What’s inside $8 Billion transportation tax plan

by Mark Hester
Associated Oregon Industries

After almost a year of deliberations that included a statewide tour for public meetings and dozens of committee and subcommittee meetings, the Joint Committee on Transportation Preservation and Modernization this week unveiled a draft transportation plan.

There is no question that Oregon needs to invest in its transportation infrastructure, to preserve, modernize and overall improve our transportation systems. These systems directly impact Oregon’s economic vitality and influence Oregonian’s quality of life. Over the last year, Legislators have heard from the public and received input from transportation experts on the reasons the current funding streams are failing to preserve our transportation infrastructure investments and move people through congested transportation systems.

To address those demonstrated needs, the Legislature rolled out a plan that proposes more than $8 billion in taxes and fees to be collected over 10 years and a list of priorities that spans the state, targeting areas with the most need. Like any large revenue and spending bill, this plan has something for everyone to like or dislike.

Like Legislators, Associated Oregon Industries (AOI) and Oregon Business Association (OBA) are still digesting the proposal that was unveiled on Monday and discussed in detail on Wednesday. Most of the discussion Wednesday focused on funding. Senator Fred Girod (R-Stayton) and other Republicans warned that an $8 billion, 10-year plan almost certainly would face a ballot challenge and would be difficult to defend – particularly in rural Oregon. However, there was also an acknowledgment that infrastructure needs are significant. Nevertheless, when you add in the possibility of other tax increases to fund the 2017-19 General Fund Budget, the $8 billion price tag becomes even more politically challenging. The Committee has “to balance need and politics,” Representative Cliff Bentz (R-Ontario) warned.

After two meetings discussing the transportation bill framework, it’s hard to predict what will happen to the plan as Legislators race the clock to try to turn it into a final bill that can pass a floor vote before the end of the 2017 Session. However, this is a robust transportation bill that will require significant political capital to move through the Legislative process in short order – all while the Legislature contemplates other tax increases. Here are some highlights of the draft proposal:

Highway Trust Fund ($5.09 billion): The bulk of the money would go to the Highway Trust Fund, which the Oregon Constitution dedicates for the construction, improvement, maintenance, operation and use of public highways, roads, streets and roadside rest areas. The money would come from increases in the gas tax (6 cents at first, with an additional 2 cents each biennium through 2025-27), tiered increases in title and registration fees based on vehicle fuel efficiency. Owners of vehicles with better gas mileage would pay higher fees to help offset the decline in Highway Fund revenue that has occurred, in part, because of improved fuel efficiency.

Congestion ($1.1 billion from state, $1.1 billion from Metropolitan Planning Organizations): The plan would create a congestion relief and carbon reduction fund. The money would come from a 1% excise tax on new vehicle sales, pre-construction tolling and future congestion relief programs. Some of the money also would be used for freight projects.

ConnectOregon ($100 million plus matching funds): This category has the lowest dollar value but, due to declining lottery revenue, some of the more controversial funding methods: a 5% excise tax on new bicycle sales and a potential tax on aggregate to raise money for the state’s multimodal transportation program. ConnectOregon has been an important component of funding our multimodal transportation system that connects highways with port and rail systems. This program will also support bicycle and pedestrian projects.

Transit ($107.1 million): Funding for public transit almost always creates controversy and this proposal relies on an employee payroll tax of 1/10 of 1% that is sure to generate discussion. Committee members stressed that the money will be for statewide programs and not for Portland area mass transit. The suggested division: 85% for operational service improvements; 10% for competitive grants for enhanced service; 4% for inter-city transit; 1% for a statewide resource center.

The plan is available on the Oregon Legislative Information System.

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