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So far, Portland population
So far, Portland population is not shrinking, at least not officially. The official census 2000 results show Portland still growing, at last count 529,121 people. Census population ESTIMATES show an increase to 538,800 by 2003, falling to 532,888 in 2004 and rising again to 533,427 in 2005. Those are estimates, however, and aren't accurate nor necessarily representative.
As for spending on mass transit, the city has allocated $168 million to the transportation office this year. The majority of that funding is used to maintain roads, streetlights, curbs, and signals. Road repair and replacement is dependent on the weight (ground pressure) and frequency of the vehicles using them. A bus carries 50 people during peak hours, and typically 5-20 people in non-peak hours. Every dollar we spend on mass transit infrastructure is roughly equivalent to saving $5-$20. (This is a gross oversimplication, but the principle remains true)
The transportation office already is underfunded and cannot meet all of its obligations with the budget it has - should we not fund street repair? How much good are parks, schools and jails going to be if no one can get to them?
Remember, most of the funding for mass transit comes from state and federal funds specifically earmarked for that purpose. If you want that money to go to these other projects that "never seem to get funded", then get activist at the state and federal level and push for changes.