Gov. Tina Kotek on Tuesday announced she will call legislators into a special session in August in the hopes of passing a transportation funding bill.

The Legislature adjourned June 27 without reaching an agreement on a transportation package. New legislation is needed to avert pending layoffs at the Oregon Department of Transportation, Kotek stated in a news release.

“I am confident that lawmakers will step up next month to avert these layoffs by approving the necessary funding for the state’s transportation needs,” Kotek said. “I appreciate their partnership and am eager to be on the other side of this crisis.”

Kotek said her priority is to deliver needed funding for the state highway trust fund for the 2025-27 biennium.

A funded ODOT budget will halt the pending layoffs and maintain operations at maintenance facilities that are otherwise scheduled to be shuttered, Kotek said. The agency began laying off 483 workers on July 7. But Kotek directed ODOT to postpone the effective date of the layoffs for an additional 45 days.

“The special session will be focused on critical near-term solutions to stabilize basic functions at ODOT and local governments,” Kotek said. “This is just the first step of many that must be taken to meet our state’s long-term transportation needs.”

More layoffs are planned for early 2026 unless the Legislature approves funding, she said.

Recently, a key holdout on the bill, Sen. Mark Meek, D-Gladstone, said he would be open to a special session, but that he wants Kotek to agree to repeal a state statute that authorizes tolls on interstates 5 and 205.

Notably, Kotek’s announcement did not address funding for any of Oregon’s mega-projects, such as the Interstate 5 Rose Quarter Improvement Project or the Interstate Bridge replacement and highway expansion project.

The Legislature will reconvene on Aug. 29.

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Congress’ passage of a $10.9 billion extension of the federal Highway Trust Fund through May was not the worst thing it could have done to create uncertainty among transportation leaders and the construction industry. That would have been to have done nothing.

Instead, Congress’s action was the second worst thing it could have done, said Travis Brouwer, the Oregon Department of Transportation’s chief of staff. By only providing funding for part of 2015, Congress created a state of uncertainty for transportation departments like ODOT.

“We have money for part of next year,” Brouwer said. “But it’s really hard for us to know how many projects to put out to bid when we don’t have funding for all of next year.”

ODOT will likely slow down bidding projects starting in the fall and will maintain that delayed tempo until Congress takes longer-term action on the fund, which the state typically relies upon for about 100 highway paving and bridge repair projects each year.

“Given the fact that they waited until the day before the trust fund was expected to run out of cash, I don’t think this is an issue that will be immediately addressed at the next session of Congress,” Brouwer said.

The state’s transportation program is already in a downward trend with bond-financed Jobs in Transportation Act and Oregon Transportation Investment Act projects winding down and revenue being used to pay back those bonds, according to Brouwer.

“When it comes to 2015, we just don’t know how many paving and bridge repair projects we’ve selected that will actually go out to bid,” he said.

The U.S. Senate had proposed a short-term measure that would have extended the fund through December, which Senate leaders say would have created an opportunity to pass a long-term spending bill during the lame duck session in Congress.

The House rejected the idea and forwarded its own bill, which will be financed by changing the timing for when corporations pay taxes on pension funds. Initially, there will be more tax payments, but those payments will be reduced over time. The Senate approved the bill 81-13. The bill was forwarded to President Barack Obama, who is expected to sign it.

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With the clock ticking, U.S. Sen. Ron Wyden, D-Ore., is pitching a temporary solution to sustain the nearly depleted federal Highway Trust Fund through the end of the year – or at least through the summer construction season.

The Preserving America’s Transit and Highways (PATH) Act, is subject to a markup session by the Finance Committee on Thursday, which is the last workday before Congress breaks for the Fourth of July recess. It includes $9 billion that would be generated over 10 years from multiple revenue sources; a few would be lowering the threshold for heavy vehicle taxes, spurring tax payments by revoking or denying passports of evaders and requiring distributions of inherited IRAs within five years.

Wyden, who earlier said that failure to find a long-term solution to the transportation funding crisis would be a “tragic mistake,” called his short-term patch “an imperative first step” toward a long-term solution.

