LFO Analyst: Jordan

The Department of Transportation (ODOT) is responsible for developing, maintaining, and managing Oregon's transportation system in a safe and efficient manner that enhances the state's economic competitiveness and livability. Historically, ODOT has focused primarily on constructing and maintaining highways; however, more recently, with designated Federal and Lottery Funds, it has broadened its focus to include reduced use of the automobile in congested areas and increased emphasis on alternative modes of transportation. The Department is under the direction of the five-member Oregon Transportation Commission, which is appointed by the Governor.

The bulk of the Department's revenues originate from motor fuel taxes, licenses, and fees that are constitutionally dedicated for highway construction and maintenance. The state Highway Fund, dedicated to build and maintain highways and highway rest areas, is shared among ODOT, counties and cities. For 1999-01, $573 million is projected to accrue to other state agencies and local governments leaving $2.25 billion available for expenditure. State motor fuel sources are forecasted for only slight increases (less than 1%) due to slower growth in Oregon's economy and increased fuel efficiency. Federal appropriations from the Federal Highway Trust Fund are received and reported as Other Funds. The total amount of Federal Funds in this category for the 1999-01 biennium is over $595 million. Federal Funds received and reported as Federal revenue are grants or direct revenue for specific programs such as transit, aviation and rail projects. The agency will continue to receive Intermodal Surface Transportation Efficiency Act (ISTEA) funds for projects underway. Passage of the Federal Transportation Equity Act for the 21^st Century (TEA-21) in 1998 will provide approximately $232 million more federal funds for the Statewide Transportation Improvement Program (STIP) through 2003.

The Department receives $20 million in Lottery Funds to make bond installment payments for the Westside Light Rail Line, construction of which is now complete. The Department usually receives a small amount of General Fund to provide state matching funds for public transit and growth management grants and for the federally mandated Motor Voter program, which allows DMV customers to register to vote when they conduct motor vehicle-related transactions. The 1999-01 budget contains several limited revenue initiatives to increase ODOT revenues by an estimated $9.7 million, driver licensing fees, aviation fuel taxes and others.

The legislature adopted a Transportation Funding Package (House Bill 2082) increasing motor fuel and use fuel tax rates by 2 cents on November 1, 1999 and by another 3 cents on January 1, 2000. Also included in the package is an increase in passenger car registration fees by $10 per biennium, modification of registration fees for vehicles between 8001 and 26,000 pounds and replacement of the weight-mile tax with a new diesel fuel tax rate of $.29 per gallon on July 1, 2000. The Department of Transportation is also given the authority to sell $600 million in Highway User Bonds to be used only for Highway Modernization projects. Revenue for the 1999-2001 biennium from these changes is expected to increase $175 million.

** Includes anticipated revenues if HB 2082 becomes law

Highway construction and maintenance continues to be the agency's largest function. TEA-21 is structured along the lines of the previous federal transportation legislation, designed to reduce congestion and improve air quality and encourage alternative modes of transportation. Operating expenses, however, for these alternative modes remain high, and they are not yet able to provide the same level of transportation flexibility and choice as highways.

During the interim, the Joint Legislative Audit Committee and Secretary of State Audits Division initiated several audits and program reviews on the Department's effectiveness in managing the current resources of the highway fund. The reports confirm that there is no malfeasance by the Department and that the Department is taking steps to resolve issues of concern. At the request of the 69^th Legislative Assembly, ODOT developed both an organizational budget and a program budget to meet the need for better information than previous budgets. The program budget focuses on the distinction between programs and services rather than on broad areas of responsibility. During 1997-99, ODOT implemented a number of efficiency measures that provided more than $71 million in additional resources for highway improvements.

Oregon's population growth rate continues to increase traffic congestion and demands for better transit services, ports and airports. At current funding levels, ODOT predicts critical transportation needs during the next 20 years will not be met. The Oregon Transportation Commission is reviewing long-range transportation priorities and financing strategies in its update of the Oregon Highway Plan. Local governments face equally critical transportation issues. Pressure on property taxes and local general funds, and no increases in state funding have left local communities with fewer resources for transportation.

The Governor proposed several transportation strategies for growth management in the Oregon Livability Initiative. The proposed budget included $24 million General Fund and $10 million Federal/Other Funds for high-speed rail and connecting busses to all regions of the state and increased senior and disabled transportation services throughout the state. Also included was $50 million in revenue bonds to buy highway rights-of-way for getting people safely on and off of state highways and to increase local street capacity so drivers can avoid busy intersections and heavily traveled roads. An interagency Community Solutions Team was proposed to continue work with local governments and community leaders on collaborative planning and problem solving of land use and transportation growth issues. Funding for the Community Solutions Team was proposed as part of the Transportation Development Program in its application for additional TEA-21 federal funds as a component of the Transportation and Community and System Preservation Pilot Project. The total proposed budget for transportation strategies in the Oregon Livability Initiative was $156 million.

The legislature approved a total budget expenditure limitation of $2.114 billion and 4,791.91 full-time-equivalent positions (FTE). This is a reduction of $72.5 million from the Governor's recommended budget but an increase of $460.6 million over the 1997-99 estimated expenditures. The total number of full-time-equivalent positions is decreased 33.07 from the Governor's recommended budget, reflecting the fiscal impact of legislation to replace the weight-mile fuel tax with a diesel fuel tax in the 1999-2001 biennium (HB 2082). The budget includes $467,670 General Fund that supports the federally mandated Motor Voter program and provides matching funds for the transit and transportation growth management programs. In addition, $4 million General Fund is appropriated in SB 5511 for the Senior and Disabled Transit program. The budget also includes $20 million Lottery Funds for debt service on the Westside Light Rail bonds and provides expenditure limitation for $1.751 billion Other Funds and $41million in Federal Funds. If House Bill 2082 becomes law, it provides for an additional Other Funds expenditure limitation of $187.7 million for implementation of Maintenance, Preservation, Safety and Modernization projects and $15 million Other Funds and $25 million Federal Funds for the High Speed Rail and Senior and Disabled Transit programs. Several budget notes were adopted addressing issues related to: transportation growth management and development programs; changes in rules and procedures to produce cost saving to result in more money for road projects; transportation safety programs and efficiencies derived by combining agency activities; financial reporting; and HB 2478 relating to accountability requirements. The agency is also directed to report to the Emergency Board on projects to be funded by bonding identified in House Bill 2082.

