Oregonians likely to see higher transportation taxes next year, lawmakers announce
Top Oregon lawmakers have indicated for months that a major transportation package they’re pushing this year will almost certainly include increased or new taxes.Thursday, they revealed the 10 tax and fee hikes they want that to entail.In a plan made public Thursday afternoon, leaders of the Joint Transportation Committee outlined an array of tax hikes they say are essential to repair and maintain Oregon roads and bridges and expand access to alternative forms of transportation — while ensuring that drivers, bikers, truckers and businesses all pay their fair share.“We’re very confident that this is a good proposal, and it really gives us a good framework to go from,” Sen. Chris Gorsek, a Gresham Democrat and co-chair of the committee, told The Oregonian/OregonLive. The highly-anticipated framework proposes hiking the state’s gas tax, raising vehicle title and registration fees and implementing taxes on tire and vehicle sales, among other tax and fee increases. The higher costs could hit Oregonians as soon as January.Lawmakers project that the increased taxes would eventually raise $1.9 billion per biennium for the state highway fund, most of which goes to the state, counties and cities for basic maintenance and operations. The state transportation agency would receive $850 million of that new funding — half the amount Gov. Tina Kotek requested from lawmakers in December — while cities would receive about $340 million and counties about $510 million.Some of those increases, including the gas tax and a tax on miles driven, would ramp up year by year, so that full amount wouldn’t be available until about 2030 or so.State and local officials have told lawmakers for months that they need more funding to operate and maintain existing transportation infrastructure, instead of shiny new projects that have been cornerstones of former transportation packages. For now, lawmakers appear willing to support that mission.“It really is back to basics,” Gorsek said. Perhaps the most ambitious proposal in the framework is a road user fee, which could drastically alter Oregon’s transportation funding mechanisms by charging drivers primarily according to the number of miles they drive rather than by taxing their gas purchases. Drivers of electric vehicles, who don’t pay the gas tax, would have to enroll in the program starting next year. But other drivers would not have to make the switch until at least 2029, meaning lawmakers would have time to hammer out the details.Lawmakers say the new funding mechanisms would put Oregon drivers on par with truckers, who have argued for years that they overpay for their share of Oregon’s roads. (State analyses support that claim.) The framework also proposes increasing tax revenue from truckers by 16.9%. “This package is really set up to make sure that we are listening to what folks across the state said,” Rep. Susan McLain, a Democrat from Hillsboro and co-chair of the transportation committee, told The Oregonian/OregonLive.The framework also outlines four new or increased taxes that would raise an estimated $364 million in additional funding per biennium for multi-modal transportation and other programs to enhance Oregon’s transportation infrastructure.For example, a new 3% tire tax would fund rail operations, new wildlife crossings over highways and salmon restoration programs to mitigate the environmental impact of tire pollution. Similarly, the framework proposes increasing the payroll tax and the bike tax to expand transit service and improve bike and pedestrian infrastructure.Lawmakers still have many questions to address as they continue negotiating details of the package. For instance, the framework does not include any accountability measures to ensure that funding is spent quickly and efficiently, which lawmakers have said will be a vital aspect of this year’s package. Lawmakers say those accountability measures will soon materialize, as out of state consultants continue their review of the Oregon Department of Transportation’s policies and ongoing work.Though the framework does not call for or fund any new projects, it would provide money to complete unfinished megaprojects like retrofitting and widening the Abernethy Bridge between West Linn and Oregon City and widening and capping Interstate 5 near the Rose Quarter. Estimated costs for both of those projects have skyrocketed in recent years, and officials say more funding will be necessary to get them across the finish line.The framework proposes allocating $250 million to help the state secure additional bonding for the projects, which would help cover debt payments and some construction costs. Lawmakers could choose to increase funding for these projects, but they have not indicated willingness to do so. McLain pointed out that these unfinished projects, which also include the long-running effort to revamp the Newberg-Dundee Bypass, already have