Oregon lawmakers quietly OK’d a $90 million cost overrun for a massive Capitol renovation project this year, ratcheting up spending by nearly 25% without so much as hinting they planned to do so.
The new expenses, tucked away in budget bills passed late in the legislative session, were not mentioned in committee hearings or outlined in written testimony. They were approved and voted on without discussion. The result is that taxpayers are now expected to pay nearly $465 million for what has been billed as a $375 million endeavor without any explanation. An official webpage describing the project was only changed to reflect the updated cost after OPB pressed about the matter.
The state’s top two lawmakers say there was no duty to explain the cost overruns in public hearings. House Speaker Dan Rayfield’s office told OPB that the Capitol renovation had received attention when it was approved last session and that even an increase approaching $100 million did not necessarily merit mention.
“Capital projects typically incur normal shifts in cost estimates, and so updates to the initial estimate were anticipated,” a spokeswoman for Rayfield, D-Corvallis, said in an email.
A short statement from Senate President Rob Wagner, D-Lake Oswego, largely mirrored those comments, saying that the increased spending “followed our regular review procedure for capital construction projects.”
The two Democrats who control the budget-writing committee, along with two lawmakers who chair a subcommittee that approved the expenditure, never responded to inquiries on the matter.
The low-key increase is likely to do little to quiet critics inside and outside the government who believe that the state’s budget process is too opaque. And it suggests lawmakers see little need to inform the public about major cost escalations, even as the legislative body sometimes demands officials like Gov. Tina Kotek report back about major expenses.
Some Republicans, long wary about spending big on the Capitol, say the renovation project has been hard to track.
“We’ve been very frustrated with the lack of transparency,” said Senate Minority Leader Tim Knopp, R-Bend, a member of the budget committee. “Any tax dollar needs to have a conversation about why it’s being spent and how it’s being spent.”
Since 2016, lawmakers have embarked on a systematic overhaul of the aging statehouse, paid for with tax revenues that have consistently exceeded economist’s expectations.
The first two phases tackled outdated building systems, updated entrances to be more accessible for people with disabilities, and took steps to seismically retrofit the building’s office wings.
Last year, lawmakers approved a third phase of the project, by far the most ambitious and expensive. It will secure the main piece of the Capitol — known as the “1938 building” because of when it was built — in case of an earthquake, add sprinkler systems and more. The building contains both the House and Senate chambers, as well as offices for the governor, state treasurer and secretary of state.
Beyond seismic and safety upgrades, the third phase is slated to add four hearing rooms, offer a brand new Capitol cafe, and revamp work areas for journalists and lobbyists.
”We have a duty to complete it so that the result is a strong, sustainable building that maintains historical features, is safe for occupants, and allows regular legislative work to continue,” said Brett Hanes, the state’s legislative administrator charged with managing the Capitol.
Project managers say there is no single reason why this phase of the project has ballooned in cost.
Documents submitted to state budget writers show inflation has taken a large bite — more than $27 million of the $90 million increase — just as it has with all construction projects. Other rate increases and Oregon’s new paid leave program have tacked on millions more.
The project has also grown more ambitious, Hanes said, adding work that will strengthen the Capitol’s distinct Art Deco dome, upgrade sound systems and replace elevator equipment.
One big piece of the price tag stands out. Taxpayers shelled out around $20 million for the right to hold this year’s legislative session in the Capitol with minimal interruption.
Construction workers were required to stop especially noisy hammering and drilling while lawmakers met from January to late June, delaying the project and adding costs, Hanes said.
“These adjustments were made with the best interest of the people who work and visit the Capitol in mind and to ensure the session — and public access to the legislative process — would not be critically impacted by construction,” he said.
Whether or not the noise abatement was worth $20 million is up for debate.
“If they were charging us not to make noise during hearings, that was an epic fail,” said Knopp. “People’s teeth were rattling … While we were on the floor you literally had to scream into the microphone at times.”
As it happens, Knopp played a leading role in a decision that has delayed the renovation project.
Last year, managers suggested closing the Senate chamber during the 2023 session to more efficiently complete their work. Rather than voting on bills in their roomy wood-paneled home, senators would be crammed into a committee room a floor below.
Knopp was told of the plan by then-Senate President Peter Courtney. He immediately balked.
“I said absolutely not,” he recalled. “I said, ‘We’re going to have to find a way to meet in Senate chambers.’”
Knopp prevailed, though project managers explained the move would delay the project by six months. He would come to regret some aspects of the decision.
Early in this year’s session, the Senate chamber was plagued by frigid temperatures and construction fumes. Lawmakers complained of watering eyes and splitting headaches if they spent too much time on the floor. Wagner, the Senate president, gifted every senator a fleece blanket to guard against the persistent chill and ordered fans installed to improve air circulation.
”They obviously were working around us for most of the session,” said Knopp, who led his party on a weekslong boycott this year for reasons entirely disconnected from the construction work. “Underneath us — that’s where the fumes were coming from.”
Hanes, the legislative administrator, declined to say how much the decision to open Senate chambers had added to project costs, saying in an email “there is no 1:1 correlation between any single adjustment to scope or usage of space to the $20M increase.”
Whatever its cause, the escalating price tag went unmentioned as lawmakers figured out how to spend $2 billion in unexpected tax revenues this year.
To the extent that public budget documents described the renovation at all, they said it had a “total estimated cost of $375 million,” far less than the new price tag. Hanes, in a budget presentation that touched on the project, did not mention the increase. He did not answer repeated questions about why nothing was revealed in public.
Only once did a lawmaker nod to the costs of the project. In a June 20 budget hearing, state Rep. Greg Smith, R-Heppner, asked for a full account of what all phases of the renovation would cost. But Smith said he didn’t need an immediate answer, and the hearing moved on.
Smith did not respond to an inquiry about what he learned.
The lack of transparency appears to be built into a process for funding state construction projects that doesn’t demand that officials account for escalating costs. Budget writers were aware of the hikes, and since no member of the budget committee asked for public explanation, staffers said, the $90 million overrun simply never became part of the record.
“[Informational hearings] were held during the earlier phases of the project and the public is aware of its ongoing nature,” Hazel Tylinski, a spokeswoman for Rayfield, said in an email. She added that top lawmakers and budget staffers “reviewed the cost estimate materials provided to ensure the project could complete construction.” And there the matter stood.
“Ideally these things would be put forward more transparently,” said Benjamin Clark, a public policy professor at the University of Oregon who is an expert in public budgeting. But Clark also said he could also make a case for Rayfield’s point.
”From the most generous of view … the people who put it there would say, ‘We’ve already approved it, we’re just trying to get it done,’” he said, adding: “There’s a normal operating procedure, and then there’s a more opaque version of that.”
The Legislature’s budget process, in which powerful lawmakers make spending decisions among themselves, has drawn criticism in the past. Then-Rep. Marty Wilde, D-Eugene, complained last year that the budget was “a document entirely developed outside of the public view.”
“The Oregon Constitution requires the public’s business to be conducted publicly,” Wilde said at the time, “however inconvenient that might be.”