Bill faces convoy of special interests.

Byline: David Steves The Register-Guard

SALEM - More than any other type of vehicle, the grinding burden of heavy trucks has left Oregon's bridges dangerously cracked - and the Legislature scrambling for a way to pay the repair bill.

And yet, legislators have done more to satisfy this industry than any other as it crafts a package of tax and fee increases to pay for the repair and replacement of Oregon's damaged spans - a cost for which the state Department of Transportation says heavy trucks are 56 percent responsible.

The lawmakers who have worked on this session's $2.5 billion bridge- and road-repair package say they've taken pains to satisfy the truck lobby with a tax break and vows to limit the growth of its fees because trucking companies are among the "stakeholders" whose support is critical to get the bill through a divided Legislature and to the governor for his signature.

After spending more than a decade dealing with road and bridge issues, Sen. Bruce Starr, one of the key legislators to shape the bill, said he is convinced that getting all the key lobbying groups in support of a transportation-funding bill is crucial.

"You're better off to have unanimity among the stakeholders," said the Hillsboro Republican, who first got involved with transportation policy and politics as a legislative aide in the late 1980s. "We've seen what happens when you don't."

But others say they're baffled at the special treatment, including a $3 million tax break and promises to lower the overall trucking fee increases by that amount in case the tax break is removed from the bill.

"I would ask the question, why are they being pandered to? I don't understand why they're given the power they appear to hold over this package," said Randy Tucker, a lobbyist for the land-use watchdog group 1,000 Friends of Oregon.

Lobbyist opposition

An apparent backlash against legislative bill-writers' deference to the trucking industry has sidetracked the funding package, House Bill 2041. It passed the House nearly three weeks ago and its architects in the Senate planned to get it to the governor's desk within a week.

A bipartisan group of senators has stalled the bill's progress with their complaints about the bill's tax credit for the purchase of low-emission engines.

In large part, these dissenting lawmakers are concerned about how that tax credit would be financed: by "sequestering" future income taxes projected from the 4,750 construction jobs expected to result once the bill passes. In addition to the annual $3 million for the truck-engine tax credit, HB 2041 would provide $1 million a year for an advertising campaign to prod people toward alternative forms of transportation, and $1 million to help transit districts buy buses.

"I think it's really a back-door way to get extra money for some folks," said Sen. Joan Dukes, an Astoria Democrat and one of the Senate's leading dissenters.

She and other legislators have proposed pulling from the bill the entire $5 million for transit buses, advertising and truck-engine tax credits.

Instead of getting the bill through the Senate by the end of June, as expected, backers are now struggling to find ways to either line up votes to keep the bill in its current form or to allow changes that won't cause support to unravel. The bill was referred to the Senate Revenue Committee last week after it became apparent it didn't have enough support to pass the Senate. The committee is scheduled to take the bill up and consider amendments on Monday.

The list of lobbyists and lawmakers who oppose changes to the bill that might lead to higher trucking taxes is long and varied.

Darrell Fuller, an auto dealer lobbyist and head of the Oregon Highway Users Alliance, said that's because the funding package was delicately assembled like a house of cards, sensitively balanced to satisfy the job-creating, tax-limiting, gravel-supplying and bridge-fixing demands of a wide array of interests - trucking being one of them.

"The notion you can pull one or two cards out of this house and leave the house standing is a risk that the alliance doesn't wish to take," he said during recent testimony.

Sen. Rick Metsger, a Welches Democrat who with Starr took the leading role in negotiating the transportation package, shares Fuller's concern. Doing away with the truck-engine tax credit would set off a chain-reaction of problems for one lobbying group - resulting in deteriorating support from legislators to the point that the package can no longer draw the three-fifths super-majority required for such revenue-raising legislation.

The trucking lobby has insisted that without the $3 million tax break, the Legislature will have to reduce its share of the fee increases by that amount. That would bring in the American Automobile Association of Oregon/Idaho, to make sure the Legislature honors a constitutional requirement that truckers and motorists each pay their "cost responsibility" for road work.

The overall cost-responsibility formula for transportation costs requires motorists to put in $2 for every $1 that trucks pay.

That means a $3 million drop in the proposed increase for the trucking industry's weight-mile fees would force down motorists' proposed fee increases by $6 million. And Metsger said that money would come out of the portion being dedicated to cities' and counties' road maintenance needs - triggering opposition from lobbyists who represent local governments.

In other words, taking the tax break out means either going back on a deal with the truck lobby and inciting its opposition to the package, or offsetting that move by lowering the overall size of the package - and inciting the League of Oregon Cities and the Association of Oregon Counties to "go nutso," Metsger said.