some dedicated funding. “Are they still in the queue? Have they been started? Do they have state support in the past? Yes,” she said. “So are they going to be part of the ongoing work that’s done under safety, under maintenance, under preservation? Absolutely, yes.”That transportation committee members were able to outline the long list of proposed tax and fee hikes to raise the billions state and local transportation officials have said they desperately need is a significant milestone. Some Salem insiders for months have quietly questioned whether lawmakers will be able to produce a substantive transportation package this year. But listing tax increases is easier than getting a three-fifths majority of lawmakers – the required threshold to pass bills that raise revenue – to support them.“It is a joy that we are at this stage,” Gorsek said, with nearly three months to go until the legislative session’s deadline.Democratic lawmakers briefed about the proposal Wednesday ahead of its public release reacted with some optimism, Gorsek and McLain said. That’s significant because Democrats hold a supermajority in both chambers, meaning they could theoretically pass tax increases with no Republican support.But it likely won’t be that straightforward. Each of Oregon’s 90 lawmakers will have a different take on the package, not to mention the influential groups, including environmentalists, unions and business groups, that will continue roaming the Capitol to sway lawmakers in their favor.Gorsek and McLain say they want the package to receive bipartisan support. Whether that will be the case remains to be seen.Unlike in the past, “We’re not saying to legislators, ‘Okay, do you want a new bridge in your district? Oh, then vote for this,‘” Gorsek said. “Instead, what we’re saying is, “Do you want the roads to be paved in your district? Do you want the snow to be plowed off in your district?‘”Here is every new or increased tax or fee included in the framework. Unless otherwise specified, the revenue would go to the state highway fund:(New) 1% tax on every vehicle purchase. Oregon is one of five states that doesn’t currently have this type of tax. This is expected to raise $486 million per biennium. About half would go to unfinished major projects like the Abernethy Bridge, and the rest would go to the state highway fund.(New) 3% tax on tire purchases. Half of the revenue would go to rail operations, and the remaining half would be split between building wildlife crossings over highways and salmon restoration programs to offset the environmental impact of tire pollution. This tax is expected to raise $50 million per biennium.(New) Road user fee for delivery vehicles, like Amazon vans. Businesses with at least 10 medium duty vehicles that deliver packages to homes would be required to pay this fee, which would likely land at 2 cents to 7 cents per mile. It’s unclear how much money this would bring in or when it would be implemented.(New) Road user fee for some drivers. Details are scarce, but all-electric vehicle drivers would have to enroll in the pay-per-mile program by July 2026. Once enrolled, electric vehicles drivers would no longer pay higher registration fees than other drivers. Gas powered car drivers would not be affected until at least 2029.20 cent increase to the gas tax over six years. The statewide fuels tax, which is currently 40 cents per gallon, would increase to 48 cents in January and gradually increase to 60 cents by 2032. $90 increase to title fees. Title fees currently range between $101 and $192 for most cars, and it’s unclear when these fees would increase or if certain vehicles would face steeper rates.$66 increase to car registration fees. Registration and renewal fees currently range between $126 and $316 for most vehicles. It’s unclear when these fees would increase or if certain vehicles would face steeper rates.0.08% increase to state payroll tax. Oregon employers currently withhold a 0.10% tax from each employee’s gross pay, with all revenue used for state transit programs. This proposal would increase that to 0.18%. This is projected to raise an additional $268 million per biennium for transit.0.3% increase to vehicle privilege tax. Car dealers currently pay a 0.5% tax on all vehicle sales. This proposal would increase that to 0.8%, with all revenue used for rail, aviation and marine projects. This is expected to raise $44.8 million per biennium.$9.50 increase to bike tax. Bike purchasers currently pay a $15 tax for bikes sold for $200 or higher, with revenue used for bicycle and pedestrian transportation projects. This proposal would increase the tax to $24.50, which would increase revenue by roughly $1 million per biennium.— Carlos Fuentes covers state politics and government. Reach him at 503-221-5386 or cfuentes@oregonian.com.Our journalism needs your support. Subscribe today to OregonLive.com/subscribe.Latest local politics stories
The higher costs could hit Oregonians as soon as January.