With Congress in an election year, Wyden may have had no other choice than to push the can down the road. He said the extra time will help his committee find a long-term plan.

The much bigger challenge appears to be coming up with approximately $89 billion on top of projected revenues to keep the trust fund solvent through 2020, according to the Congressional Budget Office.

That number could easily be plugged by doing the unthinkable – raising the gas tax. A 12-cent increase in the gas tax over two years, indexed over time with inflation, would actually raise $164 billion over the next decade – more than enough to plug the hole, according to a by Sens. Bob Corker, R-Tenn., and Chris Murphy, D-Conn.

That proposal has gained some traction, but faces opposition from anti-tax groups and a skeptical public.

Wyden is to this ongoing problem of highway funding. The test of his political leadership could be finding a solution that is palatable on a national stage.

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State and federal dollars for transportation projects are dwindling, and contractors are noticing.

“It seems like we have not seen the level of highway projects that we’ve seen in other years,” said Dave Jensen, special projects manager in Portland for Bismarck, N.D.-based Knife River Corp. “Our competitor friends are feeling the same pinch.”

Knife River has adjusted by pursuing smaller projects and private ones, Jensen said.

“For our highway construction group, (the impact has) been huge,” he said. “We’ve had to downsize and cut back. A few years ago, we had multiple paving crews. Now we have a hard time keeping one crew busy.”

The situation may worsen. Fewer dollars are expected to come in from state and federal highway fund sources that essentially allow the Oregon Department of Transportation to cover debt service, highway maintenance and personnel.

David Lohman, acting chairman of the Oregon Transportation Commission, stated in a May 28 letter to Area Commissions on Transportation that the state will have to pay $200 million annually for the next 25 to 30 years in overall debt service on its two major investment projects of the past decade – the three-part Oregon Transportation Investment Act and the 2009 Jobs and Transportation Act.

Also, the state’s highway fund in 2013 took in about 11 percent less than originally forecast, according to Lohman.

Meanwhile, the Highway Trust Fund is expected to run out of money by July 17, according to the Congressional Budget Office. If Congress were to do nothing, Oregon would be left with an approximately $150 million annual shortfall.

Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, is seeking a quick funding fix to sustain the federal Highway Trust Fund for six to eight months, said Mike Salsgiver, executive director of Associated General Contractors’ Oregon-Columbia chapter.

“That would get it past the (November) election,” he said.

In the U.S. House, Rep. Peter DeFazio, D-Ore., has introduced the Repeal and Rebuild Act, which would create up to a six-year funding fix. HR 4848 would repeal the gas tax and replace it with an indexed tax on oil (per barrel) that wholesale companies purchase and process into gasoline.

Another proposal, released Wednesday by Sens. Chris Murphy, D-Conn., and Bob Corker, R-Tenn., would raise the federal gas tax by 12 cents a gallon and index the tax with inflation. The federal gas tax, increased to 18.4 cents per gallon in 1993, has not kept up with inflation.

At the state level, a transportation bill likely would not be passed by the Oregon Legislature in 2015, Salsgiver said, because a supermajority would be required. Plus, heavy turnover is expected in the House, and newcomers would need to be brought up to speed on critical transportation issues, he said.

“People are starting to look at what a post-JTA effort would look like, but I’d be very surprised to see it happen in the 2015 session,” he said. “They’ve set the bar very high for a tax increase and it must originate in the Oregon House.”

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A bipartisan transportation bill launched this week could help stave off major cuts in Oregon and around the nation – if funding sources can be identified.

Sen. Barbara Boxer, D-Calif., chairwoman of the Environment and Public Works Committee, is proposing reauthorization of the existing federal highway program for six years at the current level plus inflation from fiscal 2015 through fiscal 2020.

The bill would need to pass through both houses of Congress, said Travis Brouwer, chief of staff for the Oregon Department of Transportation.

“There is a strong prospect that the Transportation Committee in both the House and Senate will reauthorize the bills,” he said. “But the real challenge is finding money to avoid deep cuts.”

