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Oregon transportation funding proposal includes 5% tax on new bicycles

Posted by on May 9th, 2017 at 11:21 am

State Senator Brian Boquist knows we can’t build or tax our way out of congestion; but he wants to try it one more time.

Last night in Salem the Joint Committee On Transportation Preservation and Modernization unveiled the outline of what will become a statewide transportation funding bill.

As expected, the proposal (PDF) includes earmarks for several major highway widening projects in the Portland region and a tax on the sale of new bicycles. Overall, the package would raise about $8.1 billion that would be phased in over 10 years. That money would come from a mix of new and existing taxes and fees. As we reported back in March, the ideas presented to the committee yesterday by Senators Brian Boquist and Lee Beyer (committee co-chairs) came from four main “work groups” that met in open-door meetings in the capitol over the past three months. The proposals were also greatly influenced by an 11-city statewide tour taken by committee members last summer as well as a report by the Governor’s Transportation Vision Panel that came out one year ago.

Here’s what they put on the table last night. As you read them, consider Sen. Beyer’s comments last night: “This proposal can change; but if we want to solve the transportation problems the people told us they want to solve, this gets us there. This is the minimum we should do.”

And for reference, here’s the table with new revenue streams and revenue estimates:

Highways

It’s clear what their priorities are. Just look at what will have earmarks, a construction timeline, and a clear “course of action” baked right into the legislation.

“Fixing congestion” was by far the most urgent issue for lawmakers heading into the session and that mantra continued last night. The proposal would raise $5.09 billion over 10 years to be spent on highway/bridge expansions, road maintenance and seismic retrofits. The revenue would come from four main sources: increases to the gas tax, registration and title fees; and a new motor vehicle excise tax. The committee also wants to include placeholder language in the bill that would put collections mechanisms for congestion pricing and tolling into motion.

“No matter how much we build, we cannot build our way out of congestion… What we need to do and what’s been successful elsewhere is to congestion pricing.”
— Brian Boquist, state senator and committee co-chair

The gas tax would go up six cents in year one and then it would ratchet up another 8 cents by 2027 for a total increase of 14 cents. Increases to motor vehicle title and registration fees would increase by a total of $40 over the next 10 years. The registration and title fees would be tiered based on a car’s miles per gallon rating. Lower mileage cars (who pay more in gas tax) would pay a lower fee than cars that are more fuel efficient (and who pay less in gas tax). (Note: Thanks to the Oregon Bike Bill, state law requires that at least 1 percent of all funding for new road projects is spent on bicycling and walking infrastructure.)

While presenting these ideas last night, Sen. Boquist, a Republican from the Willamette Valley, made it clear that these traditional revenue sources would not be enough. “We cannot tax our way out of congestion,” he said. “And no matter how much we build, we cannot build our way out of congestion… What we need to do and what’s been successful elsewhere is to congestion pricing.”

While he didn’t say it directly, Boquist understands that in order to improve the efficiency of our highways we need to price them in such a way that people think twice about exercising their driving privileges. On that note, Boquist said he feels some mix of tolling and congestion pricing will be part of Oregon’s fugure. He mentioned tolling I-5 between the Willamette (downtown Portland) and the Columbia River.

And speaking of driving privilege, another way the committee has proposed to raise funds is a new “vehicle dealer privilege tax” that would levy a one percent tax on the purchase of a new car. This would raise $73 million a year that would go into a new “congestion relief and carbon reduction fund”. The details of how this fund would work is still up for debate, but their idea is that the revenue must be tied directly to projects that have a direct impact on reducing congestion and making freight/truck traffic flow more easily.

“That ‘carbon reduction’ phrase… that’s not, ‘let’s go build green things’,” Boquist said last night. “The notion is, if you have a highway system that is clogged up and you were to move freight and trucks off that and onto rail [or some other mode], that’s the sort of projects we’re talking about — projects that take truck traffic or reduce congstion on the roads.”

Boquist said he’d anticipate a court challenge to the new tax because it would fall outside Article IX of the Oregon constitution relating to highway funds. He sees the new fund as a way to pay for “major projects” from a source that’s completely outside the state highway trust fund. Boquist described it as “An excise tax on the privilege to own a vehicle.” Boquist and Beyer said that even with this suite of new increases, the cost of driving in Oregon would still be lower than in most other states.

Overall the package includes about $6.7 billion for highway projects over 10 years (if you include the new vehicle tax). Keep in mind that half the funds would go directly to ODOT, 30 percent would be allocated to counties, and just 20 percent would go to cities.