Central Services provides the core administrative functions that support each of the programs. This program includes the Director's Office, Information Systems, Financial Services, Human Resources, Communications, Business Services, and Purchasing Sections.

Central Services is supported by a combination of direct and indirect charges. Direct charges are applied where the service can be accurately measured such as in computer charges and in Highway Fuel Tax accounting. The bulk of the revenues, however, come from indirect charges that are assessed to each division based upon its number of full-time equivalent positions (FTE). The Governor's recommended budget supports a legislative concept to strengthen motor carrier audit and collection programs by locking in the time period covered by a weight-mile tax audit. The concept is estimated to increase revenues by $115,000.

Workload in Central Services is driven by the workload factors affecting the Department as a whole. This includes factors such as the demographic changes in Oregon's population and economy, implementation of TEA-21, rapidly changing information technology, and efficient delivery of programs. The growth in the budget reflects the agency's plan to accurately represent administrative functions in the appropriate program budget. These are technical adjustments that do not represent additional spending but represent a series of budget alignments in Central Services from other program areas.

The Governor's recommended budget for Central Services was $127.4 million, a 20 percent increase over 1997-99 estimated expenditures. A major component of the increase was a $17.5 million technical adjustment to reflect the realignment of computer programming services from Highway, DMV, Motor Carrier and Transportation Development to Central Services. The proposed budget continued 16 limited duration positions to support the Year 2000 (Y2K) technology project ($9.1 million) and increased supplies and services for a one-time expenditure limitation to reflect increased costs for information system consultants ($3.6 million). Positions were increased in the Information Systems Section for application development and desktop maintenance services by replacing contract services with 32 FTE ($1.1 million), and non-essential costs in information systems were reduced reflecting a shift in priorities from highway and accounting areas to Y2K services ($1.9 million). The Governor's budget supported an increase of two positions to develop an Intelligent Transportation System (ITS) statewide program ($233,000). The proposed budget established an additional position ($115,000) to support legislative concepts addressing collection activities reducing delinquent tax, penalty and interest payments in the motor carrier weight-mile and fuels tax programs. Also included was a shift of two positions from the Nonlimited budget to Central Services and eleven positions from Central Services to Nonlimited to more accurately align budgets with program operations (-$1.3 million). The budget was adjusted for increases in inflation and personnel costs.

The legislature approved a Central Services budget totaling $126.9 million and 527.27 full-time equivalent positions. This is a reduction of $874,761 from the Governor's recommended budget, less than one percent. The legislature approved Other Funds expenditure limitation reductions of $1.9 million. due to shifts from Central Services to Nonlimited programs; $336,503 and 5.5 FTE relating to motor fuel tax audit and collections (HB 2082); and $101,336 to reflect reductions in the Department of Administrative Services (DAS), Employment Relations Board, and Secretary of State Audit assessments. The legislature approved the Governor's recommendation for additional Other Funds expenditure limitation of $3.6 million to cover the increased costs of Information Technology contracts but requested that DAS unschedule the expenditure limitation until an actual need is demonstrated. Also approved were policy packages relating to Information System Efficiencies, and an Intelligent Transportation System (ITS) statewide program with reductions to allow two months to recruit for the positions. A proposal to increase staff for anticipated passage of legislation relating to the Audit and Fuels Collection program was eliminated and the agency was directed to absorb the impact within existing position authority. Finally, the legislature approved several technical adjustments totaling $346,003 Other Funds, $111,740 Federal Funds, and .83 FTE that included reclassifications of Information Systems Specialists, adjustments to attorney general charges, and personal services reconciliation.

The Transportation Development Program is responsible for planning and policy development that focuses on Oregon's future transportation system. It is also responsible for research, transportation data, and special projects. Previous budgets combined Transportation Development with transportation safety, rail, aeronautics and public transit programs. While the divisions continue to be presented in the 1999-01 recommended budget as a single Transportation Development Program, it is the Department's intent to distinguish the modes separately in future budgets. Detailed below is a breakdown of the Transportation Development budget by each division.

The Transportation Safety Division advocates transportation safety through statewide education, enforcement, and engineering. Major efforts focus on occupant protection, intoxicated driving, speeding, youthful drivers, pedestrians, bicyclists, motorcyclists, and employers. Safety programs are operated through over 150 grants and contracts awarded annually to local agencies, non-profit groups, the private sector and service providers.

The 1998 federal highway bill (TEA-21) significantly increased safety program funding. Seventy percent of the Safety program funds are federal funds, the other thirty percent are state highway funds.

A number of factors influence the workload and performance of the Transportation Safety Division. These include traffic safety education and driver training, youthful driver restrictions, posted speeds, passenger safety, and driving under the influence of intoxicants. The Division is addressing these issues through four legislative concepts.

The recommended budget was $17.5 million, 63 percent higher than the 1997-99 estimated expenditures. The budget included $4 million TEA-21 federal funding for Traffic Safety incentive projects to support development of local agency transportation system plans.

The legislature approved a total expenditure limitation of $16.8 million and 18.04 FTE. The adopted budget is essentially the Governor's recommended budget with technical adjustments to accurately reflect the Transportation Safety Divisions true program costs. Budget notes addressing statewide cooperative policing and traffic signals were adopted to provide direction on the use of federal National Highway Traffic Safety Administration (NHTSA) "bonus" funds and criteria for establishing priorities for traffic signal funding.

The Public Transit Division develops and encourages the use of transit, ridesharing, walking, bicycling, telecommuting, and other alternatives to driving alone. The Division operates four programs: Community Transit, Inter-city Passenger Development, Transportation Demand Management, and Public Transportation Planning through financial and technical assistance to local transit providers.

The Division receives the majority of its funding from federal resources. Usually a small amount of General Fund is provided for the state's matching requirement for Federal Funds. In addition, $8.1 million in cigarette tax revenue will be passed directly to local governments to support senior and disabled transportation. This revenue transfer is not included in the expenditures reported above.

Major challenges for the Division include public transit services for the elderly and disabled citizens where stagnant funding is causing a decline in services. TEA-21 is expected to boost federal funds for local transit programs, however, many local systems lack matching funds to support the programs.

The Governor's recommended budget was $32.3 million. Twenty million dollars and two positions were proposed to fund the Oregon Transportation Network portion of the Governor's Livability Initiative for Senior and Disabled Transportation ($10 million General Fund and $10 million Federal TEA-21/Other Funds).

