Portland City Council is poised to adopt a new funding mechanism for the city’s cash-strapped transportation bureau, in the form of an extra charge on Portlanders’ utility bills. The new fee, expected to go into effect in January 2027, will be tacked onto residential and commercial water bills. Most Portland households can expect to pay an additional $8.40 or $12 a month, depending on if they live in multi-unit or single-family dwellings.
The fee is expected to generate $46 million annually. It was brought to the Council along with a plan to charge utility companies more to recover damages caused by pavement excavation. That plan, approved by the Council last week, is expected to generate $20 million annually.
While an initiative that will hike Portlanders’ bills may sound politically risky, the ordinance to create the transportation utility fee is expected to pass the Council easily. Its approval seems inevitable enough for Mayor Keith Wilson to include it as a revenue source in his proposed fiscal year 2026-27 budget, released earlier this week. While the transportation utility fee proposal, which was spearheaded by Council Vice President Olivia Clark, has not been immune from criticism, the response appears balanced out by supporters who emphasize what’s at risk if the effort fails.
At a Committee of the Whole meeting in early April, Clark introduced the transportation utility and street damage restoration fees to the Council, explaining the measures as the result of months of work from PBOT staff and the City Council’s transportation committee, which Clark chairs.
“Over the last year, our committee set out to learn about asset management and the state of one of our most important assets, which is our streets and our roads. We learned that our streets are riddled with potholes, and many of the streets are failing. The condition has worsened over the last five years. We learned that if we do not act now to address the degradation of our streets, it will cost us up to 10 times more to replace them in the future,” Clark said. “Given what we’ve learned, we understand the extreme risk of doing nothing, and we are anxious to proceed.”
The Portland Bureau of Transportation (PBOT) has been in a state of financial crisis for years, particularly impacting its operations and maintenance budget. The bureau pays for maintenance work primarily through its unrestricted general fund, which makes up only about 30 percent of its total budget. PBOT’s unrestricted funds largely come from state gas tax and DMV fees, as well as local parking revenue. All of those funding sources have become less reliable in recent years.
At the same time, the city’s maintenance backlog has grown to an unmanageable level. Current estimates suggest it would cost well over $6 billion to bring PBOT’s assets—including streets, sidewalks, street lights, and signage—up to “fair” condition.
The problem didn’t come out of nowhere, though. Portland transportation leaders have long sounded the alarm about the bureau’s growing funding issues, and attempted to provide PBOT with a reliable source of revenue through a funding mechanism like the transportation utility fee. Their efforts have failed—until now.
Developing the TUF
The transportation utility fee (shortened to TUF, and sometimes referred to as a “street fee”) currently on the table has been in the works for just under a year, since the City Council voted last summer to compel city staff to look into alternative sources of funding for PBOT. After several months of research and public outreach, PBOT staff came up with an array of potential near-term funding mechanisms, including a transportation utility fee. The TUF stood out for its ease of implementation and ability to generate meaningful revenue, among other purported benefits.
Under the City Council’s current plan, the transportation utility fee would be administered by the city’s utility billing system as an addition to residential and commercial water and sewer bills. Residents in apartment buildings would pay an additional $8.40 a month, while single-family households would pay $12. Financial assistance would be available to those who qualify. For commercial customers, the fee would be assessed at 4.3 percent of water and sewer bill charges.
Similar programs have been implemented in cities across the country, including many in Oregon. The idea isn’t exactly new to Portland, either. Several politicians have attempted to implement a plan like this in the past, to no avail. Councilor Steve Novick made a notable go at passing a street fee when he was the commissioner in charge of PBOT during his first term in City Hall, a little more than 10 years ago. While Novick’s transportation utility fee plan failed, he was successful in passing the first iteration of the 10-cent Fixing Our Streets gas tax, which Portlanders have voted to renew twice.
Like past proposals, the Council’s current TUF plan has garnered some pushback. One of the biggest sticking points for critics is the fact that the fee is not tied to one’s transportation choices. Those who oppose the fee structure say it’s unfair that people who primarily walk, bike, or ride the bus should pay the same as those who drive, since the latter mode is significantly more damaging to the streets.