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Transit

Committee Co-chair Lee Beyer likened transit to “a social service” that can’t be paid for through the highway fund. To raise revenue, the proposal includes a new statewide employee payroll tax of 1/10th of one percent. 85 percent of the funds would have to be spent on operational service improvements and cities with over 200,000 people would be required to purchase buses powered by natural gas/propane or electricity. The proposal specifically prohibits funding for light rail.

If the new tax passes, a person who makes minimum wage would pay about 39-cents a week or $20 a year. Someone with an annual income of over $100,000 would pay about $100 a year.

This proposal would raise about $1.07 billion $107 million annually for transit services statewide. (Note: That’s exactly the same amount recommended by the Governor’s Transportation Vision Panel report from May 2016.)

Bicycling and walking

A four or five percent excise tax on new bicycles will very likely be part of the upcoming legislation. We’ve been reporting on this for months now and it the idea appears to have only gained acceptance along the way. The new tax is estimated to raise $1.6 to $2.0 million per year.

Other funding for bikeway-specific projects (meaning paths not in the highway right-of-way) would include a $7 million set-aside in the Connect Oregon grant program (about what bike projects receive in the competitve process now) and $4 million in grants from a state lottery-funded program for linear parks administered by Oregon State Parks and Recreation Department.

Sen. Beyer said the funds would be used to, “Take care of off-road commuter routes… As an alternative to get out of the way of trucks.”

In addition, the proposal includes $10 million a year for Safe Routes to School projects that would come out of the state highway fund (and would require a 40 percent local match). Beyer said that amount would be enough to “Complete a safe route to school a quarter-mile around every elementary and middle school in the state.” Lawmakers are also proposing $10 million a year into the All Roads Transportation Safety Program they say would address “the 450 most dangerous transportation problems in the state”.

The safe routes funding is lower than the $32 million in House Bill 3230 that was lobbied for by The Street Trust and members of the Transportation for Oregon’s Future coalition. It’s also lower than the $15 million recommended by the Governor’s Transportation Vision Panel.

As for the bike tax, there was no mention of it in a statement released today by the Transportation for Oregon’s Future coalition. The Street Trust Policy Director Gerik Kransky said, “We are happy to see an initial transportation package that includes funding for trails and safe places to walk and bike.”

Last week the Street Trust convened a meeting of local bike shop owners to discuss the idea. Development Director Brittani Garner wrote in an email to invitees that, “This type of tax has come up before, and has never come to fruition. This year may be different… As The Street Trust begins to learn more about what will be included in the full transportation package, we want to have a conversation with you, our local bike industry partners, about the potential bicycle excise tax, and its impact in Oregon.” Also at that meeting was Alex Logemann, the state and local policy analyst with national (industry-supported) nonprofit People For Bikes and the Street Trust’s Policy Director Gerik Kransky.

We weren’t at the meeting (media was not invited) but sources say it was a robust discussion. We’ll report more about local bike shop owners reactions in the coming days.

What happens next

Last night’s meeting was just the start of the debate. This proposal will create the framework for what will surely be heated discussions over the next several weeks. Everything is subject to change, but lawmakers are under a lot of pressure to pass something and they don’t have a lot of time for major disagreements. The committee plans to meet again this Wednesday to hash out details of the proposal and whittle it into a form that can be passed onto legislative counsel where it will be transformed into an actual bill. Then a slate of public hearings will happen in June with a target date for a full vote of the legislature by mid-July.

At the end of their meeting last night, committee members were reluctant to set such a short timeline for when they’d be forced to make decisions. The process this year is much more public (the meetings are recorded live) and transparent than it has been in the past and it’s clear that as tension mounts, so does the stress of lawmakers. That dynamic caused one committee member (I couldn’t tell who) to say before the gavel struck last night, “Sometimes the old smoke-filled rooms don’t look all that bad.”

Stay tuned.

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

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Kevin Love9wattsHello, KittyAlex ReedinFree Market Economist Recent comment authors
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Hello, Kitty
Subscriber
Hello, Kitty

Sales tax bad, sales tax on bikes good?

I’ve often thought that instead of 1% for bikes, that percentage should be based on the percentage of trips made by bicycles. Portland has a 6% mode split? Then 6% of road funds need to be spent on bike infrastructure.

dan
Guest
dan

Would love to see how they arrived at that revenue projection. $4m in revenue would be 80,000 bikes sold at $1,000 each, or 160,000 bikes sold at $500 each. That # of bike sales sounds high to me, but what do I know?

