Lawmakers Unveil $8 Billion Transportation Package

Under the just unveiled Oregon transportation funding package, buying a new car may have a new line item – a 1 percent excise tax – to help pay for congestion relief and seismic retrofits of critical bridges.

Under the just unveiled Oregon transportation funding package, buying a new car may have a new line item – a 1 percent excise tax – to help pay for congestion relief and seismic retrofits of critical bridges.

Oregon lawmakers and the public got their first look this week at a $8 billion, 10-year transportation package that includes provisions to preserve existing roadways, deal with highway bottlenecks, retrofit critical bridges to withstand earthquakes and bolster public transportation and bike safety.

To raise the $8 billion, Oregon’s gas tax would gradually increase over a decade by 14 cents, a 1 percent excise tax would be assessed on new car purchases and a .001 percent statewide employee-paid payroll tax would be imposed. Revenue from the excise tax on new cars would be dedicated to congestion relief projects, while the payroll tax would pay for transit improvements. There is also language in the proposal that would allow tolling on roadway facilities in the Portland area and a new excise tax on bicycles.

Senators Lee Beyer, D-Springfield, and Brian Boquist, R-Dallas, who presented the plan, made clear there is still a lot of negotiation left to do before voting begins. However, Beyer said the plan represents the minimum of what’s required to maintain Oregon’s highways and bridges, address issues such as congested freight corridors and major earthquake damage and expand public transportation.

Under the just unveiled $8 billion transportation funding proposal, tolling would be allowed to pick up the local share of the cost of congestion relief and seismic retrofits of critical bridges such as the Abernethy Bridge in Clackamas County.

Under the just unveiled $8 billion transportation funding proposal, tolling would be allowed to pick up the local share of the cost of congestion relief and seismic retrofits of critical bridges such as the Abernethy Bridge in Clackamas County.

Lawmakers arrived in Salem in February with a broad consensus it is time for a major transportation funding package. But the devil is always in the details – and, in this legislative session, in the context of a large debate over how to plug a $1.6 billion state budget hole that may grow bigger.

The plan Beyer and Boquist outlined calls for the lion’s share of early money raised by the bill to be spent in the Portland area, where congestion is the worst and few of the bridges across the Willamette River could stand up to a major earthquake. That may not set well with rural lawmakers. And not everyone, including in the Portland area, may agree on how much should be spent on seismic retrofits for a potential problem versus on relieving congestion that is an immediate and worsening problem.

There also could be voices expressing concern that the biggest bottleneck – the I-5 Columbia River Bridge – isn’t factored into the plan.

Another point of contention will be using the payroll tax to pay for transit. Supporters of the idea note there aren’t many alternatives. Under the Oregon Constitution, the State Highway Trust Fund, which is where gas tax and title, registration and license fee revenue goes, can only be used to pay for road and bridge projects. Previous attempts to find a statewide funding mechanism for public transportation, such as a tailpipe tax, were struck down because of the constitutional restriction.

A significant procedural question mark is whether all of the new or increased taxes and fees, including the statewide payroll tax, can be included in a single bill. If not, then the package may require more than one vote with a three-fifths majority to pass.

The proposal has a lot of nuances to it. For example:

  •  After an initial six cent bump, the state gas tax would increase two cents every two years, for a total of 14 cents after 10 years.
  • The title and registration fees would be increased under a tiered program designed to charge more for owners of high mileage vehicles, such as hybrids or electric cars. Vehicles that get 40+ mpg will pay the most ($40 after 10 years), 20-40 mpg will be in the middle, and 0-20 will keep the current $20 fee.
  • The gas tax and vehicle fee increases will raise $5 billion over 10 years, with 50 percent going to state roads, 30 percent to county roads and 20 percent to city roads.
  • Funding generated by the 1 percent excise tax on new cars would be used to match on a 50-50 basis with local funding through Metropolitan Planning Organizations (MPOs) throughout the state. Smaller MPOs outside of Portland may lack the capacity to raise enough money for a 50-50 match. There also was discussion among lawmakers who developed the package of raising the excise tax on new cars to 2 percent over the 10-year period.
  • Tolling was discussed, mainly on I-5 and I-205, but as Boquist pointed out, any project-specific tolling needs to be collected at the project area.
  • A 5 percent excise tax levied on newly purchased bikes would generate an estimated $4 million annually to pay for bike safety projects.
  • Under the employee payroll tax, a minimum wage worker would pay 39 cents a week, for a total of $20 per year. Te new statewide tax is expected to generate approximately $100 million annually, with the following distribution: 10 percent to fund a competitive grant program for improved service; 4 percent dedicated to inter-city transit; 1 percent dedicated to a statewide resource center and the remaining 85 percent distributed among the transit properties by formula. If the statewide payroll tax becomes a reality, public transportation would no longer be eligible for funding under the Oregon Connect program.
  • The package also contains $7 million in Connect Oregon funding and $4 million for the State Parks Department, which oversees Oregon’s beaches that allow vehicular traffic.

The Joint Committee on Transportation Preservation and Modernization will resume on Wednesday its review of the proposal and answer questions.

Because of the size of the package and concerns about Oregon Department of Transportation management, accountability provisions  have been attached. The proposal recommends continuing the Joint Committee, giving it oversight over both the budget and policy of ODOT as well as expanding the Oregon Transportation Commission to include members from each region of the state. Uniform standards for the quality of roads and bridges also would be established as part of the package.