The legislature approved a total budget of $31.3 million and 13.59 FTE. That is a 3 percent reduction from the Governor's recommended budget primarily due to technical adjustments identified by the department. The adopted budget includes a total of $19 million and one position ($4 million General Fund, $5 million Other Funds, and $10 million Federal Funds) for Senior and Disabled Transit programs. In the event that Senate Bill 1284 does not become law, the legislature provided a $5 million reservation in the Emergency Fund to replace the $5 million Other Funds anticipated by its passage to insure funding for the Senior and Disabled Transit program; as well as duplicate position authority to insure continuity for the program. The legislature supported an increase of $6 million Federal Funds and one position for local transit programs from the increased TEA-21 flexible federal funds. The Governor's recommended budget is reduced by $1,250 General Fund for a four percent efficiency reduction, $186 Federal Funds for Attorney General charges, and $1,617 for personal services reconciliation.

The Aeronautics Division operates 32 state-owned Oregon airports and annually licenses or registers more than 400 other public and private airports, heliports, and landing areas. The Division also registers all pilots and non-military aircraft based in Oregon; oversees statewide aviation system planning, helps with community airport planning; and conducts aviation safety and public education programs. The Division's goals include developing aviation as an integral part of Oregon's transportation network; creating and implementing strategies to protect and improve Oregon's aviation system; encouraging aviation-related economic development; supporting aviation safety and education; and increasing commercial air service and general aviation in Oregon.

User fees are the main source of revenue for Aeronautics activities. Pilot registration fees are used solely for air search and rescue missions. State aviation fuel taxes, aircraft registrations, airport licensing fees, and leases and agreements on state-owned airports support other Aeronautics programs. Additional funds come from projects sponsored by the Federal Aviation Administration Airport Improvement Program. The agency is proposing, in separate legislation, a 1/2-cent per gallon jet fuel increase and a 5-cents per gallon increase on aviation gas. The estimated revenue impact is $1 million per year.

Statewide tax limitations restrict the ability of local governments to fund airports resulting in a backlog of maintenance and capital improvements. The aviation community supports an increase in fuel taxes for maintenance and preservation projects around the state. The legislature approved an increase in jet fuel and aviation gas taxes to fund development and improvements at non-state owned and public use airports in House Bill 2199.

The Governor's recommended budget reflected increases for deferred maintenance of the Aeronautics building ($150,000); ongoing projects relating to the safety of airports including pavement preservation, obstruction removal and financial aid to municipalities ($350,000); improvements to Siletz Bay Airport ($50,000) and Independence State Airport ($50,000); and equipment purchases for airport maintenance operations ($100,000.

The legislature approved the Governor's recommended budget at $4.2 million and 16.08 FTE.

The Rail Division regulates highway-railroad grade crossing safety and manages state and federal grade crossing improvement projects to prevent crashes and injuries at highway-railroad crossings. The Division also provides freight and passenger rail planning and improvement.

The program is operated with federal and state other funds revenue. State revenues include rail assessments (25%), highway fund (63%) and fines, rents and other sales income (12%). In the 1997-99 biennial budget, $500,000 from the General Fund was provided to fund a commuter rail project. The agency proposes an increase in the annual fee on gross operating revenues of railroads operating in Oregon (ORS 824.010) to allow state match for the Federal Railroad Administration railroad safety program. The Governor also proposes to increase the annual amount of revenue transferred from the Highway Fund to the Grade Crossing Protection Account (GCPA) from the registration of vehicles and the licensing of drivers from $300,000 to $600,000 for a total biennial program of $1.2 million.

The 1995-97 and 1997-99 expenditures reflect a portion of the rail program. In January 1996, the Rail program was moved from the Public Utilities Commission to the Oregon Department of Transportation. Most of the expenditures shown for 1995-97 and 1997-99 represent Local Rail Freight Assistance and High-Speed Rail. In 1999-01 the entire limitation for Rail has been aligned with this program. Competitive rail service and rail mergers are boosting Oregon's train traffic and urban growth has created demand for new crossings and more traffic at existing crossings.

The Governor's recommended budget reflected a technical adjustment of $4 million to include the budgets for federal and state rail crossing programs that were previously included in the construction and maintenance limitations. An increase of $41.7 million and one position was proposed to fund the Willamette Valley High Speed Rail portion of the Governor's Livability Initiative. Of the total $41.7 million, $14 million was proposed from the General Fund as state match for federal transportation funds. The Governor proposed $600,000 to improve safety at grade crossings that are not eligible for federal funding. The budget reflected the increase in TEA-21 funding of $3.4 million available for the Coos Bay Rail Bridge and rail rehabilitation projects on light density rail lines. Also included was $150,000 Other Funds and one position to support a legislative concept for state match for highway railroad grade crossing improvements.

The legislature approved a budget totaling $57.4 million and 20.06 FTE. The budget includes $35 million total funds and one position for the Willamette Valley Passenger Rail to continue current service levels and implement the next phase of projects to develop high-speed rail services in the Willamette Valley Corridor. The legislature replaced the $14 million General Fund requested by the Governor with $10 million Other Funds provided through the Transportation Reinvestment Account established in Senate Bill 1284. In the event that SB 1284 does not become law, the legislature provided a $10 million reservation in the Emergency Fund to insure funding for the Willamette Valley Passenger Rail program, as well as duplicate position authority to assure program continuity. The legislature also approved a $90,000 General Fund carryover from a 1997-99 Emergency Board action that directed a rail study in Washington County that was not completed in the 1997-99 biennium. In addition, a $100,000 reservation is included in the Emergency Fund to provide additional funding for the commuter rail study if Washington County is unable to raise local funds. The budget was reduced by $777,200 Federal Funds to reflect federal funds that will not be available for the Rail Freight Improvement project, and $7,844 Other Funds and .08 FTE to allow two months for recruiting.

The Department adheres to a formal, long-term process that produces, and periodically updates, a long-range strategy, reported in the Oregon Transportation Plan (OTP). The Division is responsible for the Department's planning activities. The planning process focuses on five areas of need: urban mobility, rural accessibility, freight transport productivity, safety, and finance. The goals, policies, and proposed actions are translated into specific projects and activities driving toward an integrated transportation system. Specific construction activities are described in the Department's four-year Statewide Transportation Improvement Program (STIP). Other sources of information and criteria for this process are the federal TEA-21, federal clean air, water, and energy acts, state benchmarks, and land use planning goals. Analytical services related to corridor planning, transportation system studies, public transit services, and traffic analyses support the planning process. Data collection areas include Oregon Transportation Management System, accident data, transportation inventory and mapping and transportation systems monitoring.

