A8
State
Blue Mountain Eagle
Wednesday, March 8, 2017
Audit: ODOT contracts still subject to gamesmanship
Agency has long recognized
problem, but done little to fix it
By Nick Budnick
Capital Bureau
A decade ago, state in-
vestigators found that Ore-
gon Department of Trans-
portation contracting had
become a cynical sport for
one highway construction
company — the executives
there submitting low bids,
then wagering over ways
they could subsequently in-
crease project costs to boost
profits.
While that case is old
history, a new state audit
of ODOT suggests that its
contracting system remains
vulnerable despite a decade
of warnings from the de-
partment’s own employees
of contractor gamesmanship
and fraud.
The audit released Mon-
day by Secretary of State
Dennis Richardson found
that ODOT fails to employ
methods to track “unbal-
anced” bids, meaning those
with unrealistic line-item
amounts meant to boost
profits.
More than 90 percent of
Capital Bureau file photo
An audit released Monday
by the Secretary of State’s
Office says Department of
Transportation contractors
often lowball bids to win
contracts, then inflate
costs through contract
change orders.
all ODOT-run projects com-
pleted from 2011 to 2015 in-
cluded unbalanced bids, and
a quarter of those later fea-
tured cost overruns, auditors
found.
Significantly, the report
echoes the criticisms of a re-
cent $1 million consultant’s
review of ODOT meant to
address concerns by the Leg-
islature.
The consultant’s study
noted ODOT’s frequent
contract overruns and said
that compared to other large
agencies that contract out
construction work, ODOT’s
contracting was “worst in
class.”
The new audit comes
as state lawmakers weigh
whether to approve new fees
and taxes on Oregonians,
such as a gas tax hike, which
will be spent on hefty road
and bridge contracts meant
to address a backlog of un-
met needs.
The Secretary of State
auditors’ critique of ODOT
bidder gamesmanship did
not come as news to Direc-
tor Matt Garrett, who has
run the department for more
than a decade.
In fact, the new audit’s
findings are strikingly sim-
ilar to those of a 2008 re-
port on unbalanced bidding
issued by ODOT’s inter-
nal auditors — suggest-
ing that the same issues
remain.
In 2008, the ODOT au-
ditors said new software to
track unbalanced bidding
could save millions of dol-
lars for a relatively minor
upfront cost.
ODOT’s response to
the latest audit — which
makes a similar recommen-
dation about software —
closely echoes the depart-
ment’s response a decade
ago.
It questions the audit’s
methodology, but agrees
with the recommendation
to closely track line items
in the bid through to project
completion.
Nick Budnick is a report-
er for the Pamplin Media
Group’s Portland Tribune.
Oregon Republicans are optimistic about party’s prospects
By Claire Withycombe
Capital Bureau
Apparently buoyed by the
victory of President Donald J.
Trump and Oregon Secretary
of State Dennis Richardson,
Oregon Republicans conven-
ing in Salem Friday and Sat-
urday were optimistic about
opportunities for the GOP in
the Beaver State.
Richardson’s election se-
cured the party’s first state-
wide elected office since
2002, resulting in something
of a victory lap vibe at the an-
nual Dorchester Conference.
While Republicans lead a
solid majority of state legis-
latures, Oregon is one of 12
states where Democrats are
in charge in both chambers,
compared to 32 states where
Republicans have control of
both chambers.
Senate Minority Leader
Ted Ferrioli, R-John Day,
noted in remarks Friday night
that one Oregon Senate seat
flipped in the last election
from Democrat to Republi-
can.
Sen. Alan DeBoer, R-Ash-
land, won a special election
to finish the last two years of
the term of the late Sen. Alan
Bates, D-Medford, who died
in August. DeBoer won the
Capital Bureau/Claire Withycombe
U.S. Rep. Greg Walden poses for a photo at the Dorchester Conference Saturday with
Promise King, executive director of the Oregon League of Minority Voters. Republicans
attending the annual political conference were optimistic about the party’s chances to
expand its fortunes in the Beaver State.
race by just under 400 votes,
according to the Oregon Sec-
retary of State’s Office.
