A five-year review of Portland’s financial condition, released today by City Auditor Mary Hull Caballero, recommends the city invest more in its transportation infrastructure.
The audit, which reviews changes in Portland’s overall financial position between 2012 and 2016, rates the city’s financial health as “stable.” A number of financial indicators in the report are positive. For example, the city’s debt is down and its liquidity and credit ratings are strong.
But the report also notes growing financial liabilities for the city.
Portland manages about $36 billion in assets. The audit found that the sewer and water infrastructure is in good condition and is a net benefit to city finances.
Portland and utility ratepayers recently funded a $1.4 billion overhaul of the city’s stormwater and sewer system to reduce pollution in the Willamette, the largest public works project in the city’s history.
Portland streets, on the other hand, are losing value faster than the city can make repairs and are becoming a financial liability.
“The Bureau of Transportation reports the lowest percentage of assets in good condition (33 percent) for streets, sidewalks, bridges, and streetlights,” the report states.
That conclusion echoes years of reviews from auditors, who warned that the Portland Bureau of Transportation wasn’t investing enough in street maintenance and that the cost of repairs would grow exponentially in future years.
“Lack of preventative maintenance risks early asset failure and increased expenditures.”
The city is beginning to address a part of that street maintenance backlog. Voters approved a 10-cent a gallon gas tax, projected to raise more than $60 million over its four-year lifespan. The tax took effect in January, and the revenue will be dedicated to paving projects and street safety improvements.
In his first major address, Mayor Ted Wheeler proposed investing an additional $500 million in city infrastructure over the next 20 years, a plan he dubbed “Rebuild Portland.”
Wheeler proposed raising the money by borrowing against revenue that will come back onto the city’s tax rolls as its urban renewal areas expire. That would start with a $50 million bond offering in 2018. He has yet to bring the proposal before the city council.
According to the auditor’s five-year financial assessment, the other big bill coming due in Portland is for police and firefighter pensions. About 25 cents per tax dollar the city collects goes to those retirement funds.
When ratepayer-funded water and sewer assets are taken out of the financial picture, the city’s net position — or the difference between the value of its assets and the money it owes — is negative $1 billion, largely due to past failures to set aside money to pay for police and firefighter retirement plans.