General planning activities are funded from state and federal highway funds and federal planning grant moneys. Transfers in from the construction program, for example, support highway planning, system studies and monitoring, and data gathering.

The program's workload focus is expanding to planning and policy matters relating to the linkage of transportation and land use, local government transportation system plan reviews, and corridor plan reviews. These work efforts affect the Division's ability to respond to the needs of local governments and provide the needed projects.

The Governor's recommended budget was $65.1 million (90 percent) higher than 1997-99 estimated expenditures. The majority of the recommended increases provided over $25 million ($20 Federal TEA-21, $5 OF) for a Transportation & Community and System Preservation Pilot grant that funds the Community Solutions Team ($15 million), and Scenic Byway Grants ($10 million). The recommended budget also provided four new Transportation Engineer 3 positions to analyze road approach permit applications within current service level funding through a decrease in professional services for contracted staff; and four new positions to replace temporary and contracted services for planning, analysis and

Geographic Information Systems offset by a corresponding decrease in professional services for contracted staff ($-24,516). The budget also reduced by $400,000 funds for discretional service contracts, for project delivery and transportation modeling ($350,000) and the Transportation Growth Management Grant program ($50,000) so that critical needs in other areas can be met.

The legislature approved a budget totaling $55.3 million and 124.57 FTE. The adopted budget is essentially the Governor's recommended budget with the following adjustments:

• Transfer of the Scenic Byways program to Highway, Special Programs ($124,334 Other Funds and one position and $10 million federal TEA-21 Funds and two positions);
• Transfer of the STIP coordinator from Transportation Development to Highway Planning and Research ($138,763 Other Funds and one position);
• An increase of $690,000 Other Funds from Transportation Safety to Transportation Development Planning services and supplies;
• A reduction of $102,363 Other Funds and .64 FTE to allow two months for recruiting proposed new positions for Analysis, Mapping and Data; and
• Technical reduction adjustments totaling $141,558 and one position to reflect adjustments in Attorney General charges, personal services reconciliation and the 4 percent efficiency reduction of General Fund from current service levels.

Five budget notes were adopted regarding access management, transportation growth management, passenger rail, community solutions teams, and the criteria for placement of medians.

The purpose of the Highway Program is to design, build, maintain and preserve quality highways, bridges and related system components. The Highway Program is derived from a comprehensive set of long-range multi-modal transportation system plans and policies developed and maintained under the direction of the Oregon Transportation Commission. The plans cover aviation, highways, mass transit, ports, freight and passenger rail, bike lanes and pedestrian needs. The Statewide Transportation Improvement Program (STIP) is a project funding and scheduling document developed through planning processes involving local and regional governments, transportation agencies and the interested public. It is updated every two years through a public hearing process. Organizationally, highway programs are administered and delivered through the five regional offices and the headquarters office of the Technical Support Division. The agency acquires most of its own right-of-way and completes most of the engineering design work but contracts with private companies for the actual construction of the projects.

Highway program activities are funded primarily from Federal ISTEA and TEA-21 funds and the State Highway Fund. An additional $250 million in revenue bonds are proposed to fund highway preservation, access acquisition projects, and local street network projects.

State and federal fuel tax revenues supporting highway programs have not kept pace with needs. The 1991 Oregon Highway Plan established a goal of having 90 percent of state highway pavements in "fair or better" condition by the year 2010. In the proposed 1999 Highway Plan, the Oregon Transportation Commission's goals calls for holding current "fair or better" condition and make progress as new funding becomes available. Presently, 77 percent of the state highway pavement is in fair or better condition. The average amount of paving completed each year will need to be increased from 470 miles to approximately 630 miles to achieve the 90 percent fair or better condition goal by 2010. To maintain bridges at the current conditions, approximately 78 bridges need to be replaced or rehabilitated per year over the next twenty years.

Previous budgets were built along lines of the organizational structure, which consolidated the highway program activities into Construction, Maintenance, Reimbursables, and Facilities Management categories. The 1999-01 budget is developed both organizationally and along program lines. The categories of the Highway Program budget are Maintenance, Preservation, Bridge, Safety, Operations, Modernization, Highway Planning, Special Programs, Emergency Relief and Local Government.

The legislature allowed a technical adjustment to the Highway Program areas for administrative and indirect costs by placing these costs within the Special Program areas as a temporary clearing account for those expenses. The adjustment allows the Department to gain experience during the biennium, charging costs to the new program area expenditure limitations.

The purpose of the maintenance program is to maintain, repair, and extend the service-life of the 7,600-mile state highway system by surface patching and bridge repair; upkeep of adjacent shoulder, drainage, landscape, and rest areas; snow removal; and sanding of roads. Maintenance may include replacing materials necessary to make highways safely usable (such as signs) but does not generally include reconstruction. Highway maintenance includes maintaining the buildings and equipment used by ODOT employees. Department personnel do most of the highway maintenance work, in contrast to construction work, which is all contracted out to private companies.

There is constant upward pressure on maintenance budgets as the highways age and the vehicle miles traveled on them increase. Roads have not been maintained in the condition called for in the Department's planning statements. The Department routinely surveys all roads, bridges, and connecting surfaces under its maintenance jurisdiction and grades their condition. Much of Oregon's highway system is growing old, resulting in larger more complex maintenance projects. Increased traffic volume is causing faster than expected deterioration and driving up costs around work sites. New environmental regulations and restrictions require costlier practices and materials. The Department proposes an increase in Winter Recreation Parking Fees from $10 to $15 to cover costs of snow removal in Sno-Parks.

The Governor's budget was $305.4 million (seven percent) higher than the 1997-99 estimated expenditures. The budget proposed increases for maintenance and repair of deteriorating highways caused by increased traffic volume and storm water damage. The budget included $5.3 million for the design and construction of regional storm water treatment facilities to comply with existing and new storm water management regulations and fish concerns; $1.5 million for traffic control and clean up at accident sites, $4.97 million to comply with provisions of ORS 276.227 requiring state agencies to ensure facilities are maintained and in good repair; $11 million for the repair of studded tire damage; and $750,000 for increased costs associated with snow removal in Sno-Parks. A reduction of $10.1 million was reflected in the Maintenance program budget shifting the revolving loan fund (Oregon Transportation Infrastructure Fund-OTIF) from the Maintenance program budget to the Nonlimited portion of the ODOT budget. In addition, the Maintenance program was decreased $7.7 million to fund other critical highway needs. Another $217,000 was transferred to Central Services for information systems costs.

