OTA Dispatch Issue 2, 2021

27 www.ortrucking.org Issue 2 | 2021 a “winner” (pays less tax than is due) or a “loser” (pays more tax than is due), but rather ODOT deems the rates to be appropriately set if, when it looks at all flat fee users as a whole, the winners and losers balance out to zero. This would mean that flat fee filers are paying as a class of tax payers (not necessarily as individual tax payers) what they would have paid had they reported and paid their highway use tax on a mileage and weight basis. That is the goal; however, year to year this goal becomes a moving target. So, this question is completely unrelated to the Highway Cost Allocation Study (HCAS) and cost responsibility of the trucking industry as a whole, although it is easy to confuse the two. Frankly, the effect of any ongoing decline and continued stagnation in market condition resulting in fewer miles being traveled moving loads of flat fee eligible commodities around the state would likely incline the analyst performing this study to conclude that a continuing, or even increasing number of fleets, will continue to perform the arithmetic to assess whether or not the annual miles their fleet will operate in a coming year will put them in position to benefit from a flat fee election in a way not anticipated or intended by the legislature when it made the flat fee option available. On the other hand, if we were to suggest the economy is turning upward at a given time, then more and not less mileage will be accumulated by fleets giving the analyst all the more reason to recommend an increase in flat fee rates at this time in order to avoid having the gap widen between tax due and tax paid. Why is it very significant that the State keep an eye on this continually changing flat fee rate analysis? Management of the flat fee component of the Oregon weight mile tax was a key concern in a lawsuit filed by the American Trucking Association in 2001. Oregon ultimately prevailed in that lawsuit upon appeal to the Oregon Supreme Court but in the years following that lawsuit the Oregon Department of Justice has continually cautioned that the State needs to be vigilant to effectively monitor and manage the flat fee rates as intended. DOJ trial attorney David Leith said, “In the meantime, I will be beating the drum—for anyone who wants to listen—that if the State chooses to administer a revenue- neutral flat-fee, it should discharge that responsibility. Judge Burton couldn’t have been clearer that the validity of the tax is not finally resolved for all years and rates by the judgment in our case. If things get further out of whack, we could be hit again.” Flat fee filers taken all together are supposed to pay the weight mile tax they would have paid if they did not file on flat fee. When they don’t, the legislature is charged to adjust the flat fee rates to make that happen. The rates are just an approximation. When the gap between what is paid and what is deemed owed is large, an adjustment is in order. ORS 825.482 directs that the Department of Transportation and the Oregon Transportation Commission review flat fee rates established under ORS 825.480 in each even-numbered year and recommend to the next following odd-numbered year regular