Public testimony submitted by the climate advocacy organization 350 PDX outlined concerns with “the broad nature of the fee and how it will affect residents.”
“There is little to no language in the ordinance about residents who are not contributing as much to the degradation of the roads, i.e., residents without cars, residents who primarily take public transport or ride a bike, and so forth,” the letter said. “Residents who regularly walk and use transit should not be required to pay the same fee as high wage earning Portlanders who drive.”
Part of the city’s rationale in favor of the utility fee is, in fact, that it will reduce the bureau’s reliance on car drivers to fund its work. PBOT’s current funding strategy, so heavily based on parking fees and gas taxes, means the bureau has a perverse incentive to keep people driving—even though that goes against the city’s climate goals and, in fact, contributes to the degradation of the streets.
Transportation leaders also point out that, even though not everyone drives on city streets, everyone benefits from well-maintained roads in some capacity.
“The premise of the TUF is that the transportation system is a utility, like the electric or water system, that benefits everybody and should be supported to some extent by everybody,” the city’s alternative transportation funding report states. “Even a person who never leaves their residence benefits from the goods and services that travel on the transportation system.”
Others suggested the fee should be higher for residents depending on the size of their property. Another point of contention is the fact that commercial customers will be charged based on their water usage, which seems to some like an arbitrary metric for this particular charge.
In response to the feedback, the Council approved several amendments to the ordinance. One amendment, proposed by Clark and Councilor Mitch Green, would require PBOT and other city leaders to develop an impact-based fee specifically for commercial payers, with special consideration given to small businesses. The Council also modified the proposal to attempt to ensure income-qualified residents in multifamily properties would pay a discounted rate for the street fee.
Where will the money go?
Among those who submitted written public comments to the Council about the TUF, many expressed concerns that the money generated from the new utility fee would be squandered, reflecting a broader distrust in local government decisions.
In order to mitigate those concerns, the TUF proposal includes a variety of accountability metrics, with program leaders required to establish a community oversight committee, present annual reports to the Council, and undergo annual external audits. Most importantly, PBOT is required to allocate the funding to specific and clearly-defined services, which will be communicated to the public.
Under the Council’s current plan, 75 percent of the fee revenues must be allocated to “activities that maintain, preserve, and rehabilitate existing transportation infrastructure,” including pavement preservation, pothole repair, traffic signal maintenance, sidewalk and curb repair, street sweeping and drainage upkeep, and more. An amendment to the plan, submitted by Councilors Tiffany Koyama Lane and Eric Zimmerman, requires the program to allocate 12.5 percent of revenues specifically to Vision Zero projects such as bicycle and pedestrian infrastructure and intersection modifications, and another 12.5 percent to the Sidewalk Improvement and Paving Program.
Even with the accountability metrics and specific spending plans, however, it may be difficult for the program to make a visible dent in the city’s massive street maintenance backlog. The problem has gone unaddressed for so long, any action taken at this point will only go so far. But those who support the program say it’s necessary anyway. In a statement last week, Novick described the situation bluntly.
“In Portland, city leaders knew by the late ‘80’s that our streets were at risk. But [they] simply let the streets rot. They were able to get away with it, politically, because it takes a long time for the deterioration of a street to become visible to the public,” Novick wrote. “And every year they delayed, the problem got much, much worse, and much, much more expensive to fix.”
The Council voted 10-2 in favor of the new fee at the April 22 meeting, though they still must take a final vote next week. Councilors Zimmerman and Dan Ryan voted “no,” with both of them stating their wish to put the new fee in front of voters.
Many of the councilors who voted in favor said they didn’t think the plan was perfect. But, they said, they knew it was necessary.
“We are left in a situation where we have to find less-than-perfect revenue options, and the TUF is that,” Councilor Green said. “This is sort of a harm-minimization approach, as far as I’m concerned.”
Novick predicted that “right now, we are quite literally on a path to being a city where most of our major streets will have to revert to gravel.”
“I think Council needs to be honest with the voters: probably the best we can hope for is that adopting these fees simply keeps conditions on the major streets from getting even worse,” he said. “That’s not an inspiring message. But the alternative is to let the city die.”
