Overview:
Lawmakers to hold special session on Aug. 29. Thousands of Oregonians raise concerns about funding.
Oregon lawmakers will hold a special session on Aug. 29 to consider funding for the Oregon Department of Transportation. The governor’s proposal includes raising payroll and gas taxes as well as vehicle registration fees. It also seeks to stronger accountability. Recent investigations into ODOT have revealed a lack of financial transparency.
Thousands of Oregonians raised issues with the upcoming proposal at a public hearing on Aug. 25, citing concerns with being overtaxed.
“Families like mine are already stretched thin,” wrote Dave C. Johnson of La Pine in his public testimony. “I am now 64 years old and on a limited income. The proposed 100% increase or any increase in the payroll tax is unfair to the working class and I oppose any and all parts of this bill.” The governor’s plan would increase the payroll tax for transit by .08% in January 2026. For someone making $2,000 per month, that comes to $3.60. The proposal would also cost the average driver about $66 per year, or $5.50 monthly, in additional gas taxes and registration fees.
The Oregon Department of Transportation’s proposed budget would provide towns, cities and counties with about $200 million in additional resources — representing approximately a 30% boost from existing funding levels.
“State and local transportation systems are connected and people in Bend don’t care who owns which road – they need it plowed, swept, paved and painted,” emphasizes Bend Mayor Melanie Kebler when discussing the city’s transportation challenges. According to Kebler, Bend and similar cities are experiencing mounting strain on their local road networks due to expanding populations, shrinking gas tax revenues, vanishing federal funding and rising maintenance costs. She stresses the urgent need for transportation funding legislation to pass in the upcoming special session, with any generated revenue being distributed equitably among municipalities.
Courtesy: Oregon Department of Transportation
Road to ruin
In recent years, revenue shortfall, combined with federal and state restrictions on how transportation money can be spent, has created budget challenges. Gas tax revenue has declined as cars have become more fuel-efficient. Meanwhile, inflation has driven up costs for everything from equipment to road salt.
ODOT has already tried to bridge the gap by cutting $300 million over five years through efficiency measures, facility consolidations and deferred maintenance. Only 6% of funding from HB 2017, Oregon’s last big transportation funding package, can go toward operations and maintenance. The rest of the funding is tied up in construction projects and paying off transportation bonds. The failure to pass ODOT funding at the end of the 2025 legislative session prompted a funding crisis that Gov. Tina Kotek has been working to address for months.
Without new funding, ODOT plans to slash 932 jobs and shut down maintenance facilities across the state, with the first cuts starting in September and a second round in January 2026. This would become the state’s largest government layoff in history.
“Without a funding solution, staffing reductions would lead to noticeable service impacts,” explained ODOT’s Lead Public Information Officer Kacey Davey. “For example, road maintenance and seasonal operations would be scaled back significantly. Travelers would see more hazardous winter driving conditions, delays in road repairs, less frequent maintenance and slower response times to issues on the road. We are committed to maintaining safety and essential services with the resources we have, but with fewer people, we would have fewer services and less capacity to respond.”
Paving the way forward
Kotek released a funding proposal Aug. 7 that would raise $620 million for the 2025-2027 budget cycle through higher gas taxes and vehicle registration fees.
“In the weeks since the adjournment of the legislative session, my team and I have worked every day with legislators, local partners and key stakeholders to zero in on a focused solution for the immediate crisis in our transportation system. I am confident that lawmakers will step up this month to avert these layoffs, and I appreciate their partnership in getting to the other side of this crisis,” said Gov. Kotek in a press release.
The plan would split the money between ODOT (50%), counties (30%) and cities (20%). ODOT’s roughly $300 million share would prevent layoffs and restore some services.
Kotek also wants major changes in how ODOT operates. Due to increased scrutiny of ODOT’s budget based on recent audits, HB 2025 would let the governor hire and fire ODOT’s director instead of the Oregon Transportation Commission. The bill also calls for biennial audits by the Secretary of State, focusing on major projects and highway fund spending.
Some public testimony on the legislation points to a desire for more accountability and oversight. “It’s about time that we start dismantling the Oregon government to save money,” wrote Robert Ezell, of Bend, Oregon, in his public testimony on the funding package. “The idea that we need to pay more while none of the government employees cut back where the systems are cut back is ludicrous.”
Redmond resident Debbie Meadows wrote that she believes transportation funding could be secured by cutting back what she believes are controversial programs. “Please manage what you have. Abandon DIE [DEI] programs, climate change nonsense, and giving away our tax dollars to illegal aliens. Then you would have enough funding. Once you have the funding, get rid of the bloated administrative staff so workers can do their jobs — maintaining our streets and roads,” she wrote in her public testimony.
In addition to audits, projects over $250 million would need legislative approval if they expand without matching local or private investment. The Joint Committee on Transportation would get year-round oversight of major projects.
Sen. Anthony Broadman, who represents Central Oregon, told the Source that Central Oregon faces unique transportation challenges that lawmakers must consider. “I support a transportation bill that moves us toward a safer and more connected system. We deal with a disproportionate amount of weather and miles traveled here in Central Oregon and the transportation bill we pass needs to be fair for Central Oregonians. We need to be getting great value and accountability for our taxpayer dollars.”
This article appears in the Source August 28, 2025.
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To be clear, I don’t support raising the gas tax or vehicle registration fees, both of which are already too high. The State of Oregon has the money. But I am more inclined to listen to any argument about raising the tax and fee when it is wrapped in jobs. It is not the business of government to create/maintain jobs. If they can find a way to maintain roads and still lay off people then bravo. But if the leading argument is saving jobs then count me out.