The legislature approved an Other Funds expenditure limitation of $295.9 million and 1,350.62 FTE. The budget provides:

• a one-time expenditure of $4.972 million for deferred facility maintenance;
• $5.297 million and one position to provide engineering and design for required water quality facilities to address storm water management and fish requirements on transportation maintenance projects;
• eight positions to augment staff who process road approach permits (Funding for the eight positions comes from shifting resource in the base budget from services and supplies to personal services.); and
• $3 million, subject to House Bill 2082 becoming law.

Technical reduction adjustments to Attorney General charges of $12,103 and personal Services reconciliations of $111,010 and a reduction of 2 positions were also approved by the legislature. The legislature did not provide resources to address proposed legislation that repaired studded tire damage, $11 million, and provided for incident response, $1.5 million Other Funds. Budget notes were adopted addressing the agency's association with local governments in sharing resources to achieve cost savings and operational efficiencies and the agency's long-range facilities maintenance plan.

The Preservation Program rehabilitates existing facilities to extend their service life. The program strives to do resurfacing treatments at the most cost-effective time in the life cycle of a pavement, typically within eight to 12 years.

ODOT has been collecting pavement condition information since 1976. In 1976, Oregon's highways were in poor condition with only 51 percent rated fair or better. Conditions improved to a high of 83 percent rated fair or better in 1993. During the past five years, conditions have dropped again to the current level of 77 percent fair or better. Costs escalate as road conditions deteriorate into the "poor" category. Modernization projects that increase capacity compete for funding against preservation works. To maintain the state highways at the current level of 77 percent fair or better, ODOT must pave 550 miles of existing roadway per year. The Department's current funding has allowed it to achieve only 85 percent of this amount, or approximately 470 miles per year.

The recommended budget was $500 million, an increase of over $330 million from 1997-99 estimated expenditures. The budget included $26 million and ten positions in new federal TEA-21 funding and $200 million in revenue bonds. Also included was a transfer of $365,000 of information system costs to Central Services and another $1.1 million reduced funding for lower priority and non-essential items so that critical needs in other areas can be met. The budget supported the shifting of Grade Crossing Protection activities to the Rail program in Transportation Development in the amount of $252,000.

The legislature approved an Other Funds expenditure limitation of $315.5 million and 407.72 FTE. The adopted budget includes $30 million for additional preservation projects anticipated in House Bill 2082. The adopted budget does not include $200 million in revenue bonds and 30 associated positions that would have increased preservation work. Also reduced is $84,939 and .80 FTE to allow for two months recruitment and $8.5 million to offset the supplemental expenditure limitation increase for the 1997-99 biennium (Senate Bill 5545) for advancing projects to the 1997-99 biennium. The administration/indirect charge adjustment for Preservation is $21.7 million Other Funds. Other technical reduction adjustments include adjustments to Attorney General charges of $12,653 and personal services reconciliation of $31,585. A budget note addressing the potential for the agency to achieve cost savings through rule review and amendment was also adopted.

This program preserves more than 2,600 bridges, tunnels and culverts on the state highway system. There are two generations of bridges in Oregon; those built in the 1930's and those built in the 1960's. The program includes repairing structural deterioration, raising bridges to increase vertical clearance, major bridge painting, repairing and preventing streambed scouring near bridges, protecting bridges from earthquake damage, repairing and protecting bridges against corrosion damage, upgrading electrical and mechanical systems in movable bridges, and making safety improvements such as installing new railings and making bridges wider.

A large number of bridges are nearing the end of their expected life and need repair or replacement. Bridge projects are more costly and variable than highway work of comparable length. ODOT estimates that bridge needs are funded at $32 million per year less than needed to keep pace with normal wear and tear.

The Governor's proposed budget of $152.7 million was ninety five percent higher than 1997-99 estimated expenditures. Included in the Bridge program budget was $27.4 million and 10.53 new FTE in new federal TEA-21 funding for projects identified in the Statewide Transportation Improvement Program (STIP). The budget transferred $106,000 of information system costs to Central Services, reduced $316,000 of funding for lower priority and non-essential items so that critical needs in other areas could be met; and transferred $121,000 of grade crossing protection costs to the Rail Division in Transportation Development.

The legislature approved an Other Funds expenditure limitation of $141.7 million and 226.30 FTE. This is essentially the Governor's recommended budget with the following technical adjustment reductions:

• $89,184 and .84 FTE to allow for two months recruitment of increased positions;
• $23,264 for adjustments to Attorney General charges and personal services reconciliation; and
• $10,883,157 to reflect the administration/indirect charge arrangement.

Increases in population have created more traffic, in turn creating more congestion and consequently more accidents. To free up funds for safety improvements in critical areas, selected preservation projects are being scaled down to minimum design standards if there is not a history of accidents for that site.

The proposed budget of $73.3 million was $55.1 million higher than 1997-99 expenditures. The budget included $20 million from revenue bond proceeds to support the Governor's Livability Initiative to purchase access rights in strategic locations before commercial development occurs to prevent traffic congestion. Another $10.2 million in new federal funding (TEA-21) and 3.95 FTE was proposed to implement STIP projects throughout the state. The budget transferred $106,000 of information systems costs to Central Services; reduced funding of lower priority and non-essential items by $159,000 so that critical needs in other areas could be met; and transferred $36,000 of grade crossing protection costs to the Rail Division in Transportation Development.

The legislature approved an Other Funds expenditure limitation of $76.5 million and 96.86 FTE positions. That is a 4 percent reduction from the Governor's recommended budget. Through HB 2197 and HB 5022, the legislature approved the $20 million revenue bonds and expenditure limitation to fund access rights in strategic locations. In addition, the legislature approved $7 million and added 5.25 FTE for additional highway safety projects anticipated in House Bill 2082. A reduction of $33,973 and .32 FTE to allow two months to recruit for positions associated with the increase in federal TEA-21 funding was approved. Also included are the following technical adjustment reductions: $9,814 for Attorney General charges and personal services reconciliation, and $3.8 million to reflect the administration/indirect charge arrangement.

Highway Operations program includes planning, development and maintenance of improvements to relieve or prevent traffic congestion such as intelligent transportation systems, transportation system management including ramp metering and incident management, demand management, including ride share, van pool, and park and ride programs. Operational projects are one way to maximize the efficiency of the state highway system using available funds.

