Many Oregonians are choosing to continue to stay home while new coronavirus cases continue to appear each day. Statewide traffic volumes have steadily increased since the Governor’s Executive Order “Stay Home, Save Lives” was implemented mid-March, but weekday traffic remains down by 11% and 16% on weekends. The slow return to regular travel will have a lasting impact on Oregon’s State Highway Fund, funded mainly through fuels and weight-mile taxes, which is the largest dedicated funding source for state and local roads in Oregon.
*Data from the Oregon Department of Transportation Weekly Covid-19 Traffic Report.
While travel is slowly returning to normal, the decline in State Highway Fund revenue is amplified by DMV branch closures and an expected slow down in the nation’s economy. As a result, county State Highway Fund revenues are expected to continue to decrease into FY 2024. Of the total $250 million in projected reductions to the State Highway Fund between fiscal years 2020 and 2024, the county share equals about $63.4 million.
In anticipation of both the loss of revenue and workplace restrictions due to COVID-19, many county road department’s are taking action to balance their budgets and adapt, primarily affecting operation and maintenance. As highlighted by the Oregonian, Multnomah County has instituted a hiring freeze and will likely have to delay some road maintenance activities due to severe budget declines of almost $2 million over the next year, about 15% of their budget.
Multnomah County is not alone. While the large counties in the metropolitan area (Multnomah, Washington, and Clackamas) are taking a significant hit, every county across the state is feeling the impacts of the decline in travel and subsequent decline in State Highway Fund revenues. Overall, counties lost $15.6 million by the end of Fiscal Year 2020, and are expected to see a decrease of $25.3 million in Fiscal Year 2021. From month to month, the impact can be devastating with an average 30% decrease in county apportionments in June, and the unprecedented travel behavior makes it difficult for counties to plan ahead.
Fortunately, many of the large capital projects are planned and budget for years in advance so many counties are not expecting delays. However, small counties with few, if any, capital projects are losing their ability to save for large projects in future years.
For more information on the future of the State Highway Fund, see the July State Highway Fund Forecast here.
For more information on county State Highway Fund apportionments, see the County Road Revenue Forecast here, or the Monthly County Covid Forecast here.