Two months of summer relaxation have done little to cool the debate over how the state should pay for road maintenance.
Oregon lawmakers on Monday picked up exactly where they left off in late June, meeting in Salem to take up a high-profile bill that would hike taxes to pay for its transportation system.
The details have changed since June 27, when Democrats’ massive and ambitious transportation package collapsed under its own weight. In front of the Legislature now is a proposal from Gov. Tina Kotek that would raise about half as much money via increases to taxes and fees paid by Oregon motorists and workers in order to pour hundreds of millions more into road and bridge upkeep.
Beyond the bill’s scope, little has changed.
The proposal, which will be taken up in a special session beginning Friday, generated hours of testimony in its first public hearing Monday. It ranged from Oregon Department of Transportation employees whose jobs are on the line if lawmakers don’t close a $300 million budget hole, to citizens visibly angry at the prospect of higher taxes.
As they had in June, local elected officials, public transit agencies and public sector unions that would benefit from new money are urging the Legislature to act. They warn of lost jobs, deteriorating roads, and reduced safety without hundreds of millions in new money.
“I’m not looking forward to paying higher taxes any more than anyone else,” Jim Trett, the mayor of Detroit, Oregon, told lawmakers. “But to me, the greater danger right now is the safety of people on our highways, especially highways going over the Cascades.”
“If this does not pass, on September 15, 1,000 positions will be lost and 500 people [at the Oregon Department of Transportation] will lose their jobs,” said Melissa Unger, executive director of Service Employees International Union Local 503, the state’s largest labor union. “This is urgent.”
Meanwhile, Republican lawmakers continue to strenuously oppose the idea of new taxes, arguing the state can and should prioritize existing money to meet its needs.
“There is no getting around that this is not a Band-Aid financially for Oregonians,” said House Minority Leader Christine Drazan, R-Canby, nodding to references to Kotek’s bill as a bandage that will not solve road funding woes.
Written testimony suggests they’ve got plenty of support from citizens, many of whom told lawmakers they were furious or worried about the prospect of new taxes.
“We are stretched beyond capacity,” a Portland resident named Emily Montero wrote in one such letter. “We cannot handle any more tax hikes. Every additional cost is another hour, another day, that my husband must sacrifice at work instead of spending time with our children.”
Lawmakers heard the same sentiment in person on Monday – some of it from people who were visibly angry. Among more than 150 people who signed up to testify on Kotek’s bill, currently known as “Legislative Concept 2,” were people like Clackamas County resident Paul Edgar.
“When we put together a tax package that makes people worse off, puts more people into need, we’re not doing our job,” Edgar told a legislative committee made up of House and Senate members from both political parties.
The question now is what happens in the next week.
A special legislative session called by Kotek officially begins on Friday. That’s when lawmakers will meet in committee to take more public testimony and, theoretically, move the transportation proposal to the House.
The bill is wide-ranging, roping in some elements of the bill Democrats attempted to pass earlier this year while leaving many others out. Because of this, many local officials warned Monday that, even if it passes, LC 2 is just a start. More work will be necessary, they say, to ensure the state’s transportation system has stable funding.
“It’s an important step forward,” said Jim McCauley, legislative director at the League of Oregon Cities. “The next step for us is going to be the work towards the 2027 session that’s going to be on a longer term package.”
Among its provisions, Kotek’s proposal would raise the state’s 40-cent-per-gallon gas tax by 6 cents. It would also increase vehicle registration fees by $42 and titling fees by $139. Electric vehicles, which do not pay gas taxes, would be required to pay an additional $30 on top of existing fees.
To better fund public transit agencies that are warning of deep service cuts, Kotek is proposing hiking a tax that Oregon workers pay from their paychecks. It would double from 0.1% to 0.2%,
The bill would also require drivers of electric vehicles and hybrids to enroll in a state program that charges people for the miles they drive. That shift is considered necessary for funding road projects as EVs continue to gain popularity and gas tax revenue is expected to decline. But the provision has rankled some environmental groups, which think it will force EV drivers to pay too much.
Kotek has also included provisions to win over the state’s freight interests. Under new language unveiled last week, it would simplify the state’s complex “weight-mile” tax for heavy trucks, reducing it from more than 85 tax rates down to 10. In addition, it would begin taxing heavy trucks for the diesel fuel they use, a change Oregon truckers say will cut down on tax dodging from out-of-state carriers.
“I can’t stress enough that this is the most significant policy bill for the trucking industry in the past 30 years,” Jana Jarvis, president and CEO of the Oregon Trucking Associations, told lawmakers.
Kotek’s bill would also allow state officials to automatically adjust fuel taxes, if lawmakers don’t take action on their own. That would occur if a regularly occurring state study – the Highway Cost Allocation Study – finds heavy trucks or lighter vehicles are paying more than their fair share of taxes.
In total, the bill is expected to raise taxes by $5.8 billion over a decade alone. That’s half as large as the $11.6 billion price tag of the bill Democrats proposed during this year’s legislative session.
That slimmer impact may win over some Democrats who were skeptical of the former bill, helping Kotek cobble together the three-fifths majorities needed to pass higher taxes.
The bill could receive a vote in the House as early as Friday if Republicans agree to waive normal procedural rules, but there is little sign they are willing to do so. Assuming the GOP refuses to fast-track the Democratic bill, a House vote could occur on Sunday at the earliest.
The Oregon Senate plans to meet on Monday, Labor Day, with the intention of passing the bill. Once again, that vote would be pushed back by days if Republicans decline to suspend rules.
