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The debate in Oregon surrounding climate change and what our state should and should not do lives on. This is a debate that will have profound consequences, and the Legislature鈥檚 response continues to be the most controversial and divisive issue of the 2020 session.

The basic premise of the cap-and-trade proposal is to require high-emitting industries (transportation, utility and manufacturing) to purchase 鈥渃redits鈥� in order to release emissions over the state-imposed cap.

Impacts from the proposed legislation will be felt across industries. Regulations placed on one industry will undoubtedly be matched with an increase in costs throughout the supply chain, with the costs of the entire program ultimately falling on consumers.

Seven people appointed by the governor will be the ultimate deciders of transportation costs, energy costs, and the ability for manufacturers to continue to operate facilities. Those facilities employ tens of thousands of Oregonians in mostly rural parts of the state.

As the debate has unfolded, the following are emerging as private industry鈥檚 biggest concerns with the proposed cap-and-trade program.

Highway Trust Fund

AGC鈥檚 opposition to the current proposal is based on a threat to the Highway Trust Fund. This fund comes from revenue from taxes and fees paid by private and commercial drivers in the state. The fund pays for maintenance and modernization of the existing and future state transportation system and has worked well for decades. The construction industry will be most affected by the impacts to this fund.

Because of its central importance to the state鈥檚 economy, Oregon鈥檚 voters put provisions into the state constitution to ensure fund revenues were spent appropriately.

Oregon鈥檚 current infrastructure needs repair. The American Society of Civil Engineers (ASCE) conducts a periodic assessment of each state鈥檚 infrastructure and associated funding systems. In 2019, ASCE graded the condition of Oregon鈥檚 overall infrastructure system a C- in its Infrastructure Report Card.

One portion of the cap-and-trade legislation would create a subaccount within the Highway Trust Fund to restrict the use of funds to exclusive projects including carbon reduction programs, culverts, nursery stock, etc. These provisions appear to unconstitutionally impact protected revenue streams, open the fund to uses not provided for in Oregon law, and begin a decline in revenues available for transportation improvement projects.

If this legislation passes, the decline of revenues to that fund will mean less money to maintain and preserve our most critical infrastructure. Any risk that jeopardizes the fund and continued use of that money to maintain and preserve our infrastructure is a gamble we鈥檙e not willing to make.

Cost containment and impacts

Cumulative increases to fuel costs for cars and trucks are another reason to be hesitant. The Low Carbon Fuel Standard, passed a few years ago; the recent significant transportation funding package, combined with indeterminate market conditions; and the combination of taxes paid at the pump are adding up. The stacking of multiple carbon programs will have a profound impact on all Oregon motorists, including freight haulers, and will have downstream negative impacts on the Oregon economy.

An additional tax on our fuel will place a significant burden on Oregon鈥檚 motorists and the economy as a whole.聽Current projections show a 22-cent-per-gallon increase in the first year of the program alone. Over the next few years, that is expected by some to climb to nearly $3 per gallon.

Threat to future investments

The push is for Oregon鈥檚 on-road and off-road users to make the switch to electric vehicles. Unfortunately, we鈥檙e a long way from that technology being equipped to become the main mode of transportation for commercial vehicles.

The anticipated decline in revenues compromises the ability to navigate future transportation investments, debt capacity and bonding possibilities. Additionally, Oregon鈥檚 counties and cities are likely to see slimmer budgets for road and bridge maintenance as revenues decline.

Burdensome mandates

The latest draft of the cap-and-trade bill contains complex and costly mandates relating to procurement, labor and public contracting. These mandates serve no carbon reduction purpose and would only result in dramatically increased project costs and frequently increased project delays, could potentially result in other states applying retaliatory reciprocal preferences, would make it functionally impossible for most local jurisdictions in the state to comply, and would inhibit the carbon program鈥檚 capacity to achieve its stated objectives.

Increases in the costs of transportation projects based on the provisions of the cap-and-trade proposal must be examined and estimated to determine the potential increase in material costs and reduced purchasing power.

Expedited review

As currently drafted, the bill contains expedited review provisions allowing for a broad group of individuals to petition the Supreme Court regarding the question of whether revenue from fuel allowances is subject to Article IX(3)a of the Oregon Constitution and is required to be deposited into the Highway Trust Fund. It appears the breadth of expedited review could easily lead to the Supreme Court ruling that these dollars are not subject to Article IX so they can spend the dollars on electric vehicle infrastructure, electric vehicle transition and other funding priorities.

Since 1942 there have been nine separate attempts to redirect funds from the Highway Trust Fund to other uses. Each time, Oregon鈥檚 voters have upheld the structure of the fund. Expedited review of cap and trade flies in the face of nearly 80 years of clear voter intent and clearly would contradict the voice of Oregonians.

One of the biggest problems is: what comes next? What are the consequences? The impacts to each industry and the trickle-down impact that most believe will lead to an increase in costs across the board, cause us great concern. Given Oregon鈥檚 minimal impact on global emission levels (0.14 percent), we believe the Legislature should continue to look at other ways to address climate change concerns and encourage a majority of legislators to oppose this bill.

Mike Salsgiver is the executive director of Associated General Contractors鈥� Oregon-Columbia chapter. Contact him at 503-685-8305 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91视频 guarantees the accuracy or completeness of any information published herein.