Either way, "the risk level goes way up in terms of passage," he said.

Truckers' cost rising

Satisfying the trucking lobby's wishes has been among the trickier aspects of assembling the bill.

Initially, Gov. Ted Kulongoski wanted to raise car and truck fees by $135 million a year. The trucking lobby balked. Such a package would require trucking companies to pay 12 percent higher weight-mile fees. The Oregon Trucking Associationsplural is preferred Metsger and Starr's $101 million version - which raised trucking fees by 9 percent.

After months of resisting the $135 million-per-year transportation package in the Legislature, the trucking industry agreed to go along with a compromise $114 annual tax increase - enticed by Sen. Starr's deal-closing suggestion that a tax credit of $500 for each new, environmentally friendly truck engine purchased in Oregon - which carried an overall cost of $3 million a year.

Metsger, Starr's Democratic counterpart on transportation issues in the Senate, agreed that it made good sense economically, environmentally and politically. And truckers accepted.

Bob Russell, the trucking associations' lobbyist, said the tax break was necessary to offset a tax increase beyond what his clients were initially willing to support because truckers are struggling so much during the economic recession.

"The trucking industry is in very dire straights," he said.

Keith Sherman, CEO of Sherman Brothers Heavy Trucking in Harrisburg, is one of many industry executives in Russell's associations who are urging him to keep a lid on rising trucking fees.

While the economic downturn is hurting everybody, Sherman said, its toll has been particularly steep for his industry. Fuel prices, which spiked in early spring, have been higher than he can ever remember during his 35 years in the business.

Insurance costs have risen dramatically for his company, which employs 350 people and includes both flatbeds that carry building materials and tankers that deliver glues, resins and other manufacturing chemicals throughout the western United States and Canada. One policy alone, Sherman said, went from $75,000 in 2000 to $618,000 in 2003.

And unlike other sectors of the economy, trucking continues to face upward pressure on wages because truck drivers remain in high demand despite Oregon's otherwise rising unemployment rates.

"We're in a struggling economy and we can't raise our rates. Those are some examples of what we're up against when it comes to cost increases," Sherman said.

Truckers support campaigns

Metsger acknowledges that part of the reason the transportation funding package ran into trouble was a perception among lawmakers that the truck lobby's "fingerprints were all over it."

Metsger was the trucking lobby's top recipient of campaign cash in last year's legislative races in Oregon, with $10,075, according to an analysis by the National Institute on Money in State Politics. Starr, who received $2,500, was the fourth biggest recipient. But it wasn't the biggest contribution for either legislator. And the $65,120 donated to Oregon candidates last year by trucking companies was far less than amounts contributed by the state's biggest contributors.

"I don't think you can say money is not a factor. But it's not the governing factor," said Janice Thompson, director of the Portland-based Money in Politics Research Action Campaign. "It seems to be a matter of many players involved and the need to keep all of them happy."

Possible compromise

Lawmakers, who'd entered the session in January hoping that road fees increases to pay for badly needed and job-creating bridge and road work would get quick approval, are now scrambling to keep HB 2041 alive.

By Friday afternoon, lawmakers had come up with what they hope will be a compromise to satisfy the trucking lobby, the lawmakers who questioned the need for a truck-engine tax credit, and everyone else with an interest in the funding package.

Instead of relying on income taxes to pay for the tax credit, the bill will be reworked so it no longer says how the credit will be financed. And while truckers can still get credit for such purchases from 2004-07, they can't actually apply it against their tax bills until the next budget cycle begins, in mid-2005, Metsger said.

"We heard the complaints, and we now have answered them," he said. "And hopefully, we'll have a good outcome everyone can support."

TRANSPORTATION BILL

The Senate Revenue Committee is expected to consider amendments to a bill that would increase fees to bring in $114 million annually to pay for bridge and road work.

FEES:

$24 hike every two years for vehicle registration

$25 increase for title transfers

10 percent increase for truckers' weight-mile tax

Hybrid vehicle fees decreased $6 every two years

$3.50 more for driver's license renewals

New fees for driving tests ($12) and written tests ($2)

SPENDING:

$1.3 billion for state bridges

$300 million for local bridges on freight routes

$371 million for city and county road maintenance and preservation

$500 million for freight transportation, large projects of statewide significance and for modernization projects

- Oregon Legislature

CAPTION(S):

A truck crosses a bridge over the Willamette River on Interstate 5 earlier this year.