SE
Guest
SE

dan
Would love to see how they arrived at that revenue projection. $4m in revenue would be 80,000 bikes sold at $1,000 each, or 160,000 bikes sold at $500 each. That # of bike sales sounds high to me, but what do I know?
Recommended 1

that’s how I see it too , they need to cut back on the wacky weed ?

SE
Guest
SE

My GUESS is that most riders don’t buy new bikes that often. I tend to hold
on to good/proven/setup bikes.
Would like to see actual sales figures and total Dollar values.

Adam
Subscriber

No surprise that light rail is specifically blocked from this bill. Rural and suburban republicans love to take jabs at “those crazy lefties in Portland”.

Peter W
Guest

I’d worry that we set up a bike tax now, with the good intention that it’d be used to expand the total available bike funding, but then years later lawmakers would question why we’re spending money on bikes from other pots, when you have a dedicated bike-funding pot.

I’d also worry that though we think this would remove the haters argument that “bikes don’t pay taxes, so get off the road”, they’d just move on to “bikes don’t pay enough taxes, get off the road”. Their line of argument will only stop when taxes are so high that the bikes have all gotten off the road.

oliver
Guest
oliver

Boy, they’re just not going to give up until we get a consumption tax in this state are they?

rick
Guest
rick

Where is the Oregon tax for metal-studded tires for cars? The state of Washington has a fee for those studs in Washington !

Mark
Guest
Mark

This will affect many more people than just those buying new bikes. This will affect me personally, as I work in a shop that sells new bikes. We have a significant number of customers from Washington and California who choose to buy bikes from us to save on their local sale taxes. This will definitely hurt our bottom line and our ability to hire and retain employees. The profit margins in a retail bike shop are not especially generous.

Also, why not tax *all* new vehicle sales at the same rate?

rick
Guest
rick

Where is the bike path adjacent to Highway 217? Homes in Metzger were bulldozed to make the highway.

Dan A
Subscriber
Dan A

I’d like to know when we will tax soccer balls too. If cars get a 1% tax and bikes get a 5% tax, soccer balls should taxed at least 10%.

Billy
Guest
Billy

Jonathan don’t we talk about paying a fair share when it comes to taxing the wealthy and corporations? I’m not against a tax (not more than 5%) on new bikes if we have reasonable assurance that the funds will go bike infrastructure. We are in need of more and better bicycle infrastructure, and it costs money. This is a concession I’m willing to consider.

Greg Spencer
Guest

The bike tax is a nuisance and it’s stupid, but it’s not the stupidest aspect of this bill. What strikes me most is the characterization of public transit as “’a social service’ that can’t be paid for through the highway fund.” This is madness, and terrible policy from Portland’s standpoint. Transit is a way to move people, just like cars, except way more space efficient. If lawmakers want to tackle congestion, they need to fund transit through transport levies and prioritise transit on roads — making more efficient use of the streets and freeways in the metro area. Most of the proposed projects called “congestion relief” are road and bridge widenings with no thought about managing the induced demand they’ll create. Particularly in Portland’s current fast-growth phase, these enlarged roads will fill right back up with single-occupancy vehicles. Trip speeds will be the same or longer and we’ll have more noise and pollution with increased car traffic. Portland’s main deficiency when it comes to transport is the lack of support and vision for transit. This bill just continues a car-centric, traffic jam course for Portland.

Buzz
Guest
Buzz

Complete BS – what we’ve all come to expect from our politicians these days.

Jason H
Guest
Jason H

Anyone know if this tax has a maximum limit? It’s still ridiculous to even consider a excise tax due to the non-conjestion, non-polution and (virtually) non-road wear that bicycles cause. But $50 on a $1000 commuter bike seems (eyeroll) somewhat more logical compared to having to pay $600 for someone buying their dream Pinarello or Moots or similar that gets ridden recreationally less often. Why not a $25 flat fee or something?

Nick W
Guest
Nick W

Not to mention that nicer MTBs are not often used on public streets anyway.

