Reaching a transportation-funding deal at the Oregon statehouse will not be a simple undertaking.
A month ago, Democratic lawmakers made public a transportation budget framework. Their plan would raise more than $1.9 billion every two years in new taxes and fees.
House Republicans soon followed up with their own proposal to get transportation work done without any new taxes or fees.
The two sides are tasked with coming to an agreement on the issue before the end of the regular session next month.
Transportation funding is an annual concern
State officials have said for multiple years that inflation has resulted in rising road costs and that the gas tax rate, the main source of money for state and local roads, is not indexed. As a result, they said, the excise tax is hard-pressed to keep pace with funding needs.
Factors further complicating the decline of transportation revenue include more fuel-efficient vehicles and electric vehicles.
Pressure to get a long-term plan in place to address transportation funding was heightened following an Oregon Department of Transportation warning that without a radical funding fix in place by 2027, the state will be forced to go without repairs to any roads that are not a federal interstate. The agency said an additional $1.8 billion annually is necessary just to make repairs.
Weight-mile tax
Another headache for the state is that the weight-mile tax levied on commercial drivers 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 truck 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.
In an effort to address the concern, one part of the Democrats’ transportation budget framework is intended to address the weight-mile tax issue. Their plan would help rebalance revenue collection from road users.
Instead of trimming the weight-mile tax, the framework calls for an increase to the state’s 40-cent gas tax rate. A 20-cent increase would be phased in over six years.
An 8-cent increase would take effect in January 2026. Three additional 4-cent increases would be implemented every two years until 2032. At that time, the tax rate would reach 60 cents.
After the gas tax increase was fully implemented, the rate would be indexed to inflation. The weight-mile tax would also increase by 16.9%.
Another change would reclassify diesel fuel as motor vehicle fuel. The switch is intended to “simplify weight-mile rates to reduce weight-mile tax evasion and alleviate administrative burdens on trucking companies.”
Other parts of Democratic transportation-funding plan
Vehicle registration fees would increase across the board by $66. Proposed fees vary by vehicle.
Vehicle title fees also would be raised by $90. The fees now range from $90 to $190.
All vehicle tax and fee increases would raise $1.5 billion per biennium.
Additionally, a 3% tax would be added to tire sales.
The majority transportation-funding plan also calls for charging light vehicle owners a per-mile fee for road use. The charges would be phased in by type of vehicle over multiple years
Corporate delivery fleets, including Amazon, FedEx and UPS, would have a road-usage charge. Affected fleets are defined by the state as operations with at least 10 medium-duty vehicles (10,001-26,000 pounds) used to deliver packages for personal or commercial use.
A Joint Committee on Transportation co-chair, Sen. Chris Gorsek of Gresham, said committee members are doing what they believe is necessary to improve transportation.
“I think Oregonians should be able to say — Is there another alternative that doesn’t reach into my pocketbook? And Republicans are here to say — Yes. The answer is yes.” – Leader Christine Drazan on the House Republican’s transportation proposal to refocus or cut $730 million… pic.twitter.com/xwScbtsbvw
— Oregon House Republicans (@OregonHouseGOP) May 1, 2025
Republicans counter tax and fee plan
House Republican Leader Christine Drazan has described the majority plan as “tone deaf.”
Statehouse Republicans have pointed to a statewide poll from early this year that showed more than three-quarters of Oregonians oppose tax increases and instead want tax cuts.
A proposal introduced by House Republicans to address transportation funding needs does not include tax or fee increases.
The minority party’s plan is touted to prioritize the core functions of the Oregon DOT. It also seeks to sideline “non-essential programs and divisive agendas” while protecting federal transportation funding and preserving critical road safety services.
The caucus identified $730 million in refocused spending, cost savings and spending cuts.
“This plan protects Oregon families from more tax increases by requiring ODOT to cut wasteful spending that does not align with core functions,” Drazan said.
Proposed changes to ODOT’s biennial budget for 2025-2027 include redirecting $306.7 million per biennium from the Statewide Transportation Improvement Fund. The fund is supported by a 0.1% payroll tax that is used to pay for transit work.
The proposal calls for the tax to be used for transportation needs other than transit.
Another $38 million ODOT wants to use for passenger rail would instead go for other purposes.
Additionally, the state’s Vehicle Privilege Tax used to aid the Oregon Clean Vehicle Rebate Program would be nixed. The tax is charged to vehicle dealers.
House Republicans are also calling for the state to “rebalance the unconstitutional burden placed on truckers as identified by the 2023 Highway Cost Allocation Study. LL
More Land Line coverage of Oregon news is available.
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