By ALEX BAUMHARDT/Oregon Capital Chronicle

SALEM — A bill to stave off hundreds of layoffs at the Oregon Department of Transportation, pay for road infrastructure projects and temporarily boost funding to public transit agencies moved forward Sunday after a rocky start.

Republican lawmakers who were absent and upset Friday about the Democrats’ proposal to pay for it — by raising gas and payroll taxes, increasing vehicle license and registration fees, and charging electric vehicle owners per-mile road use fees — showed up Sunday, following negotiations on several provisions of the bill. One key change would end the proposed payroll tax increase after two years. The payroll tax flows to public transit agencies to run trains and buses.

Members of the Joint Special Session Committee on Transportation Funding voted along party lines 7-5 to send the amended transportation funding package to the House floor. The House is scheduled to vote on the package on Monday, with a final vote in the Senate anticipated Wednesday.

The committee — which began nearly an hour late — went on for more than four hours, and included about two hours of public testimony before lawmakers asked questions of legislative experts and debated various amendments to the bill.

Lawmakers introduced more than a dozen amendments, but only two passed. One would allow the Department of Administrative Services to tweak gas taxes on everyone, and weight mile fees on trucks, to meet the Oregon Constitution’s requirement that light- and heavy-duty vehicles equitably pay for roads — two-thirds of costs paid for by light vehicle owners, and one-third paid by heavy vehicle owners — but it specifies that the agency can only adjust these taxes and fees to go down, not up. This is a change from earlier versions of the bill that would have allowed the agency to get to an equity ratio by raising those taxes and fees on light or heavy vehicles.

The second amendment sunsets the payroll tax increase — from .1% to .2% on Oregonians and employers — on Jan. 1, 2028. A previous version of the bill did not have an end date on the tax increase. Despite supporting the amendments, Republicans remained opposed to the overall bill.

“Today, it’s Labor Day weekend, and we’re talking about doubling a payroll tax on Oregon workers. I cannot in good conscience do that. I cannot do that right now,” said House Minority Leader Christine Drazan, R-Canby.

Rep. Khanh Phạm, D-Portland, countered that consistent investment in public transit with the payroll tax, which first began in 2017, has expanded public transit services across the state and continuing to invest in it is the best way for lawmakers to help Oregonians lower their costs.

“Oregonians who can downsize the number of cars they own, pay less car insurance, pay less gas, don’t have car payments, don’t have as much maintenance, don’t pay for parking — those are ways that we can reduce the cost of living for Oregonians,” she said.

Rep. Susan McLain, D-Forest Grove, described the temporary payroll tax increase as a bridge while lawmakers further discuss transportation funding issues for public transit.

“If we do this, we have a sunset that comes due in ‘28, and we have to talk about it, and we have to have a solution to replace it,” she said. “There has to be a trigger, or there has to be something that allows us to make sure that we can have full transit in the state of Oregon for both the rural and the urban areas, for the seniors, for the handicapped and for people that just should not be driving.”

Dozens of people came to testify on the bill, many of whom expressed frustration that so much had been pared back from the original House Bill 2025 package proposed during the long legislative session, and that lawmakers had done so little with the information they’d gleaned from the 2024 transportation listening tour they’d taken across the state.

Others expressed frustration that the tax and fee increases proposed by Democrats will burden already struggling Oregonians, and that the legislature’s process for producing the package through an emergency special session was a mess. The bulk of written comments opposed the proposed tax hikes, while the majority of in-person testimony supported the passage of the bill.

“Let me be clear, a transportation package must pass. Without it, our roads, bridges and essential infrastructure will fall further into disrepair. Oregon cannot afford that, and neither can Yamhill County. But let me also be clear, this package is a prime example of why I refuse to affiliate with either political party,” David “Bubba” King, a Yamhill County Commissioner, told lawmakers. “Even if you call this bill a compromise, the truth is the process has been dysfunctional.”

Many who testified were upset at Gov. Tina Kotek’s absence.

Kotek canceled her planned Labor Day vacation and is in the state, according to Roxy Mayer, the governor’s spokesperson. For her security, the office would not disclose Kotek’s location, but Mayer said in an email the governor “is closely monitoring the proceedings and has been communicating with lawmakers since the special session began.

“Since the adjournment of the legislative session, the governor and her team have worked every day with lawmakers, local partners, and stakeholders to maintain the basic transportation services Oregonians rely on,” Mayer said “HB 3991 has the support of a broad coalition, and she is focused on seeing the funding proposal cross the finish line.”

What fees and taxes would change under the proposed transportation package?

A gas tax increase from $0.40 to $0.46, effective Jan. 1, 2026 is expected to raise $90 million a year. The gas tax is split among the state and local governments, with half of the tax for the state, 30% for counties and 20% for cities.
An increase in annual registration fees from $43 to $85 for passenger vehicles; $63 to $105 for utility vehicles, light trailers, low-speed vehicles and medium-speed electric vehicles; and $44 to $86 for mopeds and motorcycles.
Increasing title fees for passenger vehicles from $77 to $216.
Doubling the payroll tax used to support public transit from 0.1% to 0.2% until Jan. 1, 2028.
An increase to registration surcharges for electric and highly fuel-efficient vehicles, from $35 to $65 annually for cars with a 40+ miles-per-gallon rating, and from $115 to $145 annually for electric vehicles.

Phasing in a mandatory road usage charge program for electric vehicles by 2031. Electric vehicle drivers have been able to opt into the OReGO program and pay 2 cents per mile in exchange for lower registration fees, and the proposed change would mandate electric vehicle drivers participate in that program or pay a flat $340 annual fee.