Reauthorization of the transportation bill is critical for replenishing the federal Highway Trust Fund, which is slated to run out of cash by late August. MAP-21, the program that keeps the trust fund solvent, is set to expire Sept. 30 without reauthorization by Congress.

If Congress were to do nothing, ODOT could lose upwards of $150 million and be forced to cancel some projects and delay others, Brouwer said. If Congress were to provide a short-term infusion of cash into the trust fund, some projects could be delayed, he said.

The new bill includes provisions that would “explore alternative transportation revenue mechanisms,” such as ODOT’s Road User Fee Pilot Program, Brouwer said.

Oregon is gearing up for a July 1, 2015 program launch: 5,000 volunteer participants will receive a rebate on their gasoline taxes in exchange for paying a mileage usage fee.

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An effort to pass a federal climate and energy bill has run into opposition from road builders and users who say it could hamper their efforts to pay for transportation projects.

Even before a final climate bill has been introduced, 27 associations signed onto urging Sens. John Kerry, Lindsey Graham and Joe Lieberman to drop the concept of using gas-tax money to pay for anything but transportation projects.

The federal gas tax puts 18.4 cents per gallon of gas sold into the federal Highway Trust Fund. That fund already fails to keep up with the need for transportation projects, requiring emergency transfers to stay solvent.

According to federal Department of Transportation estimates, it would take more than $30 billion more per year to just maintain the country’s existing transportation system, said Tony Dorsey, spokesman for the American Association of State Highway and Transportation Officials. “To divert money from the Highway Trust Fund, used to pay for projects that are critically important right now, there is no wiggle room here to be moving money anywhere,” he said.

A group of organizations, including paving suppliers, trade unions and bicycling advocates, signed onto the letter. The Association of Metropolitan Planning Organizations was among the signatories. That group’s vice president, Rex Burkholder, is also a councilor with regional elected government Metro. The federal Highway Trust Fund differs from state gas-tax money that can go toward only road projects, he said.

Federal money also pays for non-road transit projects, Burkholder said, and those projects suffer from the same deficit. “The Highway Trust Fund is underfunded and we’re struggling to maintain our infrastructure and keep transit going,” he said.

That said, Burkholder doesn’t want to see restrictions placed on federal money that could help reduce greenhouse gas emissions and reliance on fossil fuels.

“The key thing is that dollars should be flexible,” he said. “We want to have performance measures that do the things that accomplish the most.”

In the short term, that includes energy-saving building retrofits that quickly pay for themselves, Burkholder said. If longer-term policies were to create communities where people don’t need to drive as much, then the need to expand roadway systems would be reduced, for example.

“That’s the direction we’re going in this region,” he said. “What are the strategies that pay for themselves?”

The federal gas tax, as currently structured, may not be the best way to pay for transportation projects in the future, Dorsey said. But right now, it’s the best means available.

Two commissions studied the problem, with both recommending raising the gas tax immediately, Dorsey said. Eventually, a more stable source might be taxing vehicles per mile traveled.

“There’s no way around increasing the fuel tax,” Dorsey said. “That’s the only immediate option.”

Raising that tax, which has remained at its current level for more than a decade, will be difficult. If a climate bill increases the tax but dedicates the money raised to other uses, that will all but destroy the chances for a tax increase in a new transportation bill, he said.

“Any one gas tax is a major challenge,” Dorsey said. “Two is just monumental.”

Bicycling and pedestrian advocates who signed onto the letter also have an interest in reducing greenhouse gas pollution, said Caron Whitaker, campaign director for America Bikes. The coalition’s leaders pinned hopes on the new transportation bill.

“We want a transportation bill that embraces the concept of livable communities and transportation choices,” Whitaker said. “It’s looking at transit-oriented development, making walking and biking safer and making roads safer for all users to give people choices on how they get around.

“If (gas tax) funds are diverted to other causes, it’s going to be difficult, if not impossible, to get a new transportation bill in the future.”

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