In Oregon, DOT management -- not money -- is the problem - TransitCenter
Governance Policy
November 30, 2015
In Oregon, DOT management — not money — is the problem

This post originally appeared in the Salem, Oregon Statesman Journal on Sunday November 29, 2015. Here’s a link to a pdf version of the printed piece. 

While Oregon sits by the roadside, other places are investing big in transportation. The Denver region has spent $5.5 billion on new transit in the past decade, car-oriented Houston has dramatically expanded bus service and light rail, and this month Seattle voters approved a $930 million levy to improve streets. Legislatures as different as Pennsylvania, Iowa, Virginia, Wyoming and Vermont have recently increased transportation spending. Earlier this year Washington State raised its gas tax by 11.9 cents per gallon, about a 30% increase.

The comparisons should matter to Salem. On November 3, voters in the Cherriots district rejected a tax increase to improve transit. That same election day, 13 out of 16 transit referenda across the nation from Maine to Washington State passed, with a wide variety of places like Fraser, Colorado, Flint, Michigan, and Snohomish County, Washington saying yes to taxes for transit. Salem-Keizer joined only Box Elder County and Utah County, suburbs of Salt Lake City, in saying “no.”

Are Oregonians and Salem-Keizer residents hostile to better transportation, when conservative jurisdictions in suburban Atlanta and the legislature in Wyoming are not? No. But here’s one difference: Salem-Keizer residents cast their ballots amid low confidence in government’s competence, partly due to a loss of credibility that had happened in Salem months before. In July, the Oregon legislature’s consideration of a transportation package collapsed upon the revelation that management of the state Transportation Department (ODOT) was making wildly exaggerated claims about emissions reductions. The supposed errors in their math simply capped the incredibility of the original premise that expanding highways reduces emissions at all, as if the Director of the Department of Public Health had been at the same hearing testifying that eating chocolate cake reduces calories. When legislators and voters are asked to believe whoppers like that, no wonder they are skeptical about paying more.

ODOT management’s inaccurate forecasts were chalked up to a “mistake,” as if the problem is simply that there’s a lack of basic mathematical skills at senior levels in state government. The legislative session adjourned and life went on, with other states investing more in their transportation networks while Oregon doesn’t.

Salem-Keizer Transit (Cherriots) bus, by Jason McHuff, licensed under CC BY-SA 2.0

Salem-Keizer Transit (Cherriots) bus” by Jason McHuff is licensed under CC BY-SA 2.0


In 2016, the issue will return. You’ll hear a familiar refrain: “Oregon has a transportation finance problem!” But how can anyone judge that claim when the parties making it have been so opaque, if not downright wrong, in the past? Oregon’s transportation problem is not lack of money. What Oregon really has is a transportation governance and management problem. That problem needs to be fixed before Oregon’s streets, highways, bridges and transit can get fixed.

In response to concerns about ODOT mismanagement, Governor Kate Brown asked the agency’s own board to review its performance. But asking an agency to review itself rarely provides fresh critical thinking. Ostensibly “independent” consultants who are supervised by the agency itself and dependent on the agency’s future contracts is just the familiar cronyism of consultancy, telling agencies what they want to hear.

The good citizens who have been appointed to ODOT’s board also have limited means to create change. The last time a member of the board asked a meaningful question of staff was when Chair Catherine Mater, a Corvallis civil engineer, questioned the prioritization of a coal project which evidently did not meet technical criteria. For doing the job of Commissioner and asking tough questions, Mater’s reward was to be removed by Governor Kitzhaber in 2015. The chilling message to remaining Commissioners endures: your role is to rubber stamp whatever staff puts in front of you.

At best, asking the board of ODOT to review why ODOT performs poorly is like asking the board of United Airlines to report on why United Airlines performs poorly: for public relations purposes you’re might get some mea culpas and a sacrificial management shuffling or two, but no meaningful change.

Real change is needed, because the lesson isn’t just that other states are spending more money than Oregon is. The bigger lesson is that they reformed their transportation agencies to get better value.

In 2013, Massachusetts Gov. Deval Patrick and the legislature raised taxes for transportation by $600 million. This increase was politically possible only because they undertook managerial reform too. Massachusetts created an investment board with fiduciary expertise independent of the transportation department to oversee project selection, breaking the practice of accepting the self-serving estimates of agencies that had often proven to be wrong – the same pattern vexing Oregon today.

Also in 2013, the Pennsylvania legislature raised transportation spending by $2.3 billion. Significant funds went to transit in Philadelphia and Pittsburgh, justified by evidence that mobility in those cities is key to the state’s economy. The amount allocated to local governments’ streets was increased, including competitive grants requiring positive economic development impacts, not vague promises of “traffic relief.”

In California, the state devolves significant amounts of money to metro regions. Following a truly independent performance audit, Gov. Jerry Brown made managerial changes at the state DOT. The legislature mandated new performance measures based on economic, environmental and social outcomes, recognizing that the traffic forecasting methodology used previously – the same practice still tolerated in Oregon – was usually inaccurate and fiscally irresponsible.

