Oregon transportation-funding deal crashes
Oregon legislators wrapped up their five-month regular session without approving a transportation-funding bill. One massive funding bill was touted to eventually raise $2 billion yearly in new and higher taxes and fees.
Half of the revenue would be earmarked for the Oregon Department of Transportation. The agency has said an additional $1.8 billion annually is necessary just to make repairs.
Counties and cities would divvy the other half.
The transportation-funding package fell apart after not enough of the supermajority Democrats were willing to approve the plan.
Tax and fee increases
The Democratic bill, HB2025, included a 15-cent gas tax increase. The current excise rate is 40 cents.
An initial 10-cent increase would take effect on Jan. 1, 2026. Another 5-cent increase would take effect on Jan. 1, 2028. At that time, the gas tax rate would reach 55 cents.
Once fully implemented, the tax rate would be indexed to inflation. Indexing allows for annual increases to the tax.
Vehicle title and registration fees also were eyed for increases.
Registration fees for passenger vehicles would increase by $70 from $43 to $113. New title fees would be raised by $105 from $77 to $182.
A new road-usage charge for electric and hybrid vehicles was also part of the plan.
Additionally, corporate delivery fleets that include Amazon, FedEx and UPS would have a road usage charge. Affected fleets are defined by the state as operations with at least 10 vehicles (8,001-26,000 pounds) to deliver packages for personal or commercial use.
In an effort to get something done before the session wrapped up, Democrats tried to pass a slimmed-down version of the transportation-funding bill.
The last-minute stop gap included a 3-cent gas tax increase. Title and registration fees would increase by $21 and $91 – down from $70 and $105.
The stop gap, HB3402, would raise about $215 million yearly. All new revenue would be earmarked for ODOT. Nothing would be allotted for local governments.
The transportation-funding effort failed because Republicans declined to suspend rules to allow the last-minute bill to be rushed to the House floor for a vote.
Facts. https://t.co/Qmem6J0L16
— Shelly Boshart Davis (@BoshartDavisAg) July 7, 2025
Weight-mile-tax
A fix for the state’s weight-mile tax was also included in HB2025.
The tax is levied on commercial drivers. It is the subject of a lawsuit filed by the Oregon Trucking Association and three motor carriers.
The Oregon Constitution requires the state highway fund to be “fair and equitable to light and heavy users alike to ensure that cars and trucks pay their fair share of the usage of the road.”
Figures provided by the Oregon Trucking Association show the trucking industry paid 34% of all taxes owed by Oregon motorists, despite trucks representing 14% of vehicle miles traveled in the state.
The lawsuit claims that the state’s weight-mile tax is unconstitutional because it forces truck drivers to pay more than they should be required to pay.
To address the issue, the transportation-funding bill called for revising the formula for weight-mile taxes.
Republicans felt shut out of process
Throughout the session, GOP lawmakers complained about being shut out of transportation-funding discussions.
The minority party had called for an alternative to the deal.
House Republican Leader Christine Drazan pointed to a statewide poll from early this year that showed more than three-quarters of Oregonians oppose tax increases. Instead, residents want tax cuts.
Her caucus proposed a plan without tax or fee increases.
The plan prioritized core functions of the state DOT. “Non-essential programs and divisive agendas” would be sidelined while protecting federal transportation funding and preserving critical road safety services.
The caucus identified $730 million in refocused spending, cost savings and spending cuts.
“Over 4,000 pieces of testimony have been submitted, with 70% of Oregonians staunchly opposed to (HB2025),” Rep. Shelly Boshart Davis, R-Albany, said in prepared remarks. “The largest tax hike in Oregon’s history is not a compromise – it’s grossly irresponsible.”
What’s next?
Gov. Tina Kotek directed most of her ire at Republicans for the Legislature’s failure to get a transportation-funding deal done.
The Democratic governor said the minority party was unwilling to make a deal before the regular session ended. She also called out her own party leaders for throwing in the towel and adjourning the session two days early.
To make matters worse, the lack of action on the issue could result in hundreds of ODOT layoffs.
Kotek has since indicated that a special session could be upcoming. LL