A bike excise tax, losing the Lottery, and more Safe Routes: Our look at state transportation funding package

By the end of this month Oregonians will have their first look at what state lawmakers and interest groups have cooked up for a transportation package.

I’ve followed the progress and have noticed several key themes worthy of your attention. Here’s my best take on what’s going on.

But first, let’s start with an overview of how the package is being developed:

How the sausage is being made

The package is being drafted by the Joint Committee on Transportation Preservation and Modernization — a 14-member body with eight Democrats and six Republicans that represent districts throughout Oregon. They’ve met five times since February 1st. Their meetings are usually less than 30 minutes long because the real work is being done in four work groups. These groups have been assigned to focus on specific topics. Here are the names of the groups and the committee members assigned to each of them:

Congestion Work Group:
– Sen. Brian Boquist (R-Dallas)
– Rep. Barbara Smith Warner (D-Portland)
– Rep. Susan McLain (D-Hillsboro)
– Sen. Betsy Johnson (D-Scappoose)

Public Transit/Bike/Ped/Safety Work Group:
– Sen. Lee Beyer (D-Springfield)
– Sen. Rod Monroe (D-Portland)
– Sen. Kathleen Taylor (D-Milwaukie)

Highway Preservation/Seismic Work Group
– Rep. Cliff Bentz (R-Ontario)
– Sen. Fred Girod (R-Stayton)
– Rep. John Lively (D-Springfield)
– Sen. Jackie Winters (R-Salem)

Multimodal* Freight Work Group:
*(Note: “Multimodal” has nothing to do with bicycling in this context. It refers to freight that uses ships,railroads, and trucks.)
– Rep. Caddy McKeown (D-Coos Bay)
– Rep. Andy Olson (R-Albany)
– Rep. Greg Smith (R-Heppner)

Because these are technically “work groups” and not official committees, their meetings are not recorded for the public. They meet twice-weekly (give or take) in Capitol meeting rooms that are open to the public. Sources have told me that the discussions are very candid and interactive between the lawmakers and the various lobbyists in the room. The work groups report back each week to the larger Joint Committee and their final recommendations are due March 15th.

Based on video recordings of the Joint Committee’s meetings thus far, here’s what I think are the most interesting takeaways…

Get Ready for a bike excise tax

Seriously. Word has it that the package will include a provision to tax the purchase of bicycles. In the committee’s meeting on February 27th, Sen. Lee Beyer offered this in a report-back from his work group: “We heard about potential revenue sources for transportation… And we talked some about if there’s an opportunity — or what opportunity there might be — to do something with bicycles.” And at an event last night, The Street Trust (formerly the Bicycle Transportation Alliance) Policy Director Gerik Kranksy said, “There are a lot of people down there [in Salem] would would love to pass a bicycle excise tax. And I’m not kidding.”

According to documents released by the committee a 1% bicycle tax would yield $450,000 per year ($5 on a $500 bike). Compare that a 1-cent increase in the gas tax — a funding source sure to be in the package — which would yield $28.4 million per year.

How large would the bike tax be? We haven’t seen a detailed proposal, but an influential report released in May 2016 by the Governor’s Transportation Vision Panel, included this passage (PDF):

Implement a bicycle excise tax. To ensure that bicyclists are contributing to the infrastructure they use, the Legislature should consider creating a new tax on the sale of bicycles. Relative to bicycle registration or licensing which would have high administrative costs relative to potential revenue, a bicycle excise tax of 5-10% could raise substantial funding for bicycle infrastructure, and create opportunities to leverage additional federal dollars that require a local match.

For what it’s worth, a bicycle excise tax hasn’t been dismissed outright in the past. Not even by Oregon’s largest bike advocacy organization or by Metro, our regionally-elected government.

A 2013 transportation funding research report by the City Club of Portland recommended such a tax. At the time, The Street Trust’s Kranksy (currently Oregon’s only full-time bike lobbyist in Salem), said he would be “open to the conversation.” The Street Trust also supported a bike excise tax in 2008 — because of its potential to quell pushback and fund bike programs — when it was proposed as part of the 2009 Jobs & Transportation Act. Metro has supported it too, based on the idea that it would, “address concern, however mistaken, that cyclists don’t carry their weight.”

Reached today for his current opinion on a bike excise tax, Krasky said, “My board… will review any final bill language before our organization takes a position. We are inclined to oppose bike taxes yet willing to consider a complete transportation funding package before we make our decision.”

An excise tax on bicycles has a very small yield, would require a new collection mechanism, and is likely to be somewhat controversial. The reason it’s under considerations has everything to do with politics. For many years some lawmakers and agency staffers have chafed under pressure from constituents who say “Bicyclists don’t pay” and “Bicyclists need to pay their fair share.” Regardless of the facts and principles of the issue, a tax on bicycle users is seen as a way to quiet those critics. And while it might annoy you, consider this: This red meat is probably seen as necessary only because the bill will include significant funding for bicycle projects (see below).

