Skip to main content

Oregon State Flag An official website of the State of Oregon »

Transportation Funding in Oregon

Structural Revenue Difficulties

To make sure Oregonians could continue to rely on ODOT’s winter maintenance services, Governor Kotek requested $19 million from the 2024 Oregon Legislature to better fund road maintenance activities thrugh the biennium. Leaders from the Oregon Legislature responded and provided ODOT with $19 million of additional funding for winter maintenance activities.   

This one-time additional funding helped to keep our maintenance service levels stable for this year and next. It does not address the structural revenue issue that is affecting transportation agencies across Oregon.

What Has Happened to Transportation Revenue? 

Transportation agencies across the country are grappling with flattening 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. 

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.  

Lastly, we face restrictions on how