A transportation funding proposal by Oregon Democrats would bring in more than $1.8 billion per year in fiscal year 2029 — and more than $2 billion annually by 2034 — according to a revenue analysis circulating in the Capitol.
The estimate, dated Thursday, offers the first picture Oregonians have seen of what a set of tax and fee increases in House Bill 2025 might cost them. It comes after Democrats held four separate public hearings on the bill this week — meetings in which the lack of a clear financial estimate was brought up often.
Crafted by a legislative revenue analyst, the document shows that the bill that emerged early this week would bring in more money than an earlier “framework” Democrats unveiled for funding roads in March. That slightly different proposal was pegged at around $1 billion a year.
The numbers will add new energy to a debate over whether the Democratic proposal is asking too much of taxpayers, a contention Republicans have made repeatedly. Opponents are already lining up to refer the bill to voters if it passes, a move that could doom it.
Related: Opponents of Oregon Democrats' transportation bill are already raising money to send it to voters
Others have urged Democrats to add even more to the package, arguing it doesn’t do enough to fund things like electric vehicle infrastructure.
As currently written, HB 2025 would:
- Raise the state’s 40-cent-per-gallon gas tax by 15 cents.
- Index gas taxes to rise with inflation.
- Hike a broad array of vehicle registration and licensing fees.
- Create a 2% tax on sales of new cars and a 1% tax on sales of used cars worth more than $10,000.
- Create a new per-mile fee paid by electric vehicle and hybrid owners.
- Simplify taxation on heavy vehicles and diesel fuel.
- Set aside money for a pair of uncompleted highway megaprojects in the Portland metro area.
- Mandate increased audits of the Oregon Department of Transportation.
- And more.
The money would go toward helping the state, cities and counties meet growing road maintenance needs. But it would also fund a pair of lingering highway megaprojects, bolster transit surfaces and help build more walkable streets.
“If the Legislature does not pass a transportation package this year, communities across the state can expect more potholes, reduced road safety for citizens, and less ability to respond to the challenges of maintaining transportation infrastructure in their communities,” the League of Oregon Cities said in a statement Friday. “The time to respond to transportation investment is now.”
Some of the tax increases in HB 2025 are staggered, meaning they would raise more over time. The new revenue analysis offers a picture of what each of the tax and fee mechanisms might bring as they come online.
For instance, it suggests the new “transfer tax” on new and used vehicle sales would bring in $265 million a year when up and running and hover between $270 million and $285 million in subsequent years.
The 15-cent hike in gas taxes could raise around $230 million a year, though that number is expected to shrink over time as Oregonians drive more EVs and fuel-efficient vehicles.
Hikes to vehicle registration and titling fees are expected to bring in around $265 million a year. And an increase, from 0.1% to 0.3% of a tax workers pay out of their paychecks may raise more than $400 million in additional revenue each year for transit services.
All told, the estimate shows that by the year 2029, HB 2025 could bring in more than $1.5 billion in new money for the state highway fund, which pays for road and bridge maintenance and construction projects. It’s expected to bring in about $300 million more that year for transit and railroad spending, totaling $1.9 billion.
As the gas tax rises with inflation, so does money the state brings in under the bill. By fiscal 2034, analysts say the state will have $2 billion more to spend each year on transportation than it does today.
Democrats have presented their proposal this year as a way to fundamentally reshape how the state pays for transportation — and to correct longstanding disinvestment in nuts-and-bolts maintenance that have left the state’s roads in poor shape.
To that end, they’ve proposed a mandatory fee, set at 5% of the gas tax, that drivers of electric and hybrid vehicles would pay for every mile they drive. For instance, at the state’s current 40 cents per gallon gas tax, EV drivers would pay 2 cents per mile.
Such a “road usage charge” is aimed at ensuring the state has a way to raise money for roads, as the continued adoption of EVs eats away at the gas tax. But the program will be costly to implement, and slow to bring in money, the state has said. The HB 2025 estimate shows Oregon losing money on the program initially, before it starts to generate money.
One big lingering question mark over the new analysis is whether it accurately gauges what heavy trucks would pay under HB 2025. That’s a particularly touchy subject given state reports that have found that trucks paid more than their fair share for road maintenance in recent years.
The report shows “weight-mile” taxes from trucks vacillating widely from year to year — from more than $560 million in 2029 to just $24 million two years later. Those numbers were being closely watched by members of both parties.
As of Friday morning, no further hearings had been scheduled for HB 2025.
This story comes to you from the Northwest News Network, a collaboration between public media organizations in Oregon and Washington.