These states did not put more dollars into existing governance structures. Reform came first, with several key elements:

  • Devolution: Significant authority was devolved from the state to local governments, who are accountable and attuned to the needs of their communities.
  • Investing in outcomes: Some states have developed criteria to prioritize investments that have economic and social impact, not claims of “traffic reduction.” Some use measures of technical merit to break the expensive habit of composing “wish lists” of big projects designed to win the votes of selected individual legislators rather than serve public needs.
  • Re-defining need: Some places have also ended the practice of agencies estimating their own “needs” without meaningful fiduciary oversight. Such independent verification could have averted the forecasting “mistake” that Oregon managers belatedly confessed to in 2015, an episode echoing the same management’s discredited traffic and finance forecasts for their Columbia River Crossing plan. This chronic inaccuracy is most likely not an improbable series of simple math goofs, but a systemic pattern of cooking up figures that turn out to be untrue. When a pattern like that is systemic, it’s time to change the system, not just the management.

Before raising taxes, Oregon must recognize that its mechanisms of transportation planning, finance and oversight are not working – and won’t work better with more money. Institutional problems include:

  • The muddled layers of government defy accountability. The state, counties, and cities all own assorted highways, roads, streets and bridges in overlapping rather than adjoining geographies. Contrast that mash-up with the criminal justice system, which involves three levels of government but where responsibilities are clear: The state runs penitentiaries for sentences longer than one year, counties run jails for sentences shorter than one year, and cities run police departments that make most arrests. Each level’s specialization is based on its comparative advantage. Each link is essential, none superior to the other two. For some reason this logic does not apply in transportation. The state agency, ODOT, sits in a preferential financial position not warranted by its physical assets’ role in the entire system.
  • The formula of allocating most revenue, consisting of gas tax and other sources, is totally arbitrary: roughly 50% state government, 30% county governments, 20% city governments. This division bears no relationship to need, return on investment, or any rational metric. Cities and counties put together own over four times the mileage owned by the state, and most traffic demand is within city limits.
  • The state government is both a contestant and a judge in the distribution of funds, an untenable conflict of interest. A state agency can be a regulator of local government (like DEQ is relative to sewage treatment plants) or a state can be a funder of local government (as Oregon is with K-12) but it can’t legitimately be those things and simultaneously be a competitor with local government, for example in both seeking and distributing federal dollars.

This morass can be fixed by applying the two basic principles of sound governance: assigning clear responsibility to the agencies best suited for different tasks, and allocating funding to achieve the highest return on investment.

Reform #1: Rationalize Street, Road, Highway and Bridge Ownership

All streets, roads and highways are owned by the tax-paying public. The history of which agency first built a stretch of road should be declared just that: history. Responsibility for streets, roads, highways and bridges should be re-assigned to the levels of government whose geographic footprint and expertise best fits that type of asset. The principle is, “decisions should be made at the lowest level of government that is capable of solving the problem.” Local agencies should control streets, highways and bridges in their territory, exactly like they control sewer and water pipes. The state government has little expertise or accountability in managing roads and highways in an urban area, where most of the interconnected network is already owned and managed by local government and most trips are short. Local governments already possess authority over the land use decisions that are the primary influence on transportation demand, and they are directly accountable to the community.

This division of responsibilities would assign the state government the job it is best equipped to do: maintain long-distance corridors linking different regions of the state. By any objective measures of balance sheet, asset mix and employee headcount, the agency known as the Oregon Department of Transportation already is primarily the State Highway Department. This reform would acknowledge that reality and allow the agency to focus on its core competency, long-distance rural highways, including interstates, outside of urban areas.

Reform #2: Allocate Funding Based on Return on Investment

We don’t say the state government should get 50% of criminal justice dollars to run the penitentiaries while counties get 30% to run jails and cities get 20% to run police departments. We don’t say the state government should get 50% of education dollars to run universities, that community colleges should get 30% and K-12 should get 20%. But that’s exactly how arbitrary Oregon is with transportation dollars, “because it’s always been that way” – not a very persuasive rationale in the 21st century of limited resources.

We also wouldn’t assume the Director of the Oregon Department of Corrections knows more about crime than police chiefs in Medford and LaGrande do, or that his fiscal needs are automatically superior to theirs. But a corollary unwarranted assumption underpins the transportation regime.

Oregon can develop a new, rational funding allocation method that discards the current non-strategic distribution based on outdated agency entitlements, and replace it with one based on spending money where it brings the highest return for Oregonians, regardless of what level of government is spending it. The current conflict of interest of allowing the state highway division to be simultaneously both a competitor with local government for federal funds and an arbiter of where federal funds go must also be ended.

While other states move ahead, Oregon has stuck with a balkanized and irrational transportation governance model. Glowing danger signals like chronically flawed forecasts, under-maintenance of core assets, and increasing debt should alarm anyone concerned with Oregon’s competitiveness. Systemic mismanagement is a sign there is something wrong with the system, not just with management. Oregon will only get back on the road when bold leaders recognize that governance reform is the only way to optimize the public’s investment in transportation.

This post originally appeared in the Salem, Oregon Statesman Journal on Sunday November 29, 2015. Here’s a link to a pdf version of the printed piece. 

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