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Transportation Funding in Oregon

Structural Revenue Difficulties

Due to a structural problem with how our transportation system is funded, Oregonians may soon see declines in the transportation system.

Oregonians may see more potholes and ruts on roads and may spend more time waiting for roads to reopen after a crash because there are fewer ODOT responders. During winter, there will likely be an increase in snow and ice build-up, more chain requirements, longer delays, and more road closures.

Every transportation agency across Oregon, whether state or local, relies on the gas tax to some degree. Transportation agencies across the country are grappling with flatlining and declining fuels tax revenues as cars become more efficient and drivers make the switch to electric vehicles.

Burning less gas is great news for the environment. Oregonians making the switch to more fuel efficient, hybrid, and electric vehicles is a central reason why Oregon is on track to reduce carbon emissions from transportation by 60 percent by 2050. However, the transportation system is primarily funded by a tax on gasoline consumption, resulting in an increasingly unfunded transportation system.

Funding from recent federal and state infrastructure packages allowed ODOT to make improvements to the system. But those packages did not provide substantial funding needed to support critical ongoing maintenance and employees who respond to emergencies, staff dispatch centers, or perform other jobs that help keep the system running smoothly. We’re not able to shift money specifically dedicated to projects or programs to cover such work.

At the same time, material costs have gone up dramatically during the last few years of high inflation and labor costs have also risen significantly.

ODOT has taken a number of steps to balance our budget, including:

  • Restricting maintenance recruitments;
  • Deferring road and bridge maintenance, including pavement repair and painting;
  • Reducing winter maintenance service levels; and
  • Scaling back after-hours response efforts, including roadside assistance.

Resources including fact sheets and maps on the expected impacts of these service level reductions for each region of Oregon are noted below. We will continue to update these as needed.

We are prioritizing safety, and focusing our efforts on work with the biggest outcomes for the most people. ODOT is dedicating more resources to keeping travelers safely moving on key corridors and fewer resources on less-traveled roads.

We’ve consolidated offices and shifted more DMV services online. We’ve closed maintenance stations, reduced staff, combined crews, and deferred building maintenance on ODOT facilities over the past 11 years. However, cuts alone will not solve long-term funding needs.

There are a number of different ways to solve this structural funding issue. Options may include expanding ODOT’s pay-per-mile, or Road Usage Charge (RUC) program. Revenue could also be raised through registration or other vehicle fees, or the gap could be filled with funding from non-transportation sources. And while the gas tax won’t last forever, increasing or indexing it for inflation would help cover the cost of maintaining the system.

We look forward to working with our partners to identify and adopt sustainable funding solutions for our transportation system at the state and local level.

Funding Overview

ODOT receives funding for specific purposes from payroll tax, cigarette tax revenues, general funds, lottery funds, and a variety of transportation-related permits and fees. ODOT will receive about $5.9 billion for our operating budget during the 2023-2025 biennium. An additional $1.4 billion will flow through ODOT to be distributed to Oregon cities, counties and other agencies.

Media Coverage

ODOT pumps brakes on two major freeway projects amid budget tolling pause (Oregonian)

ODOT cuts service and maintenance capacity across the board as Oregon braces for winter (Elkhorn Media)

ODOT says: DMV expands online offerings | Keep Oregon Moving | (

ODOT: The gas tax is fading away and taking maintenance down with it | Keep Oregon Moving | (

ODOT manages a $6.12 billion budget that funds programs related to Oregon’s system of highways, roads and bridges; railways; public transportation services; transportation safety programs; driver and vehicle licensing; and motor carrier regulation.

Delivery & Operations accounts for about two-thirds, or about $4 billion, of ODOT’s 2023–2025 legislatively approved budget. The division spends its resources on maintain​ing the highway system, bridge and pavement preservation projects, adding capacity to highways, and bicycle/pedestrian projects among others.

Debt service on bonds, the second-largest spending category in ODOT’s budget, totals $615 million. Most of this debt service is paid by the State Highway Fund; some is paid out of lottery revenue, general fund and federal funds.

Policy, Data & Analysis Division has $208 million available for grant programs like Connect Oregon, transportation system planning, data collection and reporting, and electric vehicle charging infrastructure projects.

Support Services Division's budget of $192.3 million provides essential services to ODOT including procurement, information systems, employee safety and human resources.

