Oregon farmers blast machinery taxes meant to fund Portland truck upgrades

These new revenue sources would help pay for upgrading older medium- and heavy-duty trucks in and around Portland that would otherwise be phased out under a law targeting diesel emissions in Multnomah, Washington and Clackamas counties.

Until now, such improvements have been covered by $73 million from Volkswagen, which agreed to pay state governments $2.9 billion to resolve litigation over the auto company’s emissions violations.

However, the amount requested for upgrades now surpasses the money Oregon has remaining from that deal. That has lawmakers considering new sources of funding, including HB 3158.

“The point of this bill is to raise some money to help these truck owners in their operations,” said Rep. Rob Nosse, D-Portland, the bill’s chief sponsor. “The bottom line here is we’re trying to put some things in place to help those small- and medium-sized businesses comply with regulations and do what they need to do.”

The proposed taxes are an “important starting point for negotiations” but there’s room for negotiation in the bill, said Susheela Jayapal, a Multnomah County commissioner, during a recent legislative hearing.

“Regulations are only one-half of the equation. Without revenue to support businesses transitioning to cleaner equipment, the equation will remain unbalanced,” Jayapal said. “We have regulations but we don’t have a sustained source of funding to assist with this transition.”

Rep. Shelly Boshart-Davis, R-Albany, urged the House Climate, Energy and Environment Committee against passing the bill. Similar tax proposals were discussed but not ultimately recommended by a legislative task force on helping businesses reduce diesel emissions, she said.

The bill would be counterproductive, since companies are typically able to replace their fleets of trucks and machinery more quickly when they’re earning higher profits, she said. “This makes it more expensive for the people and businesses they are trying to help.”

The Oregon Farm Bureau opposes the bill because it taxes “virtually every piece of equipment” that’s used in agriculture, as well as the fuel and tires needed to run it, at a time of rising inflation and other financial stressors.

“Rural communities are not responsible for Portland’s air quality, but HB 3158 puts that responsibility squarely, and inappropriately, on the backs of our members,” the Farm Bureau said in submitted testimony.

The bill is “indifferent” to improvements in energy efficiency made by wheat growers but will hinder further investments by forcing them to fund the state’s diesel truck upgrade program, according to the Oregon Wheat Growers League.

Wheat farmers rely on machinery that’s already costly “due to its specialized function,” so the proposed 1.5% tax on retail off-road equipment sales would greatly increase the price tag, Amanda Hoey, the group’s CEO, said in submitted testimony. For example, a “very basic combine” capable of harvesting on slopes costs about $600,000.

“The proposed tax would add $9,000 before we can even get out in the field,” Hoey said, adding that proposed taxes on tires and fuel would further increase the cost.

The global market price for wheat paid to Oregon growers would remain the same even as they’d contend with the bevy of new state taxes, she said. “This will result in Oregon wheat producers struggling to compete, while our overseas competitors benefit from our disadvantage.”

By raising the cost of buying or renting new machinery, businesses will have less money for the types of investments lawmakers want to encourage, according to a joint letter from the Oregon Seed Council and the Oregon Small Woodlands Association.

“Rather, the increased costs will influence their overall cash flow and make it more difficult for companies to afford new, lower-emission equipment,” the groups said.