Oregon legislators approved a bill on July 6 that will provide an estimated $5.3 billion in new transportation infrastructure revenue over the next 10 years through a combination of motor fuel tax and transportation-related fee increases.
The legislation will:
- Gradually increase the state gas tax by 10 cents-per-gallon, beginning with 4 cents in 2018 and increasing 2 cents every other year through 2024;
- Raise vehicle registration fees to $56;
- Institute a new fee, beginning in 2020, that is charged based on a vehicle’s gas mileage. The rates begin at $18 for vehicles with a gas mileage rating of 0-19 miles-per-gallon (MPG); $23 for those with a rating of 20-39 MPG; and $33 for those with a rating of 40 MPG or greater (excluding electric vehicles);
- Create a new $110 fee for electric vehicles;
- Impose a new vehicle excise tax of 0.5 percent of the vehicle’s retail sales price;
- Institute a bicycle tax of $15 for any new adult bicycle purchased for $200 or more, used partially to provide rebates for electric vehicles; and
- Create a new 0.1 percent state payroll tax that will fund mass transit.
Gov. Kate Brown (D) announced the compromise agreement on June 28, after months of negotiations and a previous attempt to increase transportation funding in 2015. The House approved the measure with a vote of 39-20 on July 5 (three votes more than the minimum required to pass), followed by the Senate with a vote of 22-7 on July 6 (four votes more than the minimum required to pass). The bill received bipartisan support and was endorsed by environmental groups, business organizations, and local governments.
An Oregon Department of Transportation report released in 2014 concluded that an additional $405 million per year was needed in order to prevent deterioration of the state’s transportation infrastructure. Several factors contributed to this growing transportation funding gap, including payments to debt service, rising construction costs, federal funding uncertainty, reduced state highway fund revenue projects, and aging infrastructure.
The legislature adjourned for the year shortly after approving the plan. The bill now goes before Gov. Brown, who is expected to sign it into law.