People rally outside of the Capitol to support cap and trade. (Aubrey Wieber/Salem Reporter)

If Oregon’s proposed cap-and-trade program is approved and effective, it could decimate the State Highway Fund over the next 30 years.

An analysis by a nonpartisan legislative economist found that if cap and trade were to push people from internal combustion engines to electric vehicles as the program hopes, it would cut deep into gas tax revenue going into the highway fund.

The analysis, done by Legislative Revenue Office economist Mazen Malik at the request of Rep. Caddy McKeown, D-Coos Bay, determined that by 2050, the fund could see an $18.55 billion cut — that, of course, is if lawmakers don’t find a way to offset the cuts. It's value would be cut in half.

The gas tax drying up as a source of revenue could seriously hamper the state’s ability to maintain and build its roads and bridges unless the money can be found elsewhere. Current projects would not be affected, according to analysis by the Oregon State Treasury.

For about a decade, Oregon Democrats have been working on a carbon pricing program, known variably as cap-and-trade or cap-and-invest.

Last week, House Bill 2020 passed out of committee and is now before the legislative budget-writing committee for what’s likely to be a brief stay.

The proposal, a top priority for Gov. Kate Brown and Democratic leaders, appears to have the votes needed in both chambers. Even so, it remains high on Republicans’ list of bills they want killed.

Cap-and-trade would impose a 52 million metric ton cap on carbon emissions. Industries, such as manufacturing, regulated by the cap would have to pay for their pollution. Any single emitter covered by the program which is emitting at least 25,000 metric tons of greenhouse gasses annually would have to pay for every ton they emit through allowances they purchase at auction.

Buying those allowances would increase costs for a lot of industries, including fuel wholesalers. Because of that, there would be an estimated 16-cent increase per gallon of gasoline when the program would go into effect in 2020.

Malik’s analysis was released Thursday and instantly started being circulated through the Capitol.

Sen. Michael Dembrow, D-Portland, is one of the lead architects of cap-and-trade and a co-chair of the committee that crafted the bill. He said Malik’s assessment assumes lawmakers will do nothing over the next three decades to backfill lost gas tax revenue.

He also said the gas tax quandary isn’t necessarily tied to cap-and-trade. Electric vehicles are becoming more common on their own.

“We clearly will have to take action to deal with that coming problem, whether or not the Climate Action Program exists,” Dembrow said.

On Thursday, Treasurer Tobias Read sent a letter to Senate President Peter Courtney, D-Salem, and House Speaker Tina Kotek, D-Portland, informing them that a number of legislators had contacted his office asking how cap-and-trade would affect future credit ratings on Oregon Department of Transportation bonds, which now have a AA+ rating.

In the letter, Read said this is not a new problem, but cap-and-trade would accelerate it.

“Oregon has known for years that fuel taxes are a declining revenue source, and that relying on them to secure transportation-related investments would, without a new revenue source, lead to an eventual reduction in our overall bonding capacity,” Read wrote.