Increasing populations and limited funding places more reliance on system efficiency tools to increase safety and manage congestion. Community land use patterns and access between properties and on the transportation systems within communities has the greatest impact on transportation efficiency.

The recommended budget was $19.8 million, 56 percent below the 1997-99 estimated expenditures. The proposed budget included $20.5 million and 7.9 FTE to implement projects statewide as identified in the STIP and funded with new federal TEA-21 money. The budget was reduced $221,000 to transfer the Intelligent Transportation Systems work from Operations to Central Services; $20,000 to transfer information systems costs to Central Services, $23,000 to transfer grade crossing protection costs to the Rail Division in Transportation Development; and $61,000 to fund critical needs in other areas.

The legislature approved an Other Funds expenditure limitation of $17.5 million and 32.56 FTE for Highway Operations. This is essentially the Governor's recommended budget with technical adjustments reducing $148,899 and 1.52 FTE to allow two months for recruiting of new positions associated with increased Federal TEA-21 funding and $2.2 million to reflect the administration/indirect charge adjustment for Operations, and adding $22,059 for reclassification to Information Systems Specialist positions.

The Modernization program designs and builds improvements to highways that add capacity to accommodate current or projected traffic growth. This includes adding traffic lanes for passing and climbing, turning, accelerating and decelerating; building new road alignments or facilities including bypasses; reconstructing roads with major alignment improvements or major widening and widening bridges to add travel lanes.

ODOT is shifting its emphasis from modernization to preservation and maintenance. Several modernization projects programmed in the STIP after 2001 have been placed on hold. Congress earmarked funding for specific modernization projects in TEA-21 for which a 20 percent state and local match is required. Oregon will average about $10 million per year more in federal funding for earmarked state highway modernization projects under TEA-21. The payout of the associated expenditures will be dependent on the final project schedules when they are developed.

The recommended budget was $217.5 million (27 percent) below the 1997-99 estimated expenditures. The proposed budget included $17 million and 6.58 FTE to implement projects identified in the STIP with new federal TEA-21 funding. The budget was reduced to $152,000 to transfer information systems costs to Central Services and $169,000 to transfer grade crossing protection projects to the Rail Division in Transportation Development; and reduced project selection and delivery and right-of-way acquisition expenditures by $30.4 million to address other critical needs.

The legislature approved an Other Funds expenditure limitation of $350.6 million total budget and 377.51 FTE for Modernization. This is 63 percent over the Governor's recommended budget, primarily due to approval of $148 million and 47.25 FTE in anticipation of House Bill 2082 becoming law during the 1999-2001 biennium. The legislature requested that the Department of Administrative Services unschedule $100 million pending refinement of the bond sale schedule and subsequent estimates of contract work expected to be completed during the 1999-2001 biennium. A budget note requiring the Department to submit a report to the Emergency Board listing projects to be funded by bonding identified in House Bill 2082 was also adopted. Technical reduction adjustments included $55,209 and .52 FTE to allow for a two-month recruiting period for new positions associated with planned modernization projects, $34,636 for Attorney General charges and personal services reconciliation adjustments; and $14.8 million for the administration/indirect charge adjustment.

The major Highway Planning functions performed by Highway regional office include Corridor Plan development, Community Transportation System Plan review, growth management studies, land development review, and assistance to local governments on periodic comprehensive plan reviews.

ODOT provides funds each year for local government planning activities including Metropolitan Planning Organization plans (MPO), local Transportation System Plans (TSP) and transportation growth management tools. Of 31 defined corridors, 26 plans are in development of which eight are nearing completion. Population growth is outpacing ODOT planner's abilities to fully participate in both state and local planning processes.

The recommended budget was $19.1 million (39 percent) lower than the 1997-99 estimated expenditures. The budget was reduced by $18,000 to transfer information system costs to Central Services, and reduced planning related expenditures by $2 million to address critical needs in other areas.

The legislature approved an Other Funds expenditure limitation of $17.3 million and 42.66 FTE. This is a 33 percent reduction to the Governor's recommended budget. Technical reduction adjustments included $16,985 and 0.16 FTE to allow for a two month recruiting period for the two positions associated with planning activities; $3,838 for Attorney General charges and personal service reconciliation adjustments; and $1.9 million for the administration/indirect charge adjustment. An increase of $138,763 was approved to transfer a full-time Statewide Transportation Improvement Plan (STIP) coordinator position from transportation Development to the Highway Program.

A number of smaller special programs present unique challenges to Oregon's Highway Program. These programs include the Oregon Plan for Salmon and Watersheds, Environmental Services, Scenic Byways, Bicycle and Pedestrian access, Winter Recreation Parking, All Terrain Vehicles, Snowmobile/Trail Grooming, Reimbursables, Civil Rights, Oregon Transportation Infrastructure Fund, Surplus Property, Right-of-way for Other Agencies, and the Immediate Opportunity Fund.

Most of these programs are funded from state and federal highway resources. Revenues for Winter Recreation Parking comes from the sale of permits, and for All Terrain Vehicles, and Snowmobile/Trail Grooming it comes from fuel taxes, titles, registration and permits.

The Governor's Recommended Budget was $71.2 million (14 percent) above the 1997-99 estimated expenditures. The budget funded an additional $750,000 for winter maintenance of Sno-parks through an increase in Sno-Park permits and the fines for violations. The balance of the budget was current service level with the following adjustments: $38,000 of information system costs were transferred to Central Services and $112,456 of lower priority and non-essential expenditures were reduced by $112,000 to address critical needs in other areas.

The legislature approved an Other Funds expenditure limitation of $137.2 million and 89.65 FTE. The major share of the increase to this budget is the shift of $69.5 million in administration/indirect charges from other Highway Program areas to the Special Program budget. This adjustment is intended to be a temporary clearing account for these costs while the Department learns to accurately account for these expenses in the new program area expenditure limitations. The legislature also approved a technical adjustment transferring Scenic Byways from Transportation Development to Special Programs. The total amount is $10 million and 2.00 FTE positions. Technical reduction adjustments included $16,988 and 0.16 FTE to allow for a two-month recruiting period for two new positions assigned to special projects work and $10,002 in Attorney General charges and personal service reconciliation. The legislature denied a request for a new full-time position to staff the civil rights office indicating that the Department could rotate an existing vacant position into the office. The All-Terrain Vehicle program was transferred to the State Parks and Recreation Department through SB 1216. The budget includes a $3.5 million reduction to reflect this transfer.

