Turns out the Portland Streetcar — plagued by lower-than-expected revenues — is looking at something like a $1 million annual funding hole in coming years.

That news cropped up today in a city council work session, as commissioners questioned PBOT officials about the department's budget.

"It looks like it's a problem on the horizon," Commissioner Nick Fish said in the session. "We have a year to think that through and see how we can avoid that."

The program is stable in the short term. PBOT's identified its share of the streetcar's $8.9 million operating costs this year, as well as for the fiscal year that begins on July 1. It's the following years that pose a problem, according to Spokesman Dan Anderson.

As the streetcar ramps up planned service and closes the southern end of the eastside loop, costs are set to increase. PBOT's looking at an average of $1 million yearly deficit beginning in July 2014 and stretching at least to June 2018 — as far as the department has forecast.

That's not how the city hoped it would work. The shortfalls take into consideration revenue from PBOT's Central Eastside Parking Management Plan — which last year began charging for what had been free eastside parking.

Officials had planned to use money from the district — projected at $436,000 a year — to fund the city's share of streetcar expenses, according to a recent audit.

"Until those parking revenues exceed the costs of parking district implementation and operation, streetcar operations will be subsidized with other discretionary transportation revenues," the audit said.

According to PBOT's forecasts, revenues will fall short for at least the next five years.

This all comes on the heels of another revelation.

Portland’s City Budget Office disclosed—in an analysis released March 11—the streetcar has taken in a little more than half of the money it expected since installing fare boxes in September.

That’s bad news, given PBOT’s already-tough financial straits. But it’s also a problem that's more complicated than freeloaders or low ridership.

According to Chris Smith—who sits on the board of directors of the nonprofit that runs the service—part of the problem is how citizens are getting tickets to ride the streetcar.

“We're seeing more of our ridership be pass-holders than expected,” Smith said at today's meeting.

So, for instance, if a student from Portland State University rides the streetcar, she won't be using a $1 fare box. Her student ID counts as a valid fare. And anyone holding a TriMet pass — be it for a daily trip or longer access — doesn't need to worry about paying a fare for the street car.

"If TriMet handles the sales, they keep the money," said Smith. " "It's not necessarily a fare collection problem or a ridership problem."

In fact, Interim PBOT Director Toby Widmer estimated the streetcar has a 93 percent collection rate, even without cracking down.

"There has not been a ticket issued, as far as enforcement goes," Widmer told council today. "I am concerned that future projections are probably going to be difficult to meet."