Jon
Guest
Jon

To me the worst thing in this proposal is the 0.1% payroll tax increase. Once again general tax money is being used to subsidize primarily a benefit for automobiles. This should be gas and registration fees only in my opinion.
From Oregonlive:
The proposal calls for the following tax hikes over the next decade:

>> Increasing the gas tax by 14 cents, to 44 cents per gallon
>> Increasing title fees by $40, to $117
>> Increasing registration fees by $40, to $83, and adding a tiered structure
>> 0.1 percent payroll tax
>> 5 percent tax on new bicycle sales
>> 1 percent tax on new vehicle sales

http://www.oregonlive.com/politics/index.ssf/2017/05/oregon_transportation_package.html#incart_river_home_pop

Ryan
Guest
Ryan

On the bright side, maybe I can use this to get my wife to let me buy that new bike sooner rather than later… “Honey, do you really want me to have to pay all of that money in taxes later? It just doesn’t make sense to NOT buy it now! I’m just trying to look out for our family.” 😛

mikeybikey
Guest
mikeybikey

assuming bicycles are covered under the no sales tax exemptions in washington, this is good news for bike shops in vancouver.

bikeninja
Guest
bikeninja

The bike sales tax seems impractical to implement given the amount of funds raised. Since Oregon does not have a sales tax infrastructure and bikes do not require license or registration there does not seem to be a good way to track payment of the tax. Do we set up a “Bike Control Commission” like the OLCC to handle and control the import of bikes? Will crafty bike retailers just rename their products ( two wheeled mobility scooters).Or will bikes be sold unassembled to avoid the tax. My biggest fear is the addition of an overcomplicated registration and tracking infrastructure to what is now a simple business for little gain.

Daniel (teknotus) Johnson
Guest
Daniel (teknotus) Johnson

I’m always against sales taxes. Making a mode of transportation that would reduce demands on infrastructure more expensive is just idiotic.

Beth H
Guest

The simplest way to get around all this nonsense is to buy a used bike from a private party.
..::mic drop::..

Josh Chernoff
Guest

Why is it that the people who feel that cyclists should be taxed because its only fair that they pay their fair share are also opposed to taxing drivers per mile that they use on the road? Well its simple its because they are selfish hypocrites who don’t care about you. If they really feel this is a matter of fairness then where are all the toll booths?

Tom
Guest
Tom

If we are going to have a bike sales tax then shouldn’t we also have a shoe sales tax. When will the pedestrains start paying their way. Also ADA ramps are not free, so where is the wheelchair and walker sales tax. And what about those freeloading scateboarders paying 0%.

RyanT
Guest
RyanT

Lets not forget that bicyclists are paying for the roads they use already through property taxes they pay.

“Most walking and bicycling takes place on local streets and roads that are primarily paid for through property taxes and other general local taxes. Walking and bicycling inflict virtually no damage on roads and streets, and take up only a tiny fraction of the road space occupied by vehicles. Bicyclists and pedestrians likely pay far more in general taxes to facilitate the use of local roads and streets by drivers than they receive in benefits from state and federal infrastructure investment paid for through the gas tax.” – See more at: http://www.frontiergroup.org/reports/fg/who-pays-roads#sthash.Q2n1byyT.dpuf

matt savage
Guest
matt savage

$2m gets us about, what, 2 blocks of pavement. That’s just an overlay, not even a grind and overlay…

rick
Guest
rick

How about the numerous cars, suvs, and Subarus driving around in this 75 degree weather with metal-studded tires?

GlowBoy
Guest
GlowBoy

Bicycling is a public good, and should be encouraged. Most bike trips are trips NOT taken in polluting, dangerous, road-clogging automobiles, and more bicycling means lower healthcare costs for society.

Not only should bicycles not be taxed at a higher rate than automobiles, they should be reverse-taxed. Here’s a revenue-neutral idea: tax motor vehicles at 2%, with the total revenue of that extra 1% given back to bicycle buyers as a flat refund. Yes, I’m aware this means poor people who buy cheap bikes may actually net money for doing it. That makes this idea even better.

Kenny
Guest
Kenny

I am actually rather Livid.

Let me get this Straight.

5% tax on bicycle sales. Which have very small margins and ran mostly by small businesses.

Charge a mere 1% on automobiles, which commonly have pretty decent margins. Are a major purchase that many will accept higher taxes to buy.

I’d like to see what taxes cities that have a great deal more invested in bicycle infrastructure such as Netherlands and Denmark.

I’d also like to see taxes for driving that actually relate to more of the associated costs to all of us to have on the road.

A tax to purchase a car in Copenhagen is 30%. As well as several environmental fees, road tax, etc.

Why not at the very least drop the bike tax because it’s ridiculous, no civilized city would do this, and if they did there would be Cycle Tracks Galore not simple painted white lines on “some” streets in return.

Bump the auto tax to 5% which would be a great deal more revenue and help pay for the costs of driving cars.

The idea is to encourage less auto use by making bicycles as accessible, Safe, and cheap as possible.