Top Oregon lawmakers have indicated for months that a major transportation package they’re pushing this year will almost certainly include increased or new taxes.
Thursday, they revealed the 10 tax and fee hikes they want that to entail.
In a plan made public Thursday afternoon, leaders of the Joint Transportation Committee outlined an array of tax hikes they say are essential to repair and maintain Oregon roads and bridges and expand access to alternative forms of transportation — while ensuring that drivers, bikers, truckers and businesses all pay their fair share.
“We’re very confident that this is a good proposal, and it really gives us a good framework to go from,” Sen. Chris Gorsek, a Gresham Democrat and co-chair of the committee, told The Oregonian/OregonLive.
The highly-anticipated framework proposes hiking the state’s gas tax, raising vehicle title and registration fees and implementing taxes on tire and vehicle sales, among other tax and fee increases. The higher costs could hit Oregonians as soon as January.
Lawmakers project that the increased taxes would eventually raise $1.9 billion per biennium for the state highway fund, most of which goes to the state, counties and cities for basic maintenance and operations. The state transportation agency would receive $850 million of that new funding — half the amount Gov. Tina Kotek requested from lawmakers in December — while cities would receive about $340 million and counties about $510 million.
Some of those increases, including the gas tax and a tax on miles driven, would ramp up year by year, so that full amount wouldn’t be available until about 2030 or so.
State and local officials have told lawmakers for months that they need more funding to operate and maintain existing transportation infrastructure, instead of shiny new projects that have been cornerstones of former transportation packages. For now, lawmakers appear willing to support that mission.
“It really is back to basics,” Gorsek said.
Perhaps the most ambitious proposal in the framework is a road user fee, which could drastically alter Oregon’s transportation funding mechanisms by charging drivers primarily according to the number of miles they drive rather than by taxing their gas purchases. Drivers of electric vehicles, who don’t pay the gas tax, would have to enroll in the program starting next year. But other drivers would not have to make the switch until at least 2029, meaning lawmakers would have time to hammer out the details.
Lawmakers say the new funding mechanisms would put Oregon drivers on par with truckers, who have argued for years that they overpay for their share of Oregon’s roads. (State analyses support that claim.) The framework also proposes increasing tax revenue from truckers by 16.9%.
“This package is really set up to make sure that we are listening to what folks across the state said,” Rep. Susan McLain, a Democrat from Hillsboro and co-chair of the transportation committee, told The Oregonian/OregonLive.
The framework also outlines four new or increased taxes that would raise an estimated $364 million in additional funding per biennium for multi-modal transportation and other programs to enhance Oregon’s transportation infrastructure.
For example, a new 3% tire tax would fund rail operations, new wildlife crossings over highways and salmon restoration programs to mitigate the environmental impact of tire pollution. Similarly, the framework proposes increasing the payroll tax and the bike tax to expand transit service and improve bike and pedestrian infrastructure.
Lawmakers still have many questions to address as they continue negotiating details of the package. For instance, the framework does not include any accountability measures to ensure that funding is spent quickly and efficiently, which lawmakers have said will be a vital aspect of this year’s package.
Lawmakers say those accountability measures will soon materialize, as out of state consultants continue their review of the Oregon Department of Transportation’s policies and ongoing work.
Though the framework does not call for or fund any new projects, it would provide money to complete unfinished megaprojects like retrofitting and widening the Abernethy Bridge between West Linn and Oregon City and widening and capping Interstate 5 near the Rose Quarter. Estimated costs for both of those projects have skyrocketed in recent years, and officials say more funding will be necessary to get them across the finish line.
The framework proposes allocating $250 million to help the state secure additional bonding for the projects, which would help cover debt payments and some construction costs. Lawmakers could choose to increase funding for these projects, but they have not indicated willingness to do so.
McLain pointed out that these unfinished projects, which also include the long-running effort to revamp the Newberg-Dundee Bypass, already have some dedicated funding.
