors national disagreement over the benefits of PLAs. But what hasn’t been part of the conversation until now is a 2022 Oregon Department of Transportation analysis of PLAs that contradicts the benefits Kotek touted.
The study, obtained by OJP, drew on studies of more than 1,000 PLAs around the country and reached two key conclusions.
First, PLAs result in fewer bidders. “There is a consistent trend: that of open shop [non-union] contractors not bidding on PLA projects,” the report found.
Fewer bidders means less competition, which ODOT found leads to higher costs. “The PLA analysis found the inclusion of a PLA was strongly correlated with increased construction cost within the range of 10% to 20%,” the ODOT report says.
Department spokesman Kevin Glenn says the results of the analysis might not apply to all projects. “ODOT believes including project labor agreements on more projects, as directed by the governor’s executive order, can be done in a cost-effective manner,” Glenn says.
Over the past year, ODOT has been very public about its desperate financial condition. The only thing in worse shape than Oregon’s 8,000 miles of highways and 2,700 bridges is the agency’s balance sheet.
In short, ODOT director Kris Strickler has told lawmakers that the agency is broke. “In the absence of action, service will be severely reduced,” Strickler says in a presentation he has delivered repeatedly.
ODOT’s projected costs are running so far ahead of revenues that Strickler raised the prospect last year of laying off 1,000 workers, one-quarter of the agency’s staff. Meanwhile, he and lawmakers toured 12 cities across the state trying to build support for budget increases and a long list of big projects, including expanding Interstate 5 in Portland and building a new bridge to Vancouver.
But according to ODOT’s 2022 analysis, Kotek just made those projects the department already cannot afford 10% to 20% more expensive.
Kotek, a Democrat, won election in 2022 with the strong support of organized labor. (Trade unions contributed more than $1.2 million to her campaign.)
Spokeswoman Roxy Mayer denies Kotek is favoring the trade unions over the public’s interest. “The governor has always been clear about her personal commitment to both good governance, and supporting workers and communities,” Mayer says.
In an FAQ that accompanied her Dec. 19 executive order, Kotek said PLAs would “provide benefits to the communities where [projects] are constructed.”
Chris Doty, director of public works at Deschutes County, begs to differ. He’s experienced firsthand what Kotek’s executive order will mean in practice: a policy that will benefit mostly urban workers at the expense of rural Oregonians. “It’s really frustrating,” he says.
Kotek’s executive order followed a tumultuous year in which ODOT tried to implement eight PLA pilot projects around the state. Those projects included highway and bridge work spanning 12 counties. The projects’ price tag: $280 million, more than 40% of ODOT’s budget.
Doty’s team in Deschutes County was supposed to partner in one of those projects: a $30 million rebuild of the intersection of Highway 97 and Lower Bridge Way at the north end of Terrebonne. The county and ODOT would share in the cost. But when Doty looked at what the PLA entailed, he was dismayed.
First, he wasn’t at all confident that anybody would bid on the project. “There are no union contractors I’m aware of east of the mountains that do heavy road work,” says Doty, who has been building roads for 24 years and regularly speaks with peers in other county road departments.
(His view is consistent with ODOT’s analysis. The agency reviewed its construction contracts from 2017 to 2022 and found that two-thirds of them went to non-union shops. For larger contracts—$25 million and above—the split was even bigger: 89% of such contracts went to non-union firms.)
Since there were no union shops in Deschutes County, Doty says, the entire project was likely to be staffed by firms from the Willamette Valley or Southwest Washington.
Doty worried about the additional cost of limiting the bidding pool. When he read the fine print of the proposed PLA, however, he found it “stunning.” The contract also required that 29% of the labor be supplied by workers who live in an “economically distressed ZIP code.”
But according to the state’s list of such ZIP codes, there was none in Deschutes County.
That meant that for a project for which Deschutes County was putting up $10 million, 29% of the workers could not live in the county. “It was totally ridiculous,” Doty says.
Mayer, the governor’s spokeswoman, says the state will keep a close eye on costs, and Kotek’s order will deliver benefits to people who often get left out of public contracting.
“PLAs can and should be a tool to reduce workforce disparities and lift up small businesses,” Mayer says. “The governor’s order directs state agencies to set targets for the use of Office of Business Inclusion and Diversity-certified firms.” (Such companies must be owned by minorities, women or service-disabled veterans and/or be emerging small businesses.)
Doty was far from the only dissident. When the Legislature considered PLAs in 2023, officials from Klamath Falls to Scappoose beseeched lawmakers not to require them. That’s because, like ODOT and Deschutes County, they get transportation dollars from a gas tax that lags far behind inflation, so their transportation budgets are constantly falling behind.
Typical was the plea from Scappoose Mayor Joe Backus: “Oregon’s small and rural local governments desperately need the Oregon Legislature to explore how to lower construction costs,” Backus testified.
Although that 2023 bill died, ODOT announced later that year it would instead try eight pilot projects in 2024 using “community work agreements,” a form of PLAs.
Associated General Contractors–Oregon Columbia Chapter, which represents more than 830 firms, sued ODOT in Marion County Circuit Court in January 2024 to block the implementation of the pilot projects (one was the Terrebone project). The contractors argued the PLAs were anti-competitive because they would essentially exclude a majority of Oregon’s road contractors from bidding on state projects.
In a blistering decision on April 17, 2024, Marion County Circuit Judge Jennifer Gardiner sided with AGC. She issued an injunction blocking ODOT from implementing PLAs on the eight pilot projects.
“Employing a tool that has never been utilized before in Oregon, a tool that is premised on prioritizing utilization of union labor to the expense of open-shop labor, is prejudicial,” Gardiner wrote. “It is an irreparable prejudice to exclude 70% of our contractors.”
ODOT appealed to the Oregon Supreme Court.
Rather than wait for the state’s highest court to rule, however, Kotek issued her December executive order dictating PLAs should be used. It went further than just singling out eight pilot projects; it extended PLAs to all major state contracts.
“To have the governor drop this bombshell just before the session,” Doty says, “it’s really confusing.”
He wonders if Kotek issued her executive order as an end around the Supreme Court on the pending case. Mayer says that’s not the case.
“The governor acknowledges a philosophical difference between her and opponents of PLAs, but it is time to stop fighting over the tool itself and get to work building the infrastructure Oregonians will rely on for years to come,” Mayer says. “Resistance to moving forward only creates costly delays and an uncertain environment for workers, contractors, and state agencies.”
This story was produced by the Oregon Journalism Project, a nonprofit investigative newsroom for the state of Oregon. OJP seeks to inform, engage, and empower Oregonians with investigative and watchdog reporting that makes a significant impact at the state and local levels. Its stories appear in partner newspapers across the state. Learn more at oregonjournalismproject.org.