Transportation funding was a combative issue this year at the Oregon statehouse.
Democratic majority lawmakers and Gov. Tina Kotek called for a funding deal that includes tax and fee increases.
Republican legislators advocated for prioritizing transportation funds already available.
Both sides were unable to reach agreement on a funding plan before the regular session concluded in June.
Special session called by governor
Kotek called lawmakers back to the capitol to get a deal done over Labor Day weekend.
On Sept. 1, House lawmakers voted along party lines to approve the governor’s 10-year, $4.3 billion transportation-funding package.
A Senate vote was delayed until Sept. 17 because one Democratic lawmaker was unable to attend to make the required in-person vote. The state constitution requires that legislators be in attendance in the chamber to vote.
The one vote was needed to meet the supermajority threshold for passage of any tax increase.
The night before the scheduled reconvening, the special session was again paused until Monday, Sept. 29 because the lawmaker still was unable to travel to the capitol.
That day, all the legislators needed to pass the funding bill were at the capitol. The bill was approved along party lines.
Sen. Anthony Broadman, D-Bend, said the bill passage “keeps commerce moving, protects local jobs and ensures the investments that make our region strong don’t stall when winter hits.”
HB3991 now moves to Kotek’s desk for her signature.
Tax and fee increases
The governor’s transportation funding bill is touted to pay for “basic road maintenance and operations.” Funding will benefit the Oregon Department of Transportation, local governments and transit districts.
The most notable provision in the bill is a 6-cent increase in the state gas tax rate. The rate increase from 40 cents to 46 cents is scheduled to take effect Jan. 1, 2026.
The increase is projected to raise about $90 million annually.
Vehicle registration fees for passenger vehicles will nearly double from $43 to $85. Title fees for passenger vehicles will increase by $139 to $216. Supplemental fees for electric vehicles will increase by $30.
Half of the revenue from tax and fee increases will go to the state transportation department. Counties will receive 30%. Cities will get the other 20%
Another component of the transportation funding plan doubles the state’s payroll tax to 0.2%. Revenue from the increase will go to local transit districts.
Drivers of electric vehicles and hybrids will also be required to enroll in the state’s OReGO program. The program charges drivers for miles driven.
Weight-mile tax
To address what Kotek referred to as “ratepayer fairness,” the bill includes a provision to revise weight-mile tax tables.
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.”
The governor’s transportation-funding plan is touted to simplify the number of tables based on declared combined truck weight. It also sets rates for those categories.
Weight-mile rates will be reduced from 87 separate tax rates to 10. Diesel fuel will also be treated as a motor fuel rather than a use fuel.
The governor’s administration touted the change as one to “simplify weight-mile rates to reduce weight-mile tax evasion and alleviate administrative burdens on trucking companies.”
By 2029, a diesel tax will be implemented with weight-mile rates adjusted accordingly.
Oregon Trucking Association President Jana Jarvis has said it is time for Oregon to move away from its heavy reliance on the weight-mile tax.
She added that Oregon’s participation with the International Fuel Tax Agreement is “minimal.” As a result, Jarvis said, it is harder to audit carriers to ensure their weight-mile tax statements match the mileage they file with IFTA.
“It is past time for Oregon to fully join IFTA by instituting diesel fuel taxes for heavy vehicles. It is also time for Oregon to simplify the weight-mile tax system,” Jarvis recently told lawmakers.
After months of blatant incompetent leadership — and thousands of Oregonians speaking out against these insane taxes — @TinaKotek finally gets her wish: more of your money when you can least afford it. pic.twitter.com/XgCRkHdfrc
— Christine Drazan (@ChristineDrazan) September 29, 2025
Republicans consider ballot challenge
Republican lawmakers were largely opposed to the tax and fee increases included in the transportation-funding package.
Instead, GOP leaders maintain the state would be better suited to prioritize ODOT core functions. Their plan called for sidelining “non-essential programs and divisive agendas” and rerouting money to roads.
The caucus identified $730 million in refocused spending, cost savings and spending cuts.
“The process to pass this bill was sloppy and careless, and Oregonians will pay the price – at the pump, at the DMV and out of their pocketbooks,” House Minority Leader Christine Drazan, R-Canby, said in a statement.
Party leaders said they may pursue a ballot measure for fall 2026. The referendum would allow voters to decide whether to approve the transportation package.
If the referral campaign is successful, the new taxes would be suspended until the public vote is held.
“Oregonians deserve safe roads, but they also deserve a Legislature that listens,” Senate Republican Leader Bruce Starr stated. “We are more determined than ever to give voters a voice in this process. This fight is far from over.” LL
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