Oregon lawmakers will not fund Cleaner Air Oregon, Gov. Kate Brown's signature initiative to cut toxic air pollution statewide, forcing the state's environmental regulator to find another way to pay for an overhaul proposed after the 2016 Portland air crisis.

It is a significant defeat for the governor. The Democrat was unable to overcome industry opposition to convince a statehouse controlled by her party to raise $1 million to fund the program. House Bill 2269 would've levied a one-time fee on the state's 2,525 permitted air polluters.

And it's a win for Oregon's industrial lobbyists, who also killed a separate clean air initiative this session that would've cracked down on cancer-causing soot spewed from high-polluting diesel engines.

The latest decision shows how much power the state's manufacturers wield in Salem. It comes six years after industry lobbyists successfully undercut efforts to clean up toxic air pollution in Portland.

The Cleaner Air Oregon funding would have paid for the analysis needed for the Department of Environmental Quality to develop new rules to require factories, body shops and other industrial sources to reduce their air pollution if it poses a health risk to nearby residents.

The bill would've charged the state's 2,525 permitted air polluters an average of $433 each. Major polluters, like hazardous waste incinerators, would've paid $1,456, while smaller sources like gas stations and dry cleaners would've paid less than $50 apiece.

A spokeswoman for House Speaker Tina Kotek, D-Portland, said the breakdown occurred in the state Senate. "The speaker is committed to this issue and plans to work on it again in 2018," said the spokeswoman, Lindsey O'Brien.

The governor and Senate President Peter Courtney, D-Salem, did not respond to requests for comment.

Jennifer Flynt, a Department of Environmental Quality spokeswoman, said agency officials are disappointed the funding won't be approved but are looking for other ways to pay for the program.

The next steps are unclear. Deborah Kafoury, chairwoman of the Multnomah County Commission, said she was urging lawmakers not to give up on efforts to fund the program. "It's not over until the final gavel drops," she said. "I'm still hopeful for the piddly amount of $1 million that they can pull it out."

Mary Peveto, president of Neighbors for Clean Air, a Portland advocacy group, said the state environmental agency won't be able to fund the meteorological studies, emissions modeling and other research needed without shortchanging other initiatives. Without reliable funding, she said, the state risks being unable to adopt solid rules that could withstand a legal challenge.

Peveto faulted Kotek, Courtney and other top Democratic lawmakers for caving in to industry lobbyists and failing to deliver on promises made during Portland's toxic air crisis.

"This sends a message that industry gets to control the Department of Environmental Quality's budget," Peveto said. "It is stunning that industry has such a stranglehold over our legislators."

Industry groups, including Associated Oregon Industries, had opposed the one-time levy, describing Cleaner Air Oregon as a job-killing initiative that would be ruinous and cause manufacturers to close.

Similar rules already exist in California and Washington.

— Rob Davis

rdavis@oregonian.com

503.294.7657; @robwdavis