Autos are the “reason” we NEED protection and infrastructure in the first place. So, as a result, if you drive a car you help keep other vulnerable road users safe.

Our auto fees are outrageously low. Why are they adding a tax on new bicycle sakles and not just bumping the fees to drive?

wsbob
Guest
wsbob

“…Sen. Beyer said the funds would be used to, “Take care of off-road commuter routes… As an alternative to get out of the way of trucks.” …” bikeportland

It sounds as though Sen. Beyer made that statement, thinking considerately on behalf of people biking and having to deal with trucks on the road. Nice of him to think so.

Much more, and better, infrastructure for walking and biking, needs to provided, though, and not just so people biking can “…get out of the way of trucks. …”, but more importantly, because the roads in more and more traffic situations outside of commute hours, in addition to during commute hours, are filled to capacity. Too many people do not have access to good, enjoyable to use walking and biking infrastructure that could for them, be an alternative to driving.

SD
Subscriber

Single occupancy vehicle trips are congestion. Yet this legislation does little to nothing to increase access to alternatives to SOV trips.

drew
Guest
drew

As per the 2012 Grist article: driving a car costs society as a whole .20c per mile.
Riding a bike is an economic gain to society of .42c per mile.
Not a good idea to tax something that benefits all of us. Especially at 42c/mile.

Gary B
Guest
Gary B

There is plenty to complain about here. BUT, can we take a moment to soak this in:
““And no matter how much we build, we cannot build our way out of congestion… What we need to do and what’s been successful elsewhere is to congestion pricing.”

We have a Republican lawmaker from suburban Oregon not just accepting, but advocating for congestion pricing. I mean, for many BP readers this may not be cutting-edge thinking, but I suspect the idea of congestion pricing is pretty far out there (i.e. unheard of) for the much of the population. I think this is a remarkable development that shows significant progress.

The eBike Store
Guest

My understanding is that the gas tax is bringing in less revenue as folks are driving less and switching to more efficient / hybrid & electric cars. Does anyone know if the proposal includes a tax mechanism for electric cars?

The eBike Store
Guest

It also seems to me that a large percentage of road damage is caused by studded tires. I hope there is a provision for taxing them into oblivion!

Free Market Economist
Guest
Free Market Economist

If you continue to elect people who cannot figure out how to cut spending by eliminating waste, then they will continue to tax you more and more. How many of us think we could not find significant areas of the state budget that could be cut or eliminated? I think a 10% cut would not even take much effort.

Tax the poor to increase pollution!
Guest
Tax the poor to increase pollution!

This is the most environmentally destructive, regressive legislation ever proposed in Oregon. Billions of dollars to promote more cars stuck on freeways spewing out carbon to ramp up global warming. Billions from regressive taxes with flat or per person rates that will impact the poor the hardest. Taxing bikes and electric cars at rates far higher than gas guzzling SUVs or massive trucks. Oregon Democrats have gone Trump. Barf.

Andrea Capp
Subscriber
Andrea Capp

Is there anyone we should be sending emails to?

Tom M
Guest
Tom M

Great, tax new bike sales. This will create more demand for stolen bikes. Joy.

OrigJF
Guest
OrigJF

Implementing a tax on a form of transportation known to reduce congestion (aka riding a bicycle) seems flawed. If the goal is to get people to utilize the existing and proposed bicycle routes to reduce congestion on roadways, then the incentive should be to get people out of motor vehicles and onto bicycles.

If someone currently owns a motor vehicle, but not a bicycle, the new bicycle tax is a disincentive to purchase a new bicycle. Therefore, the person would continue to use the form of transportation they currently utilize instead of branching out to try other means to get from point A to point B.

Kenny
Guest
Kenny

So, if your car does less environmental harm, pollutes less..
pay MORE?!?!

If you do not even contribute to these problems by Cycling, you need to be pretty much Charged a Fee for making that choice? Kind of like a Fine.

Yeah, we’re definitely falling apart.

I thought we were ass backwards in terms of taxing the wealthy, not universally funding healthcare, education, daycare for children..

Then for a drop in the bucket of 12 million in taxes generated from local bike shops selling $400-600 average bikes.. a Program is instituted, which will cost $ to Run.

But these policies are right up there in their obtuse nature.

dwk
Guest
dwk

“I believe we do have essentially “universal” funding for education – via property taxes. Now we have HS grads who can’t read, write, do math, understand history, civics, etc.”

We also have people who think we can simply cut 10% form any budget….