(UPDATE @ 4:45: Comment from Sam Adams at the bottom...)

Back in May, Commissioner Sam Adams called a last minute press conference to break some bad news: Thanks to the rising cost of oil (then at a record $120 a barrel), people were buying less gas, and paying less gas tax, which meant the city's Department of Transportation (PDOT) was strapped for cash to the tune of $2.7 million.

Making things worse, as Adams noted in a May 18 post to his commissionersam.com blog, "the skyrocketing cost of oil has put existing estimates for transportation projects out-of-whack." Adams ordered PDOT to do a 30 day review of the "40 projects in the pipeline for delivery in the next two years," to find out how much more expensive they'd be now. (He also ditched the controversial Sauvie Island Bridge re-use project that day, citing uncertain costs.)

Fast forward more than 60 days (yeah, I don't know how a 30 day review morphed into 60, either): Oil has jumped as high as $145 a barrel (it was about $128 today), and PDOT has finished their review of projects. It's a double hit of more bad news, according to PDOT Director Sue Keil.

"Grossly we're off another million dollars since we were talking in that press conference," she says. The city is getting even less in gax tax revenues from the state, because people are buying even less fuel. "It's sticker shock on the price of gas, and more fuel efficient cars," she says. The gas tax is "not a very good funding mechanism any more."

The city council plugged the last gap when they approved the budget on June 4, but it's unclear how the city will make up this million--or what it will do to fill what is likely to be an ongoing gap, as people change their driving habits.

On the PDOT project front, Keil says the review found that materials costs are going to jump.

"We have completed our review of projects, and because of the oil-relatedness of asphalt and other increases in material costs, we found there's a 17 percent increase in the cost of projects materials," Keil says. PDOT is going to "examine all of our discretionary spending and look at productively improvements" to help address the problem.

I'm waiting for a call back from Adams' office with comment on what, exactly, they plan to do about the funding problem.

Adams says there are problems with six of the projects PDOT reviewed. "These are the ones that we know for certain are out of whack," he says. Other projects reviewed are either too early in the design phase to determine if they'll blow the budget, "or they're okay," Adams says, meaning "we felt they had a big enough contingency to deal with the overages."

As for what he plans to do about the gas tax shortfall, Adams says he's "looking at both the revenue side and the cut side at this point," and expects he won't have an answer for several weeks (he's also waiting on the state's official revised revenue forecast).

On the project side (the affected projects are listed after the jump), the funding comes from a variety of sources, like state and federal grants or system development charges.

"Some of the projects we will go back to the state and the feds and say the costs of this project, the money you gave us for this particular project isn't enough, or we'll have to go out and try to find additional revenue, and the project is delayed while we try to find additional revenue," Adams says. "And in some cases cut back the project's scope or we won't proceed with the project."

Adams--and Keil--point out one "silver lining" of the poor economy: The construction market has softened, thanks to things like a "reduction in condo construction," Adams says, which means "the competition for city projects has gotten tougher, tighter, so we're getting bids that are more competitive and lower."

This is the city's summary memo of the 30-day review, with the six most-affected transportation projects.

Summary of the projects with significant cost increases:

Burnside: Bridge-14th Avenue, E
• Estimate exceeds funding as a result of a scope change and schedule delay
• Cost reduction packages have been prepared to bring the project back in line with or under available funding

Division Streetscape/Recon, SE
• Estimate increased from $3.9 million to $5.5 million
• MTIP request being prepared to bring the costs back in balance with estimates

Kenton: Denver St Improvement, N
• Estimate increased from $3.3 million to $4.0 million
• $780K contingency/inflation in original estimate
• This is a PDC funded project
• The project manager will work with PDC to resolve the funding requirement

Cully Blvd Project, NE
• New estimate is $200,000 less than available funding
• This limited contingency creates a very tight project at 10% design

Burgaard Bridge Replacement
• A scope change requires a longer storm sewer replacement
• Costs are expected to increase by $250,000 to $300,000