Salem physician Bud
Pierce, the 2016 Republican
gubernatorial candidate who
lost to Democratic Gov. Kate
Brown, said he was feeling
optimistic about the future of
the Republican party in Ore-
gon.
Pierce, who is on the
board of directors of Ore-
gon’s League of Minority
Voters, moderated a panel
of speakers, that included
Promise King, executive di-
rector of the league, about
including people of color in
state politics and campaigns.
Asked by a reporter wheth-
er he sees a conflict between
his party’s aim to include mi-
nority groups and the rhetoric
of President Trump — who
has been prone to making
gross generalizations about
minority groups, including
immigrants from Mexico —
Pierce said he was waiting to
see what action the president
takes.
“Let’s see if he can give
a legal status to 11 million
people,” Pierce said. Pressed
about the likelihood of such
a reversal by the president,
Pierce said: “Well see, you
know, it was unlikely that
Nixon would go to China.”
Pierce points to the state’s
lack of affordable housing as
one example of what he calls
the “failures” of the Dem-
ocrats’ policies in Oregon
that he believes could attract
more voters to the right.
The Legislature is de-
bating proposals to ban rent
hikes and no-cause evictions,
and many Republicans at the
conference advocated instead
for loosening up the state’s
land use restrictions to en-
courage more development
and housing supply.
Pierce said he believes
Republicans may benefit
from the growing number of
voters in the state who are
not affiliated with any polit-
ical party.
Many new voters have
been registered recently
through the state’s new auto-
matic voter registration law,
which registers voters as un-
affiliated unless they desig-
nates a political party.
“Can we become the nat-
ural place for the unaffiliated
votes?” Pierce asked. “May-
be they won’t call themselves
Republicans, but maybe
they’ll do it.”
Lawmakers back away from controversial farm property tax bill
Legislation would have effectively raised taxes on farmland, machinery
By Mateusz Perkowski
Capital Bureau
Intense opposition by Or-
egon’s farmers, ranchers and
forestland owners has appar-
ently convinced lawmakers
to back away from altering
key property tax provisions
affecting agriculture and for-
estry.
Machinery used for ag-
riculture and forestry is ex-
empt from property tax as-
sessments while property
dedicated to producing crops,
livestock and timber is less
heavily taxed than other real
estate.
Under the original lan-
guage of House Bill 2859,
the property tax exemption
for equipment and the farm
use assessment for land
would expire in 2024 unless
renewed by lawmakers.
I found Dad’s remote in the fridge again.
…I’m beginning to get worried.
IT’S NOT LIKE HIM.
The proposal evoked
alarm in Oregon’s natural
resource community, which
turned out in full force at a
March 1 hearing to argue that
creating a “sunset” for these
provisions would financially
destabilize farming, ranching
and forestry.
By the end of the hearing,
the overwhelmingly negative
testimony against HB 2859
seemed to have the desired
effect on members of the
House Revenue Committee.
“I’m pretty convinced
putting a sunset on these
things that are very long-
term assets doesn’t make any
sense,” said Rep. Phil Barn-
hart, D-Eugene, the commit-
tee’s chair.
At the beginning of the
hearing, Barnhart said the bill
was drafted in response to an
audit from Oregon’s Secre-
tary of State’s Office, which
called for periodic review of
existing property tax exemp-
tions and tax credits.
In light of the objections
to HB 2859, though, Barnhart
said he thought the sunset
provisions related to natural
resources should be eliminat-
ed from the bill.
The suggestion drew no
objections from other com-
mittee members, so Barnhart
said they would only consid-
er the remaining provisions
of HB 2859 related to eco-
nomic development and oth-
er issues.
“I think you should con-
sider all of what I just said
means that you win,” Barn-
hart told the audience, to en-
thusiastic applause.
Farmers, ranchers and for-
estland owners at the hear-
ing emphasized that natural
resource industries were al-
ready highly uncertain due
to the weather and volatile
markets.
Landowners said they
shouldn’t also have to con-
tend with the possibility their
property taxes may rise dra-
matically every six years,
which is the period of sunset
review established under HB
2859.
