A Plan for
Yesterday, the House of
Representatives Democrat Caucus released a draft plan to
maintain and modernize Oregon’s transportation infrastructure
over the next decade. The draft plan represents a scaled down
and amended version of governor Kulongoski’s transportation
plan that was to be funded by $500 million in higher taxes and
fees. This draft plan is the result of a bipartisan and
bicameral work group that has been deliberating for several
months. I want to emphasize that this is a draft plan that has
not been adopted by, or agreed to, by all members of the work
group. It has not been adopted by either political party.
The draft plan would raise $300
million annually from increased fuel and weight per mile
taxes, increased title and registration fees, and a license
plate replacement fee. The six cent per gallon (25 percent)
increase in fuel and weight per mile taxes would generate
$163.8 million. The $16 (60 percent) increase in vehicle
registration fees would provide an additional $88 million. A
$23 (46 percent) increase in vehicle title fees would create
another $34.5 million in revenue. Finally, a $12 (240 percent)
increase in license plate replacement fees would add $16
million in tax revenue.
The plan provides that the six
cent gas tax increase would not take effect until the sooner
of either the occurrence of two consecutive quarters of
positive state employment growth, or January 1, 2011. It would
allow the City of Portland to impose a vehicle registration
fee based on vehicle miles travelled. The plan calls for a
four year moratorium on any increase in local fuel taxes or
other registration fees. After four years it provides more
populous counties the ability to increase registration fees
with approval of the Transportation Commission. Finally, it
requires voter approval of future increases in local fuel
$273 million would be dedicated
to modernize, maintain, preserve, and improve safety on our
road system. The money would be divided 50 percent to the
state ($136.5 million), 30 percent to the counties ($81.9
million) and 20 percent to the cities ($54.6 million). The
five counties in Senate District 28 would receive a little
more than $11 million from the funding package for their road
work. Cities within our district would receive a little more
than $1 million to maintain their roads.
$24 million would be committed to
“Flexible Funds” for multi-modal transportation. The final $3
million would be dedicated to rest area improvements. A
portion of the state highway money would include provisions
for debt service on an additional $800 to $900 million bond
for large highway congestion relief projects throughout
Oregon. The first bonds would be scheduled for sale in 2012
resulting in debt service payment starting in 2013. The total
annual debt service on that proposed bonding increases to
about $68 million by 2018 and the debt would not be paid off
until 2032. The entire amount to be repaid cannot accurately
be calculated because the bonds would be sold “as needed” and
the interest rates would be set by market price at the time.
The proponents estimate that the
$300 million package will sustain an average of 4,600 Oregon
jobs each year during the first five years of implementation.
This calculation is based on a formula that predicts 14 jobs
per one million dollars of highway expenditure. These jobs
include direct employment resulting from road building,
indirect jobs in industries that support road building, and
induced jobs that result from the benefit of increased
consumer spending. A job is defined as full time employment
for one person for a full year.
Oregon receives about $350
million each year from the federal government for the highway
program. This year the American Recovery and Reinvestment Act
(ARRA) provides for spending $27.5 billion for building
highway, bridge, and other surface transportation
improvements. Enhanced passenger rail, freight rail and port
infrastructure development is also included. Oregon’s share of
that additional federal money is about $334 million. This ARRA
money has a “use it or lose it” provision wherein states must
obligate half of the money by June 29, 2009, and the rest by
March 2, 2010, or it will be withdrawn and redistributed to
other states. The objective is to provide funding for “shovel
ready” projects to stimulate the economy by creating jobs.
The ARRA also establishes a
competitive grant program that will provide funding for even
more highway and bridge projects. It is expected that the turn
around time on these grants will be very short due to the
current economic situation. It is further expected that the
grants will carry provisions requiring them to be put to use
within a short timeframe.
The need for highway
transportation improvements in Oregon is great. The need for
job creation in Oregon is even greater. It would appear that
all three of these state and federal highway funding proposals
are scheduled to be implemented during the same time frame.
The number of jobs that could be potentially created is
Several important policy
questions must be considered:
1.) Do Oregonians believe that
increased spending on transportation infrastructure is the
best investment of state resources?
2.) Do the Department of
Transportation, counties, and cities have the capacity to put
all those funds to use within the required time frame?
3.) Are Oregonians willing to
pay an additional $300 million per year in taxes and fees to
fund the transportation projects that create the needed jobs?
4.) Are Oregonians willing to
obligate the next generation with more debt to pay for current
transportation infrastructure development?
5.) Will Oregonians refer any
fuel tax increase to the ballot and shoot it down in flames as
Oregon voters did in response to the last attempted fuel tax
increase in 1999?
Your legislators will be voting
on some form of a transportation package within the next six
weeks. I would very much appreciate your thoughts on this