Oregon transportation funding proposal includes 5% tax on new bicycles

State Senator Brian Boquist knows we can’t build or tax our way out of congestion; but he wants to try it one more time.

Last night in Salem the Joint Committee On Transportation Preservation and Modernization unveiled the outline of what will become a statewide transportation funding bill.

As expected, the proposal (PDF) includes earmarks for several major highway widening projects in the Portland region and a tax on the sale of new bicycles. Overall, the package would raise about $8.1 billion that would be phased in over 10 years. That money would come from a mix of new and existing taxes and fees. As we reported back in March, the ideas presented to the committee yesterday by Senators Brian Boquist and Lee Beyer (committee co-chairs) came from four main “work groups” that met in open-door meetings in the capitol over the past three months. The proposals were also greatly influenced by an 11-city statewide tour taken by committee members last summer as well as a report by the Governor’s Transportation Vision Panel that came out one year ago.

Here’s what they put on the table last night. As you read them, consider Sen. Beyer’s comments last night: “This proposal can change; but if we want to solve the transportation problems the people told us they want to solve, this gets us there. This is the minimum we should do.”

And for reference, here’s the table with new revenue streams and revenue estimates:

Highways

It’s clear what their priorities are. Just look at what will have earmarks, a construction timeline, and a clear “course of action” baked right into the legislation.

“Fixing congestion” was by far the most urgent issue for lawmakers heading into the session and that mantra continued last night. The proposal would raise $5.09 billion over 10 years to be spent on highway/bridge expansions, road maintenance and seismic retrofits. The revenue would come from four main sources: increases to the gas tax, registration and title fees; and a new motor vehicle excise tax. The committee also wants to include placeholder language in the bill that would put collections mechanisms for congestion pricing and tolling into motion.

“No matter how much we build, we cannot build our way out of congestion… What we need to do and what’s been successful elsewhere is to congestion pricing.”
— Brian Boquist, state senator and committee co-chair

The gas tax would go up six cents in year one and then it would ratchet up another 8 cents by 2027 for a total increase of 14 cents. Increases to motor vehicle title and registration fees would increase by a total of $40 over the next 10 years. The registration and title fees would be tiered based on a car’s miles per gallon rating. Lower mileage cars (who pay more in gas tax) would pay a lower fee than cars that are more fuel efficient (and who pay less in gas tax). (Note: Thanks to the Oregon Bike Bill, state law requires that at least 1 percent of all funding for new road projects is spent on bicycling and walking infrastructure.)

While presenting these ideas last night, Sen. Boquist, a Republican from the Willamette Valley, made it clear that these traditional revenue sources would not be enough. “We cannot tax our way out of congestion,” he said. “And no matter how much we build, we cannot build our way out of congestion… What we need to do and what’s been successful elsewhere is to congestion pricing.”

While he didn’t say it directly, Boquist understands that in order to improve the efficiency of our highways we need to price them in such a way that people think twice about exercising their driving privileges. On that note, Boquist said he feels some mix of tolling and congestion pricing will be part of Oregon’s fugure. He mentioned tolling I-5 between the Willamette (downtown Portland) and the Columbia River.

And speaking of driving privilege, another way the committee has proposed to raise funds is a new “vehicle dealer privilege tax” that would levy a one percent tax on the purchase of a new car. This would raise $73 million a year that would go into a new “congestion relief and carbon reduction fund”. The details of how this fund would work is still up for debate, but their idea is that the revenue must be tied directly to projects that have a direct impact on reducing congestion and making freight/truck traffic flow more easily.

“That ‘carbon reduction’ phrase… that’s not, ‘let’s go build green things’,” Boquist said last night. “The notion is, if you have a highway system that is clogged up and you were to move freight and trucks off that and onto rail [or some other mode], that’s the sort of projects we’re talking about — projects that take truck traffic or reduce congstion on the roads.”

Boquist said he’d anticipate a court challenge to the new tax because it would fall outside Article IX of the Oregon constitution relating to highway funds. He sees the new fund as a way to pay for “major projects” from a source that’s completely outside the state highway trust fund. Boquist described it as “An excise tax on the privilege to own a vehicle.” Boquist and Beyer said that even with this suite of new increases, the cost of driving in Oregon would still be lower than in most other states.