ODOT Headquarters budget of $54.9 million provides leadership and management to the agency and vital services and accountability to partners and the public. Program areas include the Office of Equity and Civil Rights including the ESB program ($27.2 million), Government Relations and Communications. Audit Services has a budget of $3.9 million.

Finance & Budget Division's budget of $80.7 million provides essential services to ODOT including financial management, budget, revenue forecasting and collecting fuels tax. Also included are the Office of Innovative Funding and Statewide Investment Services.

Driver and Motor Vehicle Services Division has a budget of $311.3 million. DMV licenses and regulates drivers and vehicles to promote safety and protect consumer interests through 60 field offices located throughout the state. The Transportation Safety Section provides safety programs that address intoxicated driving, young drivers, use of safety belts, child safety seats and other programs.

The Public Transporation Division and Rail ProgramPublic Transportition has $465.7 million available for communities and local transportation providers to help people with special needs, those in rural areas and intercity travelers. The Rail Program regulates rail and crossing safety and to provide intercity rail service.

Commerce and Compliance Division uses its budget of $116.7 million to register and inspect trucks, enforce weight, size, and safety regulations, issue permits, and collect the weight-mile tax. The division also include rail safety, which ensure the structural safety of railroad cars, equipment, track, crossings, signals and to maintain a safe environment for railroad employees.
The remaining part of the budget is for capital construction and capital improvement projects, and carryover in programs like the Oregon Transportation Infrastructure Fund.

Federal Transportation Funding

The federal government provides revenues from federal fuels taxes and heavy truck taxes to states and local governments. Most federal funding is distributed to states and local governments by funding formulas.

Oregon receives about $700 million in funding from the Federal Highway Administration each year for construction projects on the state’s roads, including the interstate, as well as planning and engineering. Some funds can also be used for transit and bicycle/pedestrian capital projects. All federal highway funds flow through ODOT. We distribute about 30 percent of those funds to local governments. Oregon also receives about $150 million in public transportation funding from the Federal Transit Administration each year.

State Highway Fund

Oregon’s State Highway Fund collects resources from three main sources:

  • Taxes on motor fuels, including gas tax and diesel tax.
  • Taxes on heavy trucks, including the weight mile tax and truck registrations.
  • Driver and vehicle fees, including licenses and vehicle title and registration.

Under the Oregon Constitution, State Highway Fund fees and taxes must be spent on roads, including bikeways and walkways within the highway right of way. State funds can be used for both construction projects and the day-to-day maintenance and operations of the state’s roads.

Formulas set in state statute distribute more than 40 percent of State Highway Fund revenues (after deducting the costs of collecting the revenue) to cities and counties.

Other State Funding

ODOT also receives revenue from a number of other state sources, including:

  • A 0.1 percent employee payroll tax ($1 for $1,000 in payroll) pays for public transportation service in both rural and urban communitities.
  • A 0.5 percent vehicle dealer privilege tax on new car sales funds rebates for electric vehicles and provides ongoing funing for the multimodal Connect Oregon program. 
  • A $15 tax on the sale of new bicycles with tires over 26 inches and that cost at least $200 goes to off-road bicycle and pedestrian paths that serve commuters. 
  • A small portion of cigarette tax revenues are dedicated to transit services for seniors and disabled people.
  • Custom license plate fees are dedicated to operating passenger rail.

The Statewide Transportation Improvement Program is ODOT's capital improvement program for state and federally-funded projects. ODOT and the Oregon Transportation Commission develop the STIP in coordination with a wide range of stakeholders and the public.

The Commission allocates funding among the following major categories:

  • Fix-It programs fund projects that fix or preserve the state’s transportation system, including bridges, pavement, culverts, traffic signals, and others. ODOT uses data about the conditions of assets to choose the highest priority projects. 
  • Enhance programs fund projects that enhance or expand the transportation system. 
  • Safety programs reduce deaths and injuries on Oregon’s roads. This includes the All Roads Transportation Safety program, which selects projects through a data-driven process to ensure resources have maximum impact on improving safety for all users of Oregon’s state highways and local roads.
  • Public and active transportation programs fund bicycle and pedestrian projects and public transportation. 
  • Local government programs direct funding to local governments so they can fund priority projects.
  • Americans with Disabilities Act programs fund projects that make state highways accessible to people who experience disabilities that impact their mobility.