Oregon Democrats’ $1.9 billion transportation funding plan would hike gas tax, fees and payroll deductions
(Update: Adding news releases from Democrat, Republican lawmakers)
SALEM, Ore. (KTVZ) -- Oregonians would pay more at the pump, higher fees when they buy a car or bike and see more money deducted from their paychecks to pay for transit under a wide-ranging plan released Thursday by Democratic lawmakers seeking to fill a major transportation funding deficit.
The framework that Sen. Chris Gorsek, D-Troutdale, and Rep. Susan McLain, D-Forest Grove, released is the result of nearly two years of meetings and a statewide tour to hear about transportation needs. It comes as state and local transportation departments struggle to pay for basic maintenance like potholes and snowplows, let alone finish some major projects like the Rose Quarter highway improvement and Abernethy Bridge replacement in the Portland area.
McLain and Gorsek’s plan was shared early with the Capital Chronicle under the condition that the publication not seek comments from anyone else before 3 p.m. Thursday. It aims to raise at least $1.9 billion in additional revenue per two-year budget cycle for the State Highway Fund, Oregon’s main source of transportation funding, by the time a 20-cent gas tax increase is fully phased in, in 2032.
Much of that increased funding would come through increases to the gas tax, vehicle title and registration fees and the weight-mile tax paid by truckers. Oregonians would also see more money deducted from their paychecks under an existing payroll tax to pay for transit, and all electric vehicles would gradually be enrolled in a now-voluntary road usage charge program meant to replicate what their drivers would pay for gas-powered cars.
“It’s a big picture thing where we’re resetting everything,” Gorsek said. “But we’re not going to say to the public, ‘OK, we’re going to fix the gas tax today, and it’s going to go through the roof, or we’re going to do EVs, and it’s going to be through the roof right away.’ The idea is to work these things into something that can keep us from getting where we are now in the future.”
“Where we are now” is a funding crisis years in the making, as gas tax revenues decline, inflation hikes construction costs and the state and local governments split transportation funding. The Oregon Department of Transportation predicted an immediate deficit of more than $350 million, with warnings that it may need to lay off nearly 1,000 employees. Without legislative action, the agency has warned, it will take longer to plow roads, open and close highways during fire season and fix potholes.
The transportation co-chairs’ proposed fix comes as Oregonians deal with higher prices on all kinds of goods and anticipate increased costs due to President Donald Trump’s tariffs, the highest tax on foreign goods in generations.
“We’re very conscientious about the cost of living and some of the experiences we’ve had economically, but it also costs money to do nothing,” McLain told the Capital Chronicle. “And right now, we have maintenance, and we have preservation, and safety that all are the very pillars of what we’ve heard in our tour around the state.”
The plan, which will be refined by the Legislature before it adjourns in June, includes raising Oregon’s current 40-cent gas tax to 60 cents per gallon by Jan. 1, 2032. The biggest jump, to 48 cents, would happen Jan. 1, 2026, with 4-cent increases every two years until 2032.
It would also add $66 to vehicle registration fees, which now run between $126 and $156 every two years. Titles, which cost about $101 to $116, would increase by $90.
Electric vehicle drivers now pay more — $192 for title and $316 for registration — but their registration costs would go down as they enrolled in a road user charge program or paid a flat annual fee. The current road user charge program, OReGO, is a voluntary two-cent-per-mile fee, but lawmakers want to expand it to all electric vehicles.
Existing EVs would be enrolled in the program by July 2026, newly purchased vehicles by July 2027, plug-in hybrids by 2028 and all new vehicles rated at 30 mpg or greater by July 2029.
Additionally, McLain and Gorsek want to charge a one-time fee of 1% of the vehicle price when a car is sold. Oregon is one of only five states that doesn’t currently have such a fee.