The Highway Emergency Relief program repairs or builds highways, roads and trails that suffer serious damage from natural disasters such as earthquakes and floods. The Federal Highway Administration Emergency Relief program supplements state resources in case of damage to the Federal Aid Highway System. Application for these federal funds requires a declaration of emergency by the governor and damage must generally exceed $1 million from a single event.

Limited resources for preventative maintenance that would minimize damage from natural disasters restricts the amount of work that can be done to protect highways or bridges against a major event.

The recommended budget was proposed, for the most part, at the current service level with a transfer of $4,000 of information system costs to Central Services and a reduction of $12,000 in non-essential expenditures to address critical needs in other areas. The budget proposed to complete projects from prior disasters. It did not provide a contingency for a significant event in the 1999-01 biennium. If a significant event occurred, ODOT would shift resources from other programs for a state match for federal funds if the emergency event qualifies for the federal emergency relieve funds.

The legislature approved an Other Funds expenditure limitation of $5.5 million and 9.71 FTE. This is essentially the Governor's recommended budget with technical adjustments. Technical reduction adjustments included $802 for Personal Services Reconciliations and $404,499 for the administration/indirect charge adjustment.

The purpose of the Local Government Program is to work in a cooperative venture with cities, counties and regional planning agencies to insure priority transportation needs are met. ODOT provides federal revenues and reimbursements to local governments for surface transportation, local bridges, congestion mitigation, transportation enhancements and planning. The legislature mandated $1 million in state gas tax revenues be distributed among cities under 5,000 population. ODOT shares a portion of its federal funds with counties and cities outside the Portland metropolitan area whose population is greater than 5,000. The Portland metropolitan area gets a specific amount through federal appropriations. In the Local Government Fund Exchange program local governments can exchange $1 of their federal fund allocation for 94 cents in state highway funds. Exchanging federal funds for state funds helps local agencies avoid complicated federal contracting regulations and ensures that all federal funds are expended within required timelines.

Local governments face the same critical transportation issues as the state. Pressure on property taxes and local general funds and no increases in state funding have left local communities with fewer resources for transportation. The demand on state funds to match increases in federal revenue and meet state requirements may cause the Fund Exchange program to be re-evaluated.

The Governor's recommended budget was $217.2 million (28 percent) higher than the 1997-99 estimated expenditures. Included in the proposed budget was $30 million in revenue bond proceeds to support the Governor's Livability Initiative by increasing local and secondary street capacity to handle increased traffic. The budget proposed $54.8 million to implement projects identified in the STIP with new federal TEA-21 funding and $918,000 to fund eight new positions to provide technical support to local governments for Federal Aid projects through design, bid opening and construction. Funding of these new positions would be 100% through Local Government matching resources. The budget transferred $254,000 information systems costs to Central Services and reduced the amount of voluntary state participation in local roadway improvements that interface with state highway networks by $15.2 million.

The legislature approved an Other Funds expenditure limitation of $203.3 million and 107.67 FTE. The adopted budget approves the Governor's recommendations with the following technical adjustments:

• A reduction of $178,372 to allow for a two-month recruiting period for the eight new positions assigned to project work associated with the increase in TEA-21 funding;
• A reduction of $15 million services and supplies and a shift to Special Payments to continue voluntary state participation in local road improvements that interface with state highway networks;
• A reduction of $15,490 for Attorney General charges and personal services reconciliation adjustments; and
• A reduction of $13.7 million for the administration/indirect charge adjustment.

Driver and Motor Vehicles (DMV) licenses and registers over 6.5 million drivers and motor vehicles and enforces motor vehicle-related laws. There are 67 DMV offices statewide serving more than 13,000 walk-in customers each day. In addition, DMV personnel process more than 16 million transactions and respond to over 1.2 million phone inquiries each year. Law enforcement agencies access DMV computer information files more than 31,000 times each day, and insurance companies, banks, law firms, and others access over 11,000 DMV records every day.

DMV is supported from fees levied for the various services that it provides. Passenger vehicle license fees are the largest single revenue collected, followed by vehicle title transfers and truck and trailer licensing fees. Together these revenues represent 72 percent of total estimated 1997-99 collections. Revenue in excess of amounts needed to cover DMV operating costs are transferred to the State Highway Fund. These transfers have dropped from approximately 38 percent of revenues to less than one half of one percent in fiscal year 1997-98.

Currently, DMV is managing workload growth and improving service levels by increasing its productivity within existing resources. As Oregon's economy and population continue to grow, there are more drivers, more vehicles and more vehicle miles traveled. During the past three years the number of transactions handled by DMV has grown about 3% per year and is projected to grow at about 3.5% per year in the 1999-2001 biennium. Revenue from driver transactions does not currently cover the costs of all driver-related programs within DMV while revenue from vehicle transactions does cover the costs of DMV's vehicle programs. The net revenues transferred to the Highway Fund have decreased significantly because DMV expenditures increased faster than service fees revenues.

The 1999-01 Governor's budget was reduced $23.1 million from the 1997-99 biennial estimated expenditures. This included a decrease of $8.4 million in one time costs for personnel services, supplies and services, equipment and temporary staffing; $17.3 million and 17 positions in transfers to Information Systems; $10.4 million in retired debt service, and a $1.4 million reduction for information technology contract service reductions. These reductions were offset by increases in salary, service and supply costs of $9.6 million and $939,000 to transfer 45 hearings officer and support positions from DMV to the Employment Department for a statewide central hearings panel. The Governor's recommended budget supported several legislative concepts that either increased revenues or facilitated collection including proposed changes to ATV/Snowmobile title and registration requirements, renewal of driver licenses every eight years instead of every four years and requiring all plate replacement fees be equitable. These proposals reduced DMV's budget by $362,000 and 4.69 FTE and increase revenue by $2.5 million.

The legislature approved a budget totaling $125.1 million and 868.38 FTE. The adopted budget is increased slightly from the Governor's recommended budget. This increase reflects the addition of $219,417 and 2.24 FTE for the All-Terrain Vehicle and Snowmobile title and registration program. Legislation that would have exempted the All-Terrain Vehicles and Snowmobiles from title and registration requirements did not pass out of the substantive committee. The All-Terrain Vehicle program was transferred to the State Parks and Recreation Department in SB 1216. The budget includes a reduction of $139,924 Other Funds and .95 FTE to reflect this transfer. The adopted budget also reflects the transfer of 46 FTE to the Employment Department for the statewide central hearings panel created in House Bill 2525. An additional $431,354 Other Funds expenditure limitation was approved in anticipation of the increase in registration fees provided for in House Bill 2082. Technical adjustments include reductions of $25,469 for Attorney General charges and $10,088 for personal services reconciliation. Budget notes addressing office locations, privatization and driver licensing identification systems were adopted.

