ON THE EVE of Portland's most challenging budget season in years, a harsh new audit on transportation funding—and whether the city spends enough maintaining its roads—has handed Mayor Charlie Hales and his "back to basics" campaign mantra an undeniable public lift.

The findings in the audit (PDF), released Wednesday, January 30, are blunt. And they line up almost perfectly with one of the issues Hales rode to victory last fall—and has continued to trumpet in office: Even with transportation revenue inching up, spending on expensive projects like streetcars and light rail and sidewalks and the new Sellwood Bridge has left the city with less money for basic street maintenance.

That pinch shouldn't be a complete surprise, as we reported more than a year ago ["Overcommitted!" News, Dec 15, 2011]. But with Hales in full-on thrift mode in the face of a $25 million citywide deficit—cutting his own staff and pulling funding for popular summer youth programs—his team is seizing on the report as an official warning of more pain to come.

"Does this audit say there are going to be some difficult cuts in the future? Yes," Hales' spokesman, Dana Haynes, tells the Mercury. "We're hoping the message is that this audit isn't going to sit on a shelf somewhere."

Hales has long paid particular interest to the Portland Bureau of Transportation (PBOT)—an office closely tied to the legacy of former Mayor Sam Adams, and, as such, a frequent target of Adams' critics at the Oregonian. Street paving, unfairly portrayed in the O as a step-sibling to small-dollar bike projects, emerged as one of the centerpieces of Hales' campaign.

Meanwhile, a report late last year calling for new revenue sources for PBOT—another way around picking trains over cars over bikes—has been quietly put aside, sources say. And Hales sacked PBOT Director Tom Miller, Adams' former aide, soon after taking office. He replaced Miller, tellingly, with a retired maintenance bureau chief.

But despite whatever somber talk might come from Hales' office, unwinding the spending decisions singled out by the audit will present some serious political challenges.

For one thing, all of the projects in question received unanimous city council support—making them not just Adams' babies, but all of the commissioners'. In addition, even though transportation revenues have gone up, they haven't gone up as much as planners anticipated—meaning PBOT is already contemplating difficult cuts to priorities like streetcar operations and neighborhood bike routes even without new cuts to clear space for extra street paving.

It's also unclear where those reductions would come from. The bureau's debt load, which must take precedence over other priorities, will double in the coming years to help pay off Portland's share of the Sellwood Bridge rebuild and the new Portland-Milwaukie light-rail extension.

Hales "has yet to go down to the line item" on cuts, Haynes says.

All the same, the city auditor's office isn't terribly sympathetic. The audit harshly raps city council for failing to do due diligence in approving "a number of aspirational plans to improve the pedestrian, streetcar, bicycle, and overall transportation system throughout the city," but then failing to figure out "how to reconcile and pay for these competing, and expensive, priorities."

"Maybe that other project is an important policy issue," says Drummond Kahn, director of audit services for Portland. "But the city has been making policy directions that provide less funding to maintenance."

In some cases, city council thought it had scared up money for a project, only to see that source fall short of expectations. Parking meters on the Central Eastside, meant to pay for operating the Eastside Streetcar expansion, came online after the streetcars were approved. Expected development fees for the light-rail line have come up short. And, because of inflation, even street paving itself is far more expensive than it was just a few years ago.

"That's why we recommend they identify a back-up funding stream for new projects," Kahn says. "So maintenance may not have to be the go-to pot of money."

The audit says PBOT, still technically under Miller's rule through Sunday, February 3, judged the findings "on track." The bureau, though, is deferring any comments to Hales' office and didn't submit a formal response to the report.

The findings are bound to spark another round of hand-wringing over whether bikes are to blame. The report, however, specifically avoids that claim. That's partly because it says the bureau has done a poor job of internally tracking those categories, but also because bike-friendly projects also can count as "basic maintenance."

"We're not" singling out bikes, Kahn says. "Well-maintained streets support all kinds of transportation."