Overall the package includes about $6.7 billion for highway projects over 10 years (if you include the new vehicle tax). Keep in mind that half the funds would go directly to ODOT, 30 percent would be allocated to counties, and just 20 percent would go to cities.

Transit

Committee Co-chair Lee Beyer likened transit to “a social service” that can’t be paid for through the highway fund. To raise revenue, the proposal includes a new statewide employee payroll tax of 1/10th of one percent. 85 percent of the funds would have to be spent on operational service improvements and cities with over 200,000 people would be required to purchase buses powered by natural gas/propane or electricity. The proposal specifically prohibits funding for light rail.

If the new tax passes, a person who makes minimum wage would pay about 39-cents a week or $20 a year. Someone with an annual income of over $100,000 would pay about $100 a year.

This proposal would raise about $1.07 billion annually for transit services statewide. (Note: That’s exactly the same amount recommended by the Governor’s Transportation Vision Panel report from May 2016.)

Bicycling and walking

A four or five percent excise tax on new bicycles will very likely be part of the upcoming legislation. We’ve been reporting on this for months now and it the idea appears to have only gained acceptance along the way. The new tax is estimated to raise $1.6 to $2.0 million per year.

Other funding for bikeway-specific projects (meaning paths not in the highway right-of-way) would include a $7 million set-aside in the Connect Oregon grant program (about what bike projects receive in the competitve process now) and $4 million in grants from a state lottery-funded program for linear parks administered by Oregon State Parks and Recreation Department.

Sen. Beyer said the funds would be used to, “Take care of off-road commuter routes… As an alternative to get out of the way of trucks.”

In addition, the proposal includes $10 million a year for Safe Routes to School projects that would come out of the state highway fund (and would require a 40 percent local match). Beyer said that amount would be enough to “Complete a safe route to school a quarter-mile around every elementary and middle school in the state.” Lawmakers are also proposing $10 million a year into the All Roads Transportation Safety Program they say would address “the 450 most dangerous transportation problems in the state”.

The safe routes funding is lower than the $32 million in House Bill 3230 that was lobbied for by The Street Trust and members of the Transportation for Oregon’s Future coalition. It’s also lower than the $15 million recommended by the Governor’s Transportation Vision Panel.

As for the bike tax, there was no mention of it in a statement released today by the Transportation for Oregon’s Future coalition. The Street Trust Policy Director Gerik Kransky said, “We are happy to see an initial transportation package that includes funding for trails and safe places to walk and bike.”

Last week the Street Trust convened a meeting of local bike shop owners to discuss the idea. Development Director Brittani Garner wrote in an email to invitees that, “This type of tax has come up before, and has never come to fruition. This year may be different… As The Street Trust begins to learn more about what will be included in the full transportation package, we want to have a conversation with you, our local bike industry partners, about the potential bicycle excise tax, and its impact in Oregon.” Also at that meeting was Alex Logemann, the state and local policy analyst with national (industry-supported) nonprofit People For Bikes and the Street Trust’s Policy Director Gerik Kransky.

We weren’t at the meeting (media was not invited) but sources say it was a robust discussion. We’ll report more about local bike shop owners reactions in the coming days.

What happens next

Last night’s meeting was just the start of the debate. This proposal will create the framework for what will surely be heated discussions over the next several weeks. Everything is subject to change, but lawmakers are under a lot of pressure to pass something and they don’t have a lot of time for major disagreements. The committee plans to meet again this Wednesday to hash out details of the proposal and whittle it into a form that can be passed onto legislative counsel where it will be transformed into an actual bill. Then a slate of public hearings will happen in June with a target date for a full vote of the legislature by mid-July.

At the end of their meeting last night, committee members were reluctant to set such a short timeline for when they’d be forced to make decisions. The process this year is much more public (the meetings are recorded live) and transparent than it has been in the past and it’s clear that as tension mounts, so does the stress of lawmakers. That dynamic caused one committee member (I couldn’t tell who) to say before the gavel struck last night, “Sometimes the old smoke-filled rooms don’t look all that bad.”

Stay tuned.

— Jonathan Maus: (503) 706-8804, @jonathan_maus on Twitter and jonathan@bikeportland.org

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