Republicans Pan Mix of Tax and Fee Hikes to Generate $1.9 Billion Over Two Years
Legislative Democrats unveiled their transportation funding plan last week that would increase the state gas tax, create a tax on car sales and tires and establish a use charge on electric vehicles and delivery trucks. Republican reaction was quick and sharply critical.
When fully implemented, the tax hikes are projected to generate more than $1.9 billion in new revenue every two years. The plan also would permit additional bonding to complete major projects authorized in the 2017 transportation funding package that remain unfinished because of increased costs.
Senator Chris Gorsek, D-Gresham, and Rep. Susan McLain, D-Forest Grove, the co-chairs of the Joint Transportation Committee, justified increased taxes as necessary to maintain roads and bridges. “We are looking to make sure we have fair and equitable funding,” McLain said. “That means all users pay.”
Gorsek and McLain emphasized that 90 percent of higher tax revenue would go for “nuts-and-bolts” transportation work such as road preservation, road striping and staffing Department of Motor Vehicle offices. They also noted the plan would correct the current situation where trucks overpay their share of transportation costs.
The plan would raise $1.5 billion over two years from higher existing taxes and fees. The proposed 1 percent tax on vehicle sales would produce almost $500 million. The plan also would slightly increase the 0.1 percent statewide employee payroll tax to 0.18 percent, far less than the 0.5 percent increase state transit providers requested.
Senator Bruce Starr, R-Dundee and the Senate’s top Republican on transportation issues, said, “We’ve been waiting for the majority party to put their first offer on the table. Now is when the conversation starts.”
His GOP counterpart in the House, Rep. Shelly Boshart Davis, R-Albany, offered a blunter response. “This is so egregious that to me this isn’t even a starting point. I completely reject it.”
House Republican Leader Christine Drazan, R-Canby, was equally blunt. “The Democrats’ tone-deaf proposal throws more money at a system that has repeatedly failed to recognize that its core mission is to provide safe and reliable roads and bridges. A dozen new taxes and fees are a slap in the face to all Oregonians that simply can’t afford to pay more for less.”
McLain insisted, “This [plan] is looking at getting back to basics, which is maintenance and preservation.” Democrats included one concession to Republicans in their plan by omitting highway tolling.
Democrats hold three-fifths supermajorities in the House and Senate and could pass a transportation tax bill without any Republican votes.
Democrats have tasked Starr with leading an effort to increase the accountability of the Oregon Department of Transportation, following project cost overruns and a major $1 billion accounting error. Consultants are conducting a review that will unveil recommendations by May 31.
ODOT says without an infusion of revenue from this legislative session, it will be forced to lay off as many as 1,000 employees.
Transportation Tax Plan Elements
As reported by OPB, here are highlights from the Transportation Reinvestment Package, referred to as TRIP:
- A staggered 20-cent increase to the state’s 40-cent-per-gallon gas tax. The tax would increase by 8 cents next year and another 4 cents each in 2028, 2030 and 2032. Afterward, the gas tax would increase based on the rate of inflation.
- A sales tax equal to 1 percent of the price of all new and used cars sold in Oregon.
- A new “road usage charge” that electric and highly fuel efficient vehicles would pay – either as a flat fee or based on actual miles driven in Oregon. Existing electric vehicles would be subject to the charge beginning in July 2026. New EVs, plug-in hybrids and cars with fuel economy of 30 miles-per-gallon or better would be added in subsequent years.
- A separate road usage charge for delivery vehicles used by companies with at least 10 vehicles in operation. The fee is aimed at delivery services like Amazon.
- An additional $66 on Oregon vehicle registration fees.
- An additional $90 on vehicle titling fees, which now range from $90 to $190.
- Increasing the state’s weight-mile tax on heavy vehicles by 16.9 percent. TRIP also envisions a far simpler tax structure for heavy trucks.
A 3 percent tire tax yielding $25 million per year for rail operations, safe highway crossings for wildlife and improved salmon habitat.- Increasing the auto dealer privilege tax from 0.5 percent per vehicle to 0.8 percent.
- Adding $9.50 to an existing $15 tax on sales of new bicycles costing at least $200, with funds going to bike and pedestrian facilities.
- Increasing the state payroll tax from 0.1 percent to 0.18 percent to support public transit.
