Chapter § 14.4

• Jurisdiction: Oregon

§ 14.4 OIL, GAS, MOTOR FUEL, AND MOTOR-VEHICLE TAXES

§ 14.4-1 Oil and Natural Gas Taxes

Article VIII, section 2(1)(g), and Article IX, section 3b, of the Oregon Constitution limit the tax that can be imposed on "the extraction, production, storage, use, sale, distribution or receipt of oil or natural gas," or the ownership thereof, to a rate that is not "greater than six percent of the market value of all oil and natural gas produced or salvaged from the earth or waters of this state as and when owned or produced." Revenues from these taxes are dedicated to the Common School Fund. Or Const, Art VIII, § 2(1)(g). Interest on these revenues is also required to be dedicated to the Common School Fund. State ex rel. Sprague v. Straub, 240 Or 272, 279, 400 P2d 229, clarified, 240 Or 272, 282, 401 P2d 29 (1965).

The people added Article VIII, section 2(1)(g), and Article IX, section 3b, to the Oregon Constitution in 1980. See HJR 6 (1979). Previously, the legislature had enacted a statute former ORS 469.420 (1981)), which directed the state Department of Energy (DOE) to fund its activities by imposing fees against electric utilities, natural gas utilities, and petroleum suppliers. In Northwest Natural Gas Co. v. Frank, 293 Or 374, 380-82, 648 P2d 1284 (1982), the Oregon Supreme Court held that an unintended consequence of the adoption of Article VIII, section 2(1)(g), and Article IX, section 3b, was that the DOE's assessment was a "tax which Article VIII, section 2(1)(g) dedicates exclusively to the Common School Fund." The court left open the question whether Article VIII, section 2(1)(g), and Article IX, section 3b, apply to taxes imposed on oil or natural gas that is imported into, as opposed to extracted from within, Oregon. Northwest Natural Gas Co., 293 Or at 382.

§ 14.4-2 Motor-Vehicle Fuel and Motor-Vehicle Taxes

There is no constitutional limitation in Oregon on the amount or rate that the legislature may assess on motor vehicles or on refined motor-vehicle fuels. The Oregon Constitution does, however, limit the uses to which such tax revenues may be put. Revenue from motor-vehicle fuel taxes or motor-vehicle taxes may be used only "for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state," or for a limited list of related purposes. Or Const, Art IX, § 3a(1)-(2). Interest on these funds also must be used for these purposes. Sprague, 240 Or at 280-81.

...