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Senate OKs aviation fuel levies, but forest products harvest taxes are in limbo in fight with the House.

A fight between the House and Senate, not the political parties, stalled the march of the Oregon Legislature on Friday, June 25, to adjournment of its 2021 session.

Both chambers will return Saturday morning to complete what is expected to be the final day of the session, which must end by midnight Sunday, the 160-day limit set by the Oregon Constitution. Oregon went to annual legislative sessions, both with time limits, after voters approved a ballot measure in 2010.

The dispute was not over the state budget, which is completed. The Senate passed five of seven go-home bills on Friday and sent them to the House. The House had yet to act on a budget reconciliation bill — Oregon lawmakers approve separate budgets for agencies and then pass a budget-balancing bill at the end — but this session, it contains $3 billion from other funds and $2.4 billion from federal funds for various projects statewide.

Instead, lawmakers fought over House Bill 2434, which in its original (and finally approved) version simply extended increases in state aviation and jet fuel taxes. The Department of Aviation draws from that money to maintain rural airports.

But earlier in the week, the Senate tacked on to that bill two-year renewals for the forest products harvest tax, which applies to timber cut on private and federal lands.

The taxes pay for forestry research and education at Oregon State University, plus enforcement of the Oregon Forest Practices Act — which regulates about 10 million acres of privately owned forest lands — and suppression of forest fires. The latter programs are in the Oregon Department of Forestry.

The bill has a "relating to revenue" clause.

Those taxes were not controversial.

But the Senate also left intact the maximum $1.12 per thousand board feet that can be levied by the Oregon Forest Resources Institute. It skirted a controversy over the institute, a quasi-governmental agency that House lawmakers sought to punish in House Bill 2357. The House passed that bill on a 32-27 vote June 8, but a Senate committee took no action on it.

Advocates of change said that bill was prompted by a 2020 investigative series by The Oregonian/OregonLive and Oregon Public Broadcasting, which concluded that the institute improperly lobbied legislators, inaccurately described Oregon forest practices in advertising and educational materials, and inappropriately interfered with Oregon State University researchers whose work may have differed from industry viewpoints.

HB 2357 would have diverted two-thirds of the institute's tax collections to other accounts maintained by the Oregon Department of Forestry.

The upshot from a joint negotiating committee Friday — after the House refused to accept the Senate's version of HB 2434 — was that the Senate retreated from its changes and ended up passing the original bill, 24-4.

The state jet-fuel tax will remain at 3 cents per gallon, and aviation fuel, 11 cents per gallon; both are in addition to federal fuel taxes.

Sen. Elizabeth Steiner Hayward, a Democrat from Beaverton who is co-leader of the Legislature's joint budget panel, said lack of collections from the forest products harvest taxes would create a $13.5 million hole in the Department of Forestry budget. Both chambers have passed that budget already.

"This is going to cause a lot of problems," said Senate Republican Leader Fred Girod of Lyons, also a member of the budget panel.

Sen. Sara Gelser, a Democrat from Corvallis whose district includes Oregon State University, voted for the bill reluctantly. "It's a great example of sometimes we have to vote yes or no — and you don't feel good about either."

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