Oregon tire tax proposal hits wall of opposition

Oregon lawmakers looking for new ways to fund road and bridge projects this year will have to win over a highly skeptical public, if the first idea to get a serious hearing is any indication.

A proposal to slap a 4% tax on many tire sales in the state has garnered overwhelming pushback by opponents in recent days, many of whom say they can’t afford another cost increase and question the spending priorities of legislative Democrats.

As of Wednesday morning, more than 1,600 pieces of written testimony had been submitted in opposition to the bill, House Bill 3362, compared to around 240 in support. That outpouring followed calls by some Republican lawmakers and conservative media to fight the bill in the last week.

“The cost of utilities is through the roof and being increased every time you turn around,” Steve Woodward, a Keizer resident, said in written testimony. “Another 4% on our tires is not what we need right now.”

HB 3362 is the brainchild of Rep. Ken Helm. D-Portland, and Sen. Chris Gorsek, D-Troutdale, who say it was crafted in part to address an emerging environmental issue.

A tire additive known as 6PPD can find its way into streams and other bodies of water, where it is harmful to fish species like salmon. Helm and Gorsek want to use a quarter of the roughly $20 million a year their tire tax is expected to raise to pay for stormwater projects that can help prevent the toxins from reaching the water system. Money would also go toward improving salmon habitat.

At a public hearing on the bill Tuesday evening, Becky Anthony, a water quality specialist with the Oregon Department of Fish & Wildlife, said her department is trying to understand the emerging problem.

“We’re in the early stages of understanding the scope of the issue,” Anthony told lawmakers. “But we have indicators it may be causing concern in some Oregon streams.”

Related: Oregon gets more than $30 million from federal government to build overpass wildlife crossing on I-5

Gorsek and Helm are also clear that they’ve come together to find new money for two of their pet issues: Oregon’s rail system and crossings to help wildlife safely traverse state highways.

“What we were looking for was something that would help to shift people to other modes of transportation, rail being one of them,” said Gorsek, whose office walls greet visitors with large photos of trains. Under SB 3362, half of the money raised by the new tire tax – an anticipated $10 million a year – would go to a new fund dedicated to bolstering rail projects in the state.

Helm, meanwhile, has worked since 2019 to create more wildlife crossings. The lawmaker points to research that suggests the projects save both animal and human lives by reducing collisions, and enjoy broad support from more than 85% of the public in polling.

According to figures provided by Helm, there are more than 7,000 wildlife collisions each year in Oregon, resulting in an average of four deaths and more than 500 people receiving serious injuries.

“For a long time, my strategy has been to get this work rolled into [ODOT’s] base budget,” said Helm, who estimates the tax could pay for 20 new crossings over the next three decades. “That’s the naked ambition here.”

HB 3362 would exempt sales of tires for heavy trucks and agricultural vehicles. And it has its fans. Environmental advocacy groups have lined up behind the bill.

“With so much data out there, the question is not whether 6PPD is toxic or if wildlife vehicle collisions are dangerous and expensive, but whether we as a state are ready to take some strong actions to address them,” Sristi Kamal, deputy director of the Western Environmental Law Center, told lawmakers.

But many others expressed skepticism about the bill’s proposal to tax tires to pay for priorities that don’t relate to the pollution Gorsek and Helm say they are trying to address.

“We got really, really stuck on the part that says we’re going to tax tires to support rail,” said Darrell Fuller, a lobbyist for car and RV dealers. “Feels a little bit like a beef tax to encourage people to buy more chicken and that just doesn’t seem fair.”

Others objected to the notion of a new tax at all.

“We the people do not need new taxes,” Chad Kernutt, an Albany resident said at Tuesday’s hearing. “We need relief and the ability to keep more of our hard-earned money for our families.”

Related: Federal funding for wildlife crossing near Ashland paused

Kernutt said lawmakers should find rail money “from one of the many things that the legislators should not be funding.”

That sentiment is one lawmakers may have to push past this year, as they scramble to pay for a transportation system that is facing major challenges.

The Oregon Department of Transportation says it needs at least $354 million more in the next two-year budget to avoid drastic layoffs and service reductions. And the agency says that flattening revenues and spiking costs mean it would need much more to fully carry out its mission: up to $1.8 billion more a year.

On top of that, lawmakers have signaled they want to find billions of dollars to pay for major highway projects that were supposed to be funded by a transportation bill eight years ago.

Democrats hold three-fifths supermajorities in both chambers, meaning they can enact new taxes on a party-line vote. They’ve not been shy about suggesting Oregonians should be ready to pay more. Higher gas taxes and registration fees appear likely to be features in any bill the Legislature passes. And lawmakers are also considering possibilities like fees on retail deliveries, electric vehicle charging stations, rideshare companies and, clearly, tire sales.

House Speaker Julie Fahey suggested this week that, while a tire tax is one option, she is not married to the priorities Gorsek and Helm have set for funding.

“It is one of the potential funding mechanisms that is on the table that has been discussed by the work groups,” Fahey, a Eugene Democrat, said. “What the revenue from that tire tax is spent on is a separate conversation.”

Republicans, meanwhile, have said repeatedly they will not agree to any tax increase. They have instead railed against ODOT for its spending priorities, and have increasingly pointed to evidence of sloppy accounting and little accountability in the agency.

That came to a head last week, when ODOT officials appeared before a legislative committee to explain that the agency had overestimated its federal funding by more than $1 billion when crafting a budget two years ago. ODOT delayed planned road and bridge projects once it discovered the error, and issued nearly $500 million in new debt, according to an audit.

State Sen. Bruce Starr, a Dundee Republican, is leading an effort to increase accountability in the agency as a result. Other Republicans have slammed Democrats for suggesting cost increases.

“As a Legislature we need to stop using Oregonians as an ATM machine each time we have a new idea,” state Rep. E. Werner Reschke, R-Malin, testified on Tuesday. “Instead, we should do what Oregonians do when they have limited funds and have a new need. They reprioritize from most important to least.”