Gas taxes being hiked in Oregon

By Tami Luhby, senior writer December 27, 2010: 5:09 AM ET

NEW YORK (CNNMoney.com) — Oregon drivers may get an unpleasant shock when they pull up to the pump in the new year.

Drivers there are already paying an average of $3.06 per gallon, but in the new year the state Department of Transportation is hiking the gas tax by 6 cents. That will bring the state tax to 30 cents per gallon.

Taxpayers in the rest of the nation, however, can breathe a sign of relief. Oregon’s gas tax increase is one of the few hikes taking place on Jan. 1.

State officials across the country have shied away from raising taxes this fiscal year, which began July 1, increasing them only $6.2 billion after hiking them nearly $24 billion a year earlier.

And though states are still suffering from budget shortfalls, officials probably won’t raise taxes much over the next year.

“New governors ran on platforms of not increasing taxes,” said Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers.

The exceptions include Washington D.C., which increased its gas tax by 3.5 cents in 2009; Minnesota, which is raising its tax by 8.5 cents over several years; and Rhode Island, which upped its tax by 2 cents in 2009.

Also, voters have derailed lawmakers’ plans to raise revenues in some states. In November, residents of Washington and Massachusetts, for example, repealed taxes on candy and alcohol, respectively.

First hike since 1993

In 2009, Oregon’s legislature approved rate hikes on a host of motor vehicle fees to pay for improving city, county and state roads and highways, as well as manage rest stops. As part of that, they raised the gas tax, which had remained steady at 24 cents since 1993, and scheduled it to take effect on Jan. 1, 2011.

In total, the measures will raise $300 million a year for the state’s Department of Transportation, which is funded mainly by such levies. The department, which has been hurting for money, has had to slow or delay projects.

Drivers who use 600 gallons of gas annually will pay about $35 more, said Dave Thompson, spokesman for the Oregon Department of Transportation.

“The purpose of the gas tax is a user fee for damage you do to the roads,” said Thompson, noting that consumer prices have risen 51% since the levy was last increased. “Sooner or later we have to face the crisis of not having enough money to fix the roads.”

Still, some anti-tax advocates are not pleased with the measure.

Oregon’s unemployment rate stood at 10.6% in November, the seventh highest in the nation and above the national 9.8% rate. Many people are already suffering from higher property taxes and utility costs, said Jeff Kropf, director of the state chapter of Americans for Prosperity, which advocates for limited government.

That means the gas tax could prove a weighty burden.

“For the working person, in particular, it will take more money out of their pocket or it will cut their opportunities to get around,” said Don McIntire, president, Taxpayer Association of Oregon.