Tolls, a tool lawmakers laid the groundwork for in their 2017 transportation package, are nowhere in the framework. Gov. Tina Kotek ordered a moratorium until 2026 on tolls, which the transportation department planned to use on Interstates 5 and 205 in and around Portland in part to pay for replacing the I-5 bridge connecting Oregon and Washington, and they’re politically unpopular in Oregon, which has no toll roads.
“The governor didn’t say no to tolls in the future, but that is not what is in the package currently,” Gorsek said.
The current 0.1% payroll tax all Oregonians pay for transit would nearly double to 0.18%, adding an additional $268.6 million per two-year budget cycle. A 3% tax on tire sales would provide $50 million every two years to fund rail, wildlife crossings and salmon restoration. Bikes that cost $200 or more, which now carry a $15 tax, would see that rate increase to $24.50 per bike to provide $1 million per budget cycle for local paths and trails.
“There’s no competition between transit, maintenance and finishing our promises,” McLain said. “We have different streams of money available for stable, sufficient funding for all three.”
McLain and Gorsek said they’re confident in Oregon’s ability to continue to receive federal transportation grants, despite directives from U.S. Transportation Secretary Sean Duffy that federal funding should go toward states with high marriage and birth rates, no vaccine or mask mandates and that are committed to working with the federal government to enforce Trump’s immigration policy — all areas that don’t apply to Oregon.
“I think what helps us is that this isn’t just about Portland,” Gorsek said. “This is about the West Coast, and the bottlenecks that we have in Portland for the whole I-5 system. There are comments about Oregon and Washington in terms of the Trump administration not being very happy with us, but this is really about the region and serious economic impacts if we don’t fix this.”
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Press release from Oregon Joint Committee on Transportaton
Transportation Co-Chairs Announce Framework to Fix Crumbling Infrastructure, Strengthen Economy
Urgent action is needed this session to build a stable, sufficient and accountable transportation system for the 21st Century
SALEM, Ore. – With Oregon’s roads and bridges showing alarming signs of deterioration, Joint Committee on Transportation Co-Chairs Rep. Susan McLain (D-Hillsboro) and Sen. Chris Gorsek (D-Gresham) released a framework on Thursday for bold action to support Oregon's transportation systems.
The Oregon Transportation ReInvestment Package (TRIP) framework is informed by more than two years of work and represents a starting point for detailed conversations and action this legislative session to keep Oregon's roads paved, bridges safe, and economy strong.
“From public testimony in committee, to last year’s statewide transportation listening tour, Oregonians have been clear that they want action, not delay,” Rep. McLain said. “They want clean, safe streets. They want reliable public transit. They want to know the bridges their children cross every day are structurally sound.”
Oregon’s transportation systems — the backbone of our economy and daily life — are in crisis. More than 90 state-owned bridges across the state have major structural defects, dangerous potholes are going months without repair, school zones lack sidewalks, major promised projects are still unfinished, and much more.
Without stable and sufficient funding, essential workers at transportation agencies will be laid off and Oregonians will feel those impacts: longer wait times to clear traffic accidents, fewer roads with safety striping, less frequent road repairs and unplowed roads in the wintertime.
“Oregon TRIP is focused on the safety and maintenance of our roads, bridges and transit — not just for today, but for years to come,” Sen. Gorsek said. “Inaction is not only irresponsible, it’s dangerous. This framework is a starting point and we are looking forward to sitting down with stakeholders and our colleagues on both sides of the aisle to finalize a package this session."
Oregon was the first state in the nation to institute a gas tax in 1919, and since then it has formed the core for how the state pays for transportation. Now, Oregon is facing modern transportation challenges, including increased freight traffic, a growing population, and the rapid rise of electric and fuel-efficient vehicles, which contribute less to the fuels tax that has long funded the system.
These shifts underscore the need for a more resilient, updated approach to transportation planning and investment.
"Bad transportation infrastructure is more than just an inconvenience, it harms Oregon's economy. Employees need to be able to get to work, businesses and truckers need to be able to move goods, students need to be able to get to school," Sen. Gorsek said. "At a time when everyday costs are already too high, we cannot afford to allow crumbling infrastructure to undermine Oregon's economy."
