Options to Raise Revenues for Street Maintenance

By Don MacGillivray


Transportation funding has long been an important issue in Portland. Our streets are deteriorating under the pressure of weather, age and normal use.

At the same time, the City’s resources for addressing this issue is declining. In the 1990’s, property taxes were reduced in Oregon, making it more difficult to provide for basic services.

The main source of funding for street maintenance, the gas tax, has been shrinking for decades as people drive less and buy more fuel-efficient cars.

The average Portland household pays $25.19 in state and county gas taxes each month and only 11 percent or $2.82  goes to the City for our streets and Congress has not raised the gas tax in 21 years. It’s vital that the street maintenance backlog is addressed soon, or the cost of repairs will only grow larger over the coming years.

Portland’s economy needs good streets for driving, biking, and freight transport and the City owns $8 billion in transportation infrastructure including 4,827 miles of streets that Portland Bureau of Transportation (PBOT) maintains, along with 55,477 streetlights and 157 bridges.

Currently, 48 percent of the City’s busiest streets are in poor or very poor condition, meaning significant rehabilitation or reconstruction is needed to return them to an acceptable condition.

When streets become deteriorated, they are more expensive to repair and without adequate resources to maintain them, they continue to deteriorate.

PBOT, Portland Bureau of Transportation, estimates that the City needs to spend an additional $75 million per year for ten years, on repair and reconstruction.

Currently the following projects are prioritized above basic maintenance: the Sellwood Bridge, the Streetcar, the Portland Milwaukie Light Rail, the Downtown Marketing Initiative, and the management of the Portland Transit Mall.

City Council adopted a number of aspirational plans to improve the overall transportation system throughout the city, but they have not identified how to reconcile and pay for these competing, expensive priorities. The priorities compete for funding with maintenance of the existing assets.

A Transportation User Fee is a monthly fee based on use of the transportation system collected from residential and non-residential properties within a city. Residents, businesses and organizations rely on the system to travel and to receive and deliver goods, so all should pay to keep the system safe and well- maintained.

Mayor Hales has said residents and businesses should split the costs that are projected to hit $53 million in the third year of collections.

In deciding how much to bill each of the city’s 62,672 businesses under the proposed street usage fee, the amount would vary depending on the size and usage of the business.

The original plan was to collect $26.5 million from businesses, but the business community does not support that plan.

The City agreed that the numbers behind the street fee were imperfect while business owners characterized them as unfair. Transportation officials have suggested a new proposal that would cap the monthly charges for businesses at $135.

PBOT has developed an online calculator for non-residential customers where you can select a property type and square footage to see an estimate.

Nonprofits, organizations, and low-income people have attempted to improve the street fee. These interests believe a street fee must be more progressive.

A residential street user fee would be $12 a month in the third year of collections, but this is also disliked. A number of equity questions remain unanswered and a vetted proposal is expected to considered by City Council in November.

Many cities use property tax revenues or a less progressive sales tax to raise money for streets. A street fee is at least nominally proportional to use. Research has found that many cities customize street fees by adding exemptions for residents who don’t own cars, or charging heavier vehicles more for causing more wear and tear on the streets.

Prior to becoming mayor, Hales suggested funding for street maintenance might come from a reduction of city overhead.  This could include a reduction in City Managers. As the current ratio of managers to workers is 6:1, the ratio should be closer to 10:1.

Savings might be directed to uses such as transportation maintenance. In the 1990s when Mayor Hales was Commissioner  of PBOT, the City was able to pave ten times as many road miles as it does with today’s budget.

The next step will be determined by the working groups.


For questions regarding Portland’s street user fees, contact PDOT staff at TUF Administrator@portlandoregon.gov. or contact Dorothy Mitchell at 503.823.1053.




Options to Raise Revenues for Street Maintenance

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