With a massive road funding package hanging in the balance, top Oregon Democrats are reformulating the tax hikes that have been a key piece of their plan.
An amendment to House Bill 2025 posted Wednesday would do away with a proposed tax on car sales that comprised the single-largest piece of the transportation bill, while simultaneously increasing another tax.
It would also scale back proposed increases to the state’s 40-cent per gallon gas tax.
The changes – submitted by House Speaker Julie Fahey, D-Eugene, after days of behind-the-scenes haggling – curb the ambitions of a package criticized by members of both parties for its price tag.
Rather than raising $14.6 billion over a decade, as the current version of HB 2025 does, the bill would take in $11.6 billion, according to a draft revenue analysis sent to lawmakers.
Fahey declined to discuss the proposal.
The amendment does away with a so-called “transfer tax” that would have added 2% to new car sales and 1% to purchases of used cars worth more than $10,000.
The tax has been scrapped in favor of ratcheting up a separate, existing tax for the “privilege” of selling cars in the state. The bill would increase that tax from 0.5% to 2.25%, and apply it to sales of used cars for the first time.
Money from that increase would not go into the state’s Highway Trust Fund; it would be earmarked for a set of specific purposes. Those include helping pay for unfinished highway megaprojects such as the Rose Quarter expansion on Interstate 5 and the Abernethy Bridge seismic retrofit on Interstate 205, rebates on electric vehicle purchases and projects to make urban highways safer.
Democrats also appear to be reducing their ambitions around increasing the state’s current 40-cent-per-gallon gas tax.
The new amendment would increase the tax by 12 cents beginning next year. HB 2025 had formerly increased the tax by 15 cents, but phased that increase in over two steps.
The 155-page amendment also scraps a plan to index gas taxes to inflation in the future, a move that would have ensured they rise regularly without legislative approval.
The newly scaled-back proposals are a nod to political reality: As it passed out of committee Friday, the bill was on a path to failure.
Republicans have broadly attacked the bill as too expensive. And with key Democrats plainly in agreement last week, HB 2025 had little chance of attracting the three-fifths support needed in each chamber to approve tax increases.
All told, a version of HB 2025 that passed out of committee last week would have raised taxes by nearly $2 billion a year by 2033. The amended bill would bring in a bit more $1.5 billion that year, according to the draft analysis.
Even with a reduced price tag, HB 2025 would still amount to a major increase in money flowing into the state’s Highway Trust Fund, which pays for road and bridge maintenance projects.
The money would allow the Oregon Department of Transportation to avoid reducing its workforce and slashing services. A $6.1 billion transportation budget that passed out of committee on Tuesday contemplates eliminating more than 880 ODOT staff positions – many of which sit vacant – if HB 2025 doesn’t ultimately pass.
The timing of the ODOT budget bill – before it’s even clear how much money the agency has to spend -- spurred objections from House Minority Leader Christine Drazan, R Canby. “I don’t even know what I’m voting for,” she said on Tuesday.
The fate of a transportation funding plan will become clearer at a hearing scheduled for Thursday.
With Republicans largely signaling opposition to HB 2025, Democrats may need to vote in lockstep to pass the bill to Gov. Tina Kotek. But even if Fahey has succeeded in winning over resistant members of her party, she will need some help from Republicans to get the package across.
Because of a looming June 29 adjournment deadline, the bill will not have enough time to clear all the necessary hurdles unless Republicans agree to suspend legislative rules and allow the bill to speed along.
What concessions the minority party will demand for such a move remains to be seen.
It’s also not clear that the changes proposed by Fahey can defang a nascent campaign to refer a transportation package to voters next year, a move that could doom the proposal.
OPB’s Bryce Dole contributed reporting.
