City Streets: Investing in a Neglected Asset

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Per•Gallon Estimate of Vehicle Taxes and Fees: Western States 1.2 1 ii 0.8 c~ ;, 0.6 a 0.4 0.2 0 Oregon Montana Idaho Utah Nevada Wasnington t;anmmin ©Other Fees Taxes ®Vehicle Sales Tax ^ Gas Tames _ an increasing number of alternative fuel or hybrid vehicles are in use in the state. In 2004, Oregon ranked l ltn for the number of registered hybrid vehicles.' This ranking increases to 4th when calculating hybrid vehicle registrations as a percent of total vehicle registrations. As general fuel efficiency standards increase, the average vehicle uses less gas-meaning less revenue to the. highway fund but causes the same wear and tear on streets. Vehicles with new fuel technologies that have very high fuel efficiency rates, such as gas/ N $46 c ~ > $42 a $40 $38 $3s d a $~ Per Capita Gas Tax Revenues: All Cities electric hybrids, can travel long distances on a gallon of gas causing increased rates of road 0 ^0a'~~~e wear while paying very little inroad-user taxes. Although fuel conservation through increased fuel-efficiency has other benefits, it is a direct financial detriment to local street funding. While total state highway fund revenues 090 ~ooo oo^ ,~oti ryo0 ti°o~~oyo~o0o001 o~A0o0Q0 generated by the gas tax are increasing, on a 00~ ryoo ryoo ryoo 003 do do do ~yo ~o ,, ti per capita basis, city highway fund revenues - - continue to fall each year. Figure 4 illustrates how state highway funds are not keeping pace with city population growth, and the increased road use that population growth brings. Rising Material and labor Costs Not only is the purchasing power of state highway fund dollars decreasing, but maintenance andpreservation expenses arerising. According tothe FederalHighway Administration's Surfacing Price Index, $128 spent on highway projects in 1995 would cost $202 in today's dollars ~ In the last year alone, national construction costs have increased 3.2 percent, and labor costs increased 3.8 percent 9 The Oregon Department of Transportation, which collects the bidding prices for mixed asphalt, crushed gravel, and structural concrete, estimates that since 1993, the cost of these road construction materials has increased by more than 70 percent (see. Figure 5). Construction material costs rose by 10 percent in Oregon in 2006 City Streets: Investing in a Neglected Asset -Page 6 Increases in Street Material Costs and State Highway Fund Revenues 1993 - 2006 200% 150% 100% 50% 0% -50% -100% ® ~," ® y o• ter: ~r ®® 1993 1996 2000 2003 2006 __ __ State Highway Fund - -Structural Concrete ~ ~ Crushed Rock - -Mixed Asphalt alone. State highway fund revenues have only increased 52 percent, resulting in an additional loss of purchasing power. Use of Transportation Infrastructure Since the last state gas tax increase in 1993, the use of Oregon's highways has increased 18 percent. For some cities in Oregon, congestion has become a major problem, creating greater costs for private use and public street maintenance and preservation. According to the Texas Transportation Institute's Urban Mobility Study, Portland area congestion creates a cost to both the public and private sector of more than $569 million in 2003. Since 1993, congestion of the Portland area transportation system increased from 49 percent to 67 percent of lane miles.10 Congestion creates economic costs-delivering goods consumes more time and becomes more expensive, market range is reduced, and commute-dependent employers can suffer from loss of productivity. There are more cars and more drivers on the road, and the number will continue rising. This means that, in addition to being responsibile for maintaining and preserving existing roads, local governments must also consider and budget for system modernization and capacity improvements. Population Growth In the past decade, Oregon's population grew by 21 percent. During that same time, city population increased almost 35 percent, and now 69 percent of Oregonians live in incorporated cities (see Figure 6 ). In the next 15 years, the state's population will likely grow by an additional one million people. If past trends continue, most of this population growth will have to be accomodated by cities. City Streets: Investing in a Neglected Asset -Page 7