“Are they still in the queue? Have they been started? Do they have state support in the past? Yes,” she said. “So are they going to be part of the ongoing work that’s done under safety, under maintenance, under preservation? Absolutely, yes.”
That transportation committee members were able to outline the long list of proposed tax and fee hikes to raise the billions state and local transportation officials have said they desperately need is a significant milestone. Some Salem insiders for months have quietly questioned whether lawmakers will be able to produce a substantive transportation package this year. But listing tax increases is easier than getting a three-fifths majority of lawmakers – the required threshold to pass bills that raise revenue – to support them.
“It is a joy that we are at this stage,” Gorsek said, with nearly three months to go until the legislative session’s deadline.
Democratic lawmakers briefed about the proposal Wednesday ahead of its public release reacted with some optimism, Gorsek and McLain said. That’s significant because Democrats hold a supermajority in both chambers, meaning they could theoretically pass tax increases with no Republican support.
But it likely won’t be that straightforward. Each of Oregon’s 90 lawmakers will have a different take on the package, not to mention the influential groups, including environmentalists, unions and business groups, that will continue roaming the Capitol to sway lawmakers in their favor.
Gorsek and McLain say they want the package to receive bipartisan support. Whether that will be the case remains to be seen.
Unlike in the past, “We’re not saying to legislators, ‘Okay, do you want a new bridge in your district? Oh, then vote for this,‘” Gorsek said. “Instead, what we’re saying is, “Do you want the roads to be paved in your district? Do you want the snow to be plowed off in your district?‘”
Here is every new or increased tax or fee included in the framework. Unless otherwise specified, the revenue would go to the state highway fund:
- (New) 1% tax on every vehicle purchase. Oregon is one of five states that doesn’t currently have this type of tax. This is expected to raise $486 million per biennium. About half would go to unfinished major projects like the Abernethy Bridge, and the rest would go to the state highway fund.
- (New) 3% tax on tire purchases. Half of the revenue would go to rail operations, and the remaining half would be split between building wildlife crossings over highways and salmon restoration programs to offset the environmental impact of tire pollution. This tax is expected to raise $50 million per biennium.
- (New) Road user fee for delivery vehicles, like Amazon vans. Businesses with at least 10 medium duty vehicles that deliver packages to homes would be required to pay this fee, which would likely land at 2 cents to 7 cents per mile. It’s unclear how much money this would bring in or when it would be implemented.
- (New) Road user fee for some drivers. Details are scarce, but all-electric vehicle drivers would have to enroll in the pay-per-mile program by July 2026. Once enrolled, electric vehicles drivers would no longer pay higher registration fees than other drivers. Gas powered car drivers would not be affected until at least 2029.
- 20 cent increase to the gas tax over six years. The statewide fuels tax, which is currently 40 cents per gallon, would increase to 48 cents in January and gradually increase to 60 cents by 2032.
- $90 increase to title fees. Title fees currently range between $101 and $192 for most cars, and it’s unclear when these fees would increase or if certain vehicles would face steeper rates.
- $66 increase to car registration fees. Registration and renewal fees currently range between $126 and $316 for most vehicles. It’s unclear when these fees would increase or if certain vehicles would face steeper rates.
- 0.08% increase to state payroll tax. Oregon employers currently withhold a 0.10% tax from each employee’s gross pay, with all revenue used for state transit programs. This proposal would increase that to 0.18%. This is projected to raise an additional $268 million per biennium for transit.
- 0.3% increase to vehicle privilege tax. Car dealers currently pay a 0.5% tax on all vehicle sales. This proposal would increase that to 0.8%, with all revenue used for rail, aviation and marine projects. This is expected to raise $44.8 million per biennium.
- $9.50 increase to bike tax. Bike purchasers currently pay a $15 tax for bikes sold for $200 or higher, with revenue used for bicycle and pedestrian transportation projects. This proposal would increase the tax to $24.50, which would increase revenue by roughly $1 million per biennium.
— Carlos Fuentes covers state politics and government. Reach him at 503-221-5386 or cfuentes@oregonian.com.
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