The Motor Carrier Services Division (MCSB) is responsible for administering and enforcing laws related to motor carrier regulation including regulations related to commercial vehicle registration, safety, and weight-mile tax regulation. MCSB processes oversize permits and size and weight enforcement functions that previously were part of the DMV's responsibility. MCSB also administers rules and regulations governing highway signage and operates commercial vehicle weights and measures programs at ports-of-entry and at 74 permanent scales.

Revenues from weight mile taxes, commercial vehicle registrations, and permits provide the resources to support this division. All revenue in excess of the amount required for carrying out the regulatory and safety programs is transferred to the State Highway Fund.

State and federal entities have invested in a number of sophisticated electronic systems to facilitate freight movement. However, before the state and the industry can realize the optimum value of these systems, more carriers will need to understand the operational efficiencies afforded them and invest in the technology.

There have been efforts in the past to revise or replace the weight mile tax with diesel fuel or some other form of tax. These efforts likely will continue.

The recommended budget was eight percent less than the 1997-99 estimated expenditures. The budget reflected an adjustment of $2 million for phased-out costs of Pen Based Technology, Commercial Vision Information Systems, Scale House Modifications and redistribution of fleet acquisition. In addition, $2.4 million was reduced with a shift of 4.0 FTE to other ODOT expenditure limitations that more accurately reflected the program expenses and a reduction of $1.2 million and 13.0 FTE at selected Ports of Entry. A reduction of $59,000 and one administrative position was proposed to offset costs of a two percent tax discount for trucks equipped with transponders for use in the Green Light mainline pre-clearance program. The budget was adjusted for increases in personnel costs and inflation.

The legislature approved Other and Federal Funds expenditure limitations totaling $37.8 million and 280.5 FTE. The adopted budget reflects a decrease of $2.4 million and 25.50 FTE positions, anticipating that HB 2082 will become law during the 1999-2001 biennium. The reduction reflects the first-phase reductions associated with implementation of a diesel fuel tax to replace the current weight-mile tax for trucks. Technical adjustments included a reduction of $18,118 for Attorney General charges and personal services reconciliation.

The Light Rail program includes the state's share of funding for the Westside Light Rail Project in the Portland metropolitan area. Westside Light Rail began operations in September 1998.

Other Funds are derived from the sale of bonds, which will be retired using allocations of lottery funds.

The Governor's Recommended Budget continued Light Rail Debt Service Payments at current service levels.

The legislature approved the Governor's recommended budget.

The Board of Maritime Pilots is located within the Department of Transportation but is independent of it and the Oregon Transportation Commission. The Board is charged with the regulation, including examining, licensing, and investigating complaints, of navigation pilots on Oregon's four pilotage areas. There are currently 69 licensed pilots under the regulatory authority of the Board.

The Board is a self-supporting entity funded by license fees. Revenues for 1999-01 are estimated to be $207,000 based upon the payment of the $1,500 annual license fee by each of the 69 licensed pilots.

Workload on licensing activities is expected to remain level throughout 1999-01.

The Governor's Recommended Budget continued the Board of Maritime Pilots at the current service level with adjustments for inflation. The proposed budget inadvertently combined the Nonlimited program with the expenditure limitation. A technical adjustment will be needed to continue the $13,416 as a Nonlimited Program. The Nonlimited account was established in 1981 to alleviate a cumbersome accounting process requiring that the Board obtain Emergency Board approval for increases in limitation following every rate hearing.

The legislature adopted the Governor's recommended budget with an adjustment reducing Attorney General charges by $617.

Nonlimited programs record revenues and expenses for transactions that are generally internal to the agency and serve operating programs that are subject to expenditure limitation. They are nonlimited because the level of activity is generally unpredictable. Nonlimited sections of the budget are Debt Service, Support Services and Operations. Services within the budget include testing and inspecting roadway materials; purchasing equipment and fleet vehicles; repairing equipment in shops located in Salem, Bend, and LaGrande; selling and distributing fuel; operating storerooms; and designing and manufacturing signs and traffic signals.

The Governor's budget for Nonlimited debt service and loan fund program was recommended at $25.2 million reflecting debt service payments on highway construction bonds $2.5 million, COP and Road Grader $4.2 million and $18.5 million for the principal and interest on revenue bonds. The Nonlimited Support Services program reflected a realignment of 9.0 FTE and $1.2 million from Central Services. The Reprographics and Supply programs functions similar to other Nonlimited Support Service programs with costs and revenues driven by demand from its customers. The recommended budget also included a shift of $10 million for the Oregon Transportation Infrastructure Fund loaned out to local governments from the Highway program and a decrease of $6.5 million and 40.58 FTE shifting the Central Materials Laboratory to the Highway Program limitation.

The adopted budget includes $69.7 million and 180.17 FTE for the Nonlimited Program. Debt Service of $30 million Other Funds in the Governor's budget was reduced to $10.4 million reflecting approval of $50 million in revenue bonds for the purchase of access rights-of-way and local area network projects, and in anticipation of a potential bond sale authorized in HB 2082, should it become law during the 1999-2001 biennium. Technical adjustments reducing the Attorney General charges by $1,150 and personal services reconciliation by $149,653 were also made. A reduction to Fleet Management of $16.6 million was approved to more closely match anticipated fleet activity. Three management positions and $506,000 was transferred from Nonlimited to the Central Services Program area to more accurately reflect the nature of work performed by these management personnel in serving the entire department in the acquisition of supplies.

The Capital Improvements and Capital Construction program provides for new construction, remodeling or improvements to facilities under the oversight of ODOT. Highway and airport construction projects are included in the Capital Improvement and Capital Construction program units.

Construction activities are funded primarily through federal revenue sources and transfers of state highway funds. Other funding sources include COPs, interest earnings, donations, and grants.

The Governor's budget included capital construction projects for Condon State Airport, Wasco State Airport, Ashland, Klamath Falls & Woodburn Port of Entries, Farewell Bend Port of Entry and $1.9 million in highway facilities.

The legislature approved the Governor's recommended budget.