PORTLAND, Ore. -- Two new fuel taxes are potentially on tap for Oregonians in 2016.
Last October, Portland City Commissioner Steve Novick proposed a 10-cent-per-gallon (CPG) fuel tax in Portland to help pay for city road repairs, which would be the highest local gas tax in the state of Oregon, according to The Oregonian.
As originally proposed, the tax was limited to gasoline, and projected to raise $58 million over four years.
In January, Novick suggested adding diesel purchases by light-duty vehicles to the tax, which would raise an additional $6 million.
The Portland City Council will decide whether the tax proposal gets placed before voters during a May 17 ballot.
Now Novick is turning his attention to large diesel vehicles. According to The Portland Mercury, he is planning to propose a “load fee” on diesel fuel to help support road repairs.
“I’m pretty confident we will move ahead with it,” Novick told The Mercury, referring to the load fee, which he had already presented to Portland’s freight advisory committee. “We’re comfortable with its legality.”
Most fuel in Oregon originates from Seattle via pipeline or barge, then stored at tank farms in the Portland area owned by oil majors such as BP, Chevron and Shell. The fee would be levied on trucks that transport diesel from the tank farms to gas stations across Oregon. It is similar to an $8 fee that the Oregon Office of State Fire Marshal levies on trucks that carry bulk fuel loads, which brings in under $2 million annually.
Novick’s proposal would limit the fee to diesel loads, but could “quite possibly” consider charging more than $8 for the ability to acquire the fuel in Portland, the Mercury report said.
“The rest of the state will scream that you’re passing the tax onto them,” Novick told the newspaper. “But the reality is: Portland is taking on another liability because these tanks could catch fire.”
Novick expects the diesel load fee would pass easily on the May ballot because of its potential to raise millions of dollars for Portland’s transportation infrastructure at the expense of semis that beat up city streets, while having minimal impact on Portland residents’ pocket books.
The Oregon Fuels Association (OFA), which represents fuel distributors, retailers, commercial fueling and heating oil marketers in the state, has blasted the gas tax and diesel fee, questioning whether the latter is even legal.
"In effect, he's taxing product for the rest of the state," Paul Romain, executive director of OFA, told the Mercury. "I'm not sure he can do that."
However, the inspiration of the diesel load fee was reportedly inspired by Romain's predecessor at OFA, Brian Boe, a former attorney and lobbyist for the association, which at the time was known as the Oregon Petroleum Marketers Association. He had championed a 1.1-CPG charge to raise money to assist gas stations in meeting environment regulations, and the fee was approved by the Oregon legislature in 1991; however, after a challenge filed by AAA Oregon/Idaho, the state supreme court later overturned the fee, ruling that according to the state constitution, any revenue had to fund highway repair and construction, not gas stations.
Because Novick’s fee would raise revenues for roads, Boe believes that it would pass legal muster.
“There's an argument that can be made—and I think a pretty significant one—that that area [of Northwest Portland] serves as a hub for getting the fuel to the entire state,” Boe told the Mercury. “The City of Portland shoulders a unique liability there. We all know the risk we're at for a large earthquake,” citing a 2012 study.
Novick is first presenting the gas tax proposal to the Portland City Council, with hopes that the commissioners will approve it for the May ballot. Should the four-year tax get approved by voters, it would raise around $16 million annually, which is a fraction of the more than $100 million it is estimated that the city needs each year for the next 10 years to rehabilitate its roads.
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