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who like to pick up their own people. The golf course has
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loans cars to pilots for coffee can donations so I’m toast
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can fit into their schedule, are going on their route or are
leaving town. I took a man to Fossil for $400 but I didn’t like
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OREGON DEPARTMENT OF HUMAN SERVICES PROGRAM
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05366
“In the orchard business,
we need to plan long term,”
said Bruce Chapin, a hazel-
nut producer near Keizer.
Marsha Carr, a forestland
owner near Monroe, said her
annual property taxes would
rise from about $1,000 to
more than $25,000 under HB
2859.
Carr said her family har-
vests timber in small patches
of five to seven acres, which
preserves habitat for wildlife
and songbirds.
“That would have to
change to pay the taxes,” she
said. “We would have to cut
larger areas.”
Farmers rely on special-
ized equipment but they
often operate it for only a
month or less per year, un-
like other industries where
machinery creates revenues
year-round, said Roger Bey-
er, a lobbyist for the Western
Equipment Dealers Associa-
tion and several crop organi-
zations.
If property taxes were
imposed on farm machin-
ery, it would destroy demand
for machinery, he said. “It
would simply dry up and go
away.”
Landowners also testified
that property would unfairly
be taxed at the maximum as-
sessed value if the farm use
assessment was allowed to
expire.
Oregon’s land use system
would still prevent landown-
ers in farm zones from build-
ing homes or other high-val-
ue structures on their
property, even if it was taxed
as if such construction was
possible, opponents said.
Mark Simmons, a ranch-
er from Elgin, said the farm
use assessment is part of a
“grand bargain” between
land use restrictions and
property taxes.
While it’s currently tough
to raise cattle on Simmons’
property, it could be a “gold
mine” for development, he
said.
“It’s mostly rocks and
cheatgrass,” he said. “Some
of those rocky hills with
cheat grass have a view.”
State Rep. Greg Barreto,
R-Cove, referencing relative-
ly recent political shifts in
Michigan and Wisconsin, told
conference attendees he be-
lieves Oregon could become
a red state.
“I think there’s a lot of
hope in Oregon,” Barreto
said. “But a lot of these other
states, they didn’t just change
from blue to red accidentally,
there was some pain that went
on.”
Barreto referred to eco-
nomic woes in those states
and continued:
“If we’re not careful in
Oregon, there’s going to be
some pain in Oregon, when
we talk about PERS, when we
talk about Medicaid, when we
talk about bills that we can’t
afford to pay right now, we
will feel some pain.”
U.S. Rep Greg Walden,
R-Hood River, Ore., called on
Republicans to stay involved.
“You need to fight back,”
Walden said, when asked by
an attendee if conservative
groups were organizing to
attend town halls. “If you be-
lieve in why we run, if you
believe in the policies we’re
trying to implement, you have
to help us fight back, you have
to be there shoulder-to-shoul-
der with us.”
L EGISLATIVE
B RIEFCASE
Bill would use
phone fund to
pay for rural
broadband
State Rep. E. Werner
Reschke, R-Klamath Falls,
says he lives “at the end of
the internet.”
Reschke’s district is lo-
cated in south central Or-
egon, which has compara-
tively low use rates when
it comes to high-speed in-
ternet, according to a 2014
survey conducted by the
state’s public utility com-
mission.
A bill before the Oregon
Legislature would allow a
fund currently dedicated
to ensuring access to land-
line phone service in un-
derserved areas to be used
to provide access to high-
speed internet.
The definition of broad-
band changes as technology
accelerates. These days the
Federal Communications
Commission’s
standard
for minimum download
speeds is 25 megabits per
second.
In 2014, Oregon’s Pub-
lic Utility Commission
conducted a study on the
issue. While 85 percent of
people in Portland used
broadband, only 67 percent
did in eastern Oregon and
69 percent in south central
Oregon.
Businesses evaluate in-
ternet speeds when choos-
ing locations; some small
communities in Eastern
Oregon want to encourage
economic development by
luring young people work-
ing in the tech sector else-
where to work remotely
and enjoy the perks of ac-
cess to outdoor recreation.
The city of John Day
even has an internet task
force, which is studying
ways to bring faster and
more affordable internet to
the area. Grant County has
an average download speed
of 10 megabits per second.