You both hit on it. Between federal funding issues, cost over runs (it has doubled) and ODOT, it is amazing that any projects actually get completed. ODOT hinted that the oft repeated 2012 date (itself a delay, see below) may be pushed back to federal funding issues.

The I-40 Crosstown, estimated at $360 million, is expected to be complete in 2008 with construction of the new boulevard taking an additional two years. The timetable could be affected by availability of funding.
S U R P R I S E !