Editorial: How should Oregon pay for roads in the future?
Published 5:00 am Thursday, January 16, 2025
- Traffic on U.S. Highway 97 in Bend in September.
You may go to the store and think: These prices are too damn high. Well, the price of driving to the store could be going up, too.
One thing coming down the road in the 2025 legislative session is a debate over money for roads and other things transportation. It could mean new fees and taxes or increases.
“How do we sustainably fund our transportation system so that everyone in every corner of the state is able to get where they need to go safely and efficiently?” House Speaker Julie Fahey asked legislators on Monday.
The Oregon Department of Transportation says it has a total annual funding gap of $170 million to “keep our roads, bike lanes, and sidewalks open and safe for travel, and our communities clean and livable.”
That $170 million does not include everything. It doesn’t include local needs. It’s basically operations, not even maintenance for major roads. Maintenance is more. You can find a breakdown of how ODOT came up with the $170 million here: tinyurl.com/ODOT170million.
ODOT has laid out several funding options for the Legislature to choose from. The option that may change things the mostest, if you will, would be a road user charge. That’s when drivers pay by the mile for use of roads with some sort of tracking system. A fuels tax has been excellent, except when passenger vehicles get better and better gas mileage or don’t use gas at all. Oregon launched its own road user charge system in 2015, OReGO. People aren’t really going to sign up for that unless compelled or the state makes a much more attractive nudge.
The public reaction to switching to a road user charge may be a no thank you, the equivalent of curling into a ball with all the prickly spines pointing out. There are also a host of technical issues and questions about enforcement, collection costs and more. Should the state refuse to register vehicles that fail to pay or participate? Would local governments be able to tag on their own local option road user fees? Should the state implement the road user charge gradually or should it just set a date and turn it on?
There are many other options for revenue. The state could index existing taxes and fees to inflation. Gas taxes and vehicle fees have not kept up with rising highway construction costs. A total of 24 states do index fuel rate fees without requiring legislative action. ODOT estimates indexing fuel fees would mean an increase in the fuel tax of about 1 cent a year. Registration and title fees would increase by $2 to $3 per year.
A total of 27 states have a kind of property tax on vehicles. It might be between $39 to $154 per year, if Oregon adopted a similar rate to that of nearby states. It could be calculated based on the sale price and age of the vehicle. With 3.2 million registered vehicles in Oregon, this property tax could bring in more than $100 million a year.
A few states have started an electric vehicle charging fee, which would capture some revenue at public charging stations. For instance, Iowa charges $.026 per kilowatt hour. Iowa estimates it may raise about $220,000 in a year, though, presumably that would grow. Most passenger vehicles are charged at home. So, it might help capture revenue from visitors traveling through the state.
A few states have started charging retail delivery fees for the privilege of delivering packages. For instance, Colorado charges 29 cents per sale. Such a fee in Oregon might raise about $1.88 million for every penny of the fee.
Oregon could do more tolling for new construction and/or for special lanes on highways. Gov. Tina Kotek directed ODOT to put a pause on tolling, so this option seems unlikely in the near term.
Only five states in the country don’t have an excise tax on vehicle sales. Oregon is one. The rate varies, of course. It can be as high as 8.5% in some states. The cost is often rolled into the price of the vehicle, which for many is a monthly car payment. Oregon already has a privilege tax on the sale of new vehicles of .5%. This tax idea strikes us as redundant.
Legislators will be making decisions about these options in 2025. Tell them if they should stop or go.