Sufficient and Sustainable Funding Needed
A reliable and safe transportation system means people and goods can get where they need to go. That system includes everything from the edge of your driveway through local roads, sidewalks, bike lanes, intersections, bus routes, and state highways all the way to the interstates and railroads.
Oregon’s transportation agencies can’t afford to maintain or improve the transportation system. State highways are deteriorating; cities and counties can’t keep up with a growing backlog of maintenance. And transit agencies in cities big and small are struggling to grow ridership and facing rising operating costs.
That’s because Oregon’s transportation funding is not keeping up with rising costs.There are three driving factors:
-
Declining gas tax revenue. Oregon’s transportation agencies rely on the gas tax to fund the maintenance and improvement of our roads and bridges. However, the gas tax is struggling to keep up with rising costs as cars become more fuel-efficient and electric vehicle use increases. In 2025, the legislature passed a law that will require EVs and hybrids to pay a road usage charge. This is set to take effect in phases starting July 1, 2027.
-
Inflation driving up costs. The cost of everything, from building and paving to plowing roads, purchasing equipment and maintaining facilities, maintaining transit services, upgrading technology and providing DMV services, is going up. Oregon’s gas tax and vehicle and freight hauler fees are not tied to inflation. With every year that passes, the same dollar purchases fewer materials and less service.
-
Dollars are legally restricted to specific purposes. Most of ODOT’s transportation funding is directed by law to be spent on specific programs and services. As a public agency,
ODOT can’t move most of its money around without legislative approval. In 2026, the legislature redirected some state funds in ODOT’s budget from projects toward maintenance and operations to prevent service disruptions.
Weakening State Highway Fund Means Declining Roads
Oregon’s State Highway Fund pays for the maintenance and preservation of state, county and local roads and bridges. The state relies on gas tax receipts combined with fees on vehicles and freight haulers to form the State Highway Fund, which then distributes money to ODOT and county and city transportation agencies.
While this structure has supported the state’s transportation system for a long time, the State Highway Fund can no longer keep up with
today’s costs.
How Far a Dollar Goes Today
Just like costs for households are going up, transportation maintenance costs have risen. ODOT buys construction materials and heavy equipment, which depend on steel, fuel, manufacturing and specialized parts, and those costs have increased significantly in recent years.
Vehicles and Equipment Cost Much More
Over the past six years, ODOT saw major cost increases in essential equipment.
Equipment
| Cost in 2018
| Cost in 2026
|
|---|
10-Yard truck
| $286,000
| $389,000 (+36%)
|
Grader
| $271,000
| $358,000 (+32%)
|
Pickup truck
| $30,000
| $52,000 (+73%)
|
Everyday supplies cost more, too. For example: Road paint is up more than 30% on average. One common paint type increased by nearly $4.70 per gallon. ODOT uses about 110,000 gallons. That’s $517,000 more a year for the same amount of paint.
As funding for maintenance and preservation of Oregon’s roads and bridges falls behind, drivers will experience rougher roads, more delays, more closures and restrictions, and less reliable travel across the state. When basic maintenance is underfunded and delayed, small problems can become more expensive to address in the future.
Efforts to Address Oregon’s Transportation Funding Challenges
Because of the projected decline in the State Highway Fund, ODOT has reduced spending by about $500 million since 2019 to stay within available funding. Some of these savings have come from efficiencies and process improvements, like moving some DMV and Commerce and Compliance transactions online, consolidating office spaces, and cutting back on non-essential expenses.
These cuts have also led to reduction in services. This included reduced spending on maintenance services like litter and graffiti cleanup, paving and road striping. Reducing spending has led to smaller maintenance crews doing the work, limited overtime hours to respond to incidents around the clock, and less snow plowing on lower-volume roads. Reduced staffing has also impacted DMV offices, leading to closures in some areas and longer waits at others.
These
cuts have helped manage costs and prioritize critical services in the short term. ODOT’s ability to serve Oregonians and keep roads safe and open to traffic will deteriorate without sufficient funding in the future.
Legislative History
For nearly 20 years Oregon lawmakers have been trying to find new ways to invest in our transportation system as needs change, fuel efficiency improves and infrastructure continues to age.
-
2009 - Legislature passed the Jobs & Transportation Act of 2009. The bill raised vehicle and freight hauler fees and the gas tax to generate $300 million per year and nearly $1 billion for specific transportation projects.
-
2015 - ODOT implemented nation's first voluntary road usage charge program. ODOT has operated
OReGO as a voluntary program for vehicles 20+ mpg to pay 2 cents a mile and receive a credit for any fuels tax paid.
-
2017 - Legislature passed
House Bill 2017 to generate new revenue to build a modern, multimodal transportation system. This law established the payroll tax that funds public transportation, a bike excise tax to fund non-road projects and a vehicle dealer tax.
-
2025 - Legislature passed transportation funding package to raise taxes and fees to address maintenance and operations funding, modernize fees and make that road usage charge mandatory for electric vehicles. Tax and fee increases voted down after referendum, but the
road usage charge was left in place.
-
2026 - Democratic and Republican legislators worked together to prevent layoffs at ODOT by redirecting existing transportation funding to highway maintenance and operations.
Governor Kotek’s Workgroup
Transportation experts, users, and advocates from across the state and political spectrum are working together to build an achievable and comprehensive vision for Oregon’s transportation system.
The
Rebuilding Our Transportation Vision Workgroup is reviewing the needs, funding challenges, priorities, and tradeoffs to provide recommendations that will inform action in the 2027 legislative session. The Workgroup plans to focus these recommendations on affordability, accountability, safety, and economic vitality.