The framework proposes stabilizing current funding streams with the majority dedicated to operations, maintenance and preservation efforts distributed between the state, counties and cities. It lays the foundation for a 21st Century funding structure, with a phase-in of a Road Usage Charge for electric vehicles to make sure all drivers are paying their fair share for use of the roads.
It also invests in buses, rail, bicycles and pedestrians to ensure that Oregonians who can't or don't want to drive can still fully participate in daily life.
Finally, accountability is a key component of the package. There is broad bipartisan support for meaningful oversight of the Oregon Department of Transportation to ensure that taxpayer dollars are being used effectively and that the agency is keeping the promises it has made to Oregonians.
A team of external transportation experts is currently reviewing ODOT’s project delivery and accounting practices with the oversight of the Joint Committee on Transportation. Their results will be released in May and incorporated into the final package.
“This framework is grounded in fairness and accountability,” Rep. McLain said. “It ensures every user of the system pays their fair share and includes oversight from a bipartisan committee and independent transportation experts. But most importantly, it puts the focus where it’s urgently needed: operations, safety, and maintenance.”
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News release from House Republican Caucus:
DEMOCRAT PLAN SNUBS OREGONIANS’ CALL
FOR ACCOUNTABILITY AND AFFORDABILITY
SALEM, Ore. – Today, House Republicans released the following statement in response to House and Senate Democrats’ draft proposal to make Oregonians pay billions more in taxes for ODOT’s failures:
“The Democrats’ tone-deaf proposal throws more money at a system that has repeatedly failed to recognize that its core mission is to provide safe and reliable roads and bridges,” said House Republican Leader Christine Drazan (R-Canby). “A dozen new taxes and fees is a slap in the face to all Oregonians that simply can’t afford to pay more for less.”
“Since the beginning of this session, House Republicans have pressed ODOT on budgeting errors, incomplete projects, and mishandling of tax dollars,” said Rep. Shelly Boshart Davis (R-Albany), Vice Chair of the Joint Committee on Transportation. “It’s shocking that in spite of Oregonians’ resounding rejection of the tire tax proposal, Democrats are doubling down on this tax at a time when families are already struggling to make ends meet.”
A recent poll commissioned by House Republicans found that 80% of Oregonians oppose increasing the Gas Tax while 79% of Oregonians favor cutting taxes to make Oregon more affordable. The same poll showed that Oregonians see the cost of living as the top issue they face with 56% of Oregonians saying that taxes are too high. The statewide poll was conducted by Public Opinion Strategies between January 4–7th of this year and surveyed 500 registered Oregon voters with a ±4.38% margin of error.
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Senate Republicans Respond to Preliminary Transportation Framework
SALEM, Ore. – Today, the co-chairs of the Joint Committee on Transportation released a preliminary transportation framework. While the framework marks a starting point, Senate Republican Leader Daniel Bonham (R-The Dalles) and Senator Bruce Starr (R-Dundee) stress that it requires significant revisions before it can serve the best interests of Oregonians.
“While it’s good to finally see a framework take shape, it’s far from the solution Oregonians need. This proposal represents multi-billion-dollar tax increases that will burden hardworking families, many of whom are already struggling with the rising costs of living,” said Senate Republican Leader Daniel Bonham (R-The Dalles). “If this package had been introduced during last year’s transportation road show, we would have heard loud and clear from Oregonians across the state that they cannot afford these types of hikes. We need to be cautious and ensure any solution is not only practical but affordable for all Oregonians.”
“This is just the beginning, and there's much work to do. Republicans are committed to being part of the conversation and finding common ground to solve the state’s transportation problems,” said Senator Starr, co-vice chair of the committee. “The Majority has made it clear that we will have a seat at the table, and we anticipate the final product will look a lot different than what was released today.”