Bikeways and Safe Routes funding will get a significant bump

The most promising development with the state package thus far is that it’s very likely the bill will include significant funding for Safe Routes to School programs statewide. The amount of funding for Safe Routes currently being tossed around is $20 million. Just today at the urging of The Street Trust, Rep. John Lively and Sen. Kathleen Taylor introduced House Bill 3230 that would allocate $20 million to Safe Routes from the State Highway Fund. The money would be earmarked for projects that are within one quarter-mile of schools. Projects at Title 1 schools, that have a majority of students who receive free and reduced lunch, would be prioritized. This bill could get incorporated into the larger package as-is, or with amendments depending on what the committee agrees to.

In addition to projects that improve safety for cycling and walking around schools, the legislature is likely to include some funding for bike path and trail projects. One proposal says an additional $5 million per year is possible.

To raise additional funding for projects that improve bicycling, the state is considering raising the “1 percent for bicycles” funding set-aside (a.k.a. the “Bike Bill”). If it were raised to 2 percent, the state would have an additional $20 million in funding (based on $500 in total new revenue into the highway fund).

Freeway widening is a sure thing (of course)

As we’ve reported, highway expansion projects are a sure-bet in this package. The Big Three projects in the Portland region will get some money. The only question is how much (keep in mind they’ve already been given millions in funding for project development and planning). The package can’t fund these three projects entirely because it would push the overall price-tag way too high.

How much will lawmakers devote to “fix congestion” in the Portland region? Our guess is about $30-40 million per project. For comparison, the last major transportation bill passed by the Legislature included nearly $900 million for 37 highway projects. The Newberg-Dundee Bypass alone got $192 million and overall the projects averaged about $23 million each.

To raise the money for these big-ticket items, the Legislature will ask Oregonians to pay more for their gasoline and for various automobile-related fees like licenses and registration. A committee document shows that a 10-cent gas tax increase would raise $284 million a year; a new DMV title fee of $100 per vehicle would raise $36 million a year; a $29 increase to the vehicle registration fee would raise $171 million a year; and a $15 increase to the cost of a driver’s license would raise $9 million a year.

Bikes could lose Lottery funding

2013 was an important year for bicycle infrastructure funding in Oregon: That was the year, thanks to a concerted push by The Street Trust, that bicycle, walking, and transit projects were allowed to compete in the coveted State Lottery-funded Connect Oregon program. Since its inception in 2005, the program — which was created to fund “off-highway” projects that can’t utilize gas tax revenue — was formerly open only to airport, rail, and marine projects. Almost immediately active transportation projects flooded the grant application pool. Currently biking and walking projects earn about 5 percent of the $40 million or so available each cycle. (One recent project was the new carfree bridge over NW Flanders).

Also almost immediately, major players in the port and business lobby were not happy about sharing the pie with newcomers.

Now it appears those voices have the ear of key members of the Joint Committee. Sen. Johnson and Rep. McKeown have made veiled comments during committee meetings that a change is afoot.

At the Joint Committee meeting on February 20th, Rep. McKeown said,

“The Connect Oregon methodology has been a common topic among shippers and the ports to date. Part of it has to do with… how the current process may have wandered away from the original intent of Connect Oregon as it was devised a number of years ago. One of the conversations that has come up is the difference between moving people and moving freight. I know Sen. Beyer is working on bike/ped/transit issues and is there a way that we could begin to decouple revenue sources of how we move freight and people? That’s a conversation we’re going to wrestle with in our work group.”

And on February 13th, Sen. Johnson said, “We want to take a look at Connect Oregon and how it’s functioning. There was a lot of discussion at our first meeting about what the original intent of the legislation was.”

Kransky, with The Street Trust, has been at these work group meetings every week. I asked him about Connect Oregon and he confirmed that there’s talk of re-structuring the program. Instead of taking active transportation projects completely out of the mix, he said he’s working to create a “firewall” between the them and port/rail projects. If there’s more money coming into the program overall, and clearer boundaries about what types of projects can receive it, Kransky thinks the business interests will be satisfied.

The $64 million — or should we say $500 million — question

Does any of this matter? Does a transportation package even have a chance to pass? That’s a good question any session; but this time around it’s particularly relevant. With the failure of Measure 97 at the ballot, the Legislature has a $1.8 billion hole to fill. If Governor Brown has to raise taxes for basic state services and expenditures, some think it’s unlikely she’ll have enough political capital left over to ask Oregonians to tax themselves yet again for better roads and bridges.

Pressure from the budget shortfall might encourage lawmakers to be too timid with their transportation funding request. But if they don’t ask for enough (say, $300-$500 million), the package will lack the exciting bells and whistles needed to garner the public’s support. Lessons from other states make it clear that ambitious packages often do better.

It’s a great sign that Oregon is at a place where everyone agrees our transportation funding crisis is urgent. Whether that urgency translates into passage of a law to pay for it remains to be seen.

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

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