2026 Transportation Funding Update and Potential Workforce Reductions

Updated Jan. 14, 2026

Without most of the new revenue from House Bill 3991, ODOT is facing a funding gap in the 2025–2027 budget cycle of approximately $242 million.

As the Oregon Legislature prepares to convene for the upcoming session, ODOT is planning for multiple funding scenarios while state leaders consider options to address the funding gap and protect essential transportation services.

The Oregon Legislature passed House Bill 3991 in September 2025 to provide transportation funding needed to support ODOT operations, cancel planned layoffs, and maintain winter service levels. Petitioners have since submitted signatures to refer portions of HB 3991 to voters. As a result, most of the bill’s new revenue is delayed pending a statewide vote. 

On Jan. 7, Gov. Tina Kotek called for lawmakers to address ODOT’s funding gap in the upcoming session, repeal House Bill 3991, and provide comprehensive, long-term solutions for ODOT’s funding challenges in the 2027 legislative session.

If legislators provide new funding or other solutions to cover ODOT’s priority services, the agency would maintain current service and staffing levels needed to support public safety, frontline maintenance and direct customer service.

If additional funding or flexibility is not provided this year, ODOT would need to operate within existing revenue and legal spending restrictions. This would require reductions in services and staffing and would include layoffs. In that scenario, ODOT would prioritize preserving maintenance activities, direct customer service functions, and other frontline services. The agency would focus on continuing its core mission, serving customers, and preserving filled positions and the services employees provide. This approach reflects what legislators and the public emphasized to the agency last summer.

ODOT faces a projected funding gap of approximately $242 million for the 2025–2027 budget cycle. This gap reflects the difference between the cost of maintaining legislatively approved service and staffing levels and the revenue currently available under existing law. 

This number is smaller than earlier projections that showed an estimated a shortfall of about $350 million. Several factors have reduced the gap.

The remaining funding gap would still require significant reductions to balance the budget. If ODOT had to address the gap on its own, the agency estimates it would need to eliminate about 570 vacant positions and lay off approximately 470 employees. 

While the funding gap is smaller than it was last summer, the time left in the current budget cycle to achieve savings is also shorter. Layoffs were delayed from last summer to at least this spring, and layoffs that occur later in the cycle save less money overall. As a result, ODOT would need to reduce about 1.6 positions in spring 2026 to achieve the same budget savings as reducing one position last summer.

Gov. Tina Kotek is working with legislative leaders to identify a path forward for funding transportation services across Oregon. ODOT is supporting those conversations by providing technical analysis and expertise. Because the scale of the agency's funding gap will depend in part on the outcome of this upcoming legislative session, ODOT does not plan to issue layoff letters or initiate the bumping process unless absolutely necessary and in no case until after the session is complete and our final funding gap is defined.

“The decisions we make in the coming weeks will determine whether Oregon’s transportation system continues to decline or whether we can restore certainty in needed essential services that Oregonians rely on,” Governor Kotek said at a Jan. 7 event. “These decisions won’t be easy. There will be tradeoffs and consequences. Hundreds of people will be laid off this spring if we are not successful. Giving up is not an option.”

ODOT is currently focused on maintaining service and staffing levels while legislative discussions continue. It will be up the Oregon Legislature to decide what, if any, transportation programs and projects should have their funding redirected to maintenance and operations and what components of HB 3991 will be repealed and what will remain or be replaced. ODOT will continue to implement HB 3991 and allocate funding according to existing law until directed otherwise.

What is the current situation with ODOT’s funding and HB 3991?

The Oregon Legislature passed House Bill 3991 in September 2025 to provide transportation funding needed to support ODOT operations, cancel planned layoffs, and maintain winter service levels. Petitioners have since submitted signatures to refer portions of HB 3991 to voters. As a result, most of the bill’s new revenue is delayed pending a statewide vote.

Without that new revenue, a significant funding gap remains for the 2025–2027 biennium. ODOT currently faces a projected funding gap of approximately $242 million for the 2025–2027 budget cycle.

On Jan. 7, Gov. Tina Kotek called for lawmakers to address ODOT’s funding gap in the upcoming session, repeal House Bill 3991, and provide comprehensive, long-term solutions for ODOT’s funding challenges in the 2027 legislative session.

Why has the budget gap changed from $350 million?

Several factors have reduced the gap from our earlier estimations.

Could the funding gap change?

Yes. The final size of the funding gap depends in part on legislative action during the upcoming session. There are options that could reduce or eliminate the gap.

What caused ODOT’s maintenance funding crisis?

The crisis is driven by flattening gas tax revenues as vehicles become more fuel-efficient, legal restrictions on how transportation funds can be used, rising costs and inflation. These structural issues have persisted despite years of cost-cutting. 

What would a full repeal of HB3991 mean for ODOT?

Without a full repeal, the remaining parts of HB 3991 would increase costs and workload while reducing revenue in the short term. The law leaves several costs in place, including annual transfers of $3 million for rest areas and $500,000 for the Small Cities program. There are also costs of implementing the expanded road usage charge program (RUC), truck taxation modernization and accountability provisions. Together, these costs are estimated at about $12 million in the current budget cycle, with only limited new revenue to offset them.

Implementing these requirements requires significant staff time across the agency. If ODOT is also facing staffing reductions, completing this work would be difficult and could require service cuts elsewhere. 

A full repeal of HB 3991 would remove some currently unfunded efforts being undertaken by ODOT including changes to the existing weight/mile tax structure and the development of a mandatory road usage charge program. The provisions of HB 3991 that were referred to voters were never implemented.

As laws change or if HB 3991 is fully repealed, ODOT will adjust accordingly.

When would the repeal take effect?

A repeal would only take effect if approved by the legislature and signed by the governor. Until then, current law remains in place.

Would this change the projected gap of $242 million? 

We would conduct an analysis once legislative proposals are clear.

Have new positions created by the bill been filled?   

ODOT has not yet hired any new positions to implement HB 3991.

Do you have any details on what projects or program funding could be redirected to maintenance and operations? Do you know what those impacts would be? 

ODOT is working with the Governor’s Office and the Legislature on what project and program dollars are available to be redirected to maintenance and operations, if the law changes, in light of Governor Kotek’s direction. In the meantime, the Governor’s Office presented on this during the special legislative session. You can find that video online: Oregon Legislative Video. The relevant portion begins around 10 minutes. Legislative Fiscal Officer Amanda Beitel also presented a document to the Legislature with more detail: Dedicated Transportation Funds.

What funding scenarios is ODOT planning for?

ODOT is planning for two possible outcomes: One in which resources are made available to cover our priority service needs for this budget cycle and another in which we must make reductions that would include future layoffs.

Is ODOT planning layoffs right now?

The agency does not plan to send any layoff notices unless funding decisions are finalized and layoffs become unavoidable. 

If reductions become necessary, what services would ODOT prioritize?

If reductions become necessary, ODOT would focus first on protecting services that directly affect public safety and daily travel. This includes road maintenance and winter operations, emergency/incident response and direct customer service functions such as DMV services.

The goal would be to preserve frontline work that Oregonians rely on most, limiting impacts to those services as much as possible.

Has ODOT already taken reductions?

The agency continues to operate under an austerity budget that limits travel, purchases and more. ODOT has made substantial cuts since 2019. In the 2023-2025 budget cycle, ODOT voluntarily reduced its budget by more than $170 million. This biennium, the agency already took three major reductions totaling more than $150 million:

Spending that was phased out last biennium due to cash constraints is no longer budgeted, saving about $69 million this biennium.

Funding for rehabilitating and replacing maintenance stations was removed from the budget, saving about $38 million compared to last biennium.

The Legislature reduced the budget by about $46 million, primarily by reducing vacant positions.  

Why is ODOT continuing to hire while facing a shortfall?

At Governor Kotek’s direction, ODOT has continued hiring for critical winter maintenance positions to protect public safety and ensure essential services during severe weather. A small number of other critical positions, primarily in DMV customer service, are also being filled to maintain basic service levels. Recruitment for most other positions remains paused, and hundreds of vacancies continue to be held open to manage costs.

Why can’t ODOT use federal funds or shift money from projects?

Federal funds are largely restricted to capital projects and cannot be used for maintenance or operations. Oregon law also limits ODOT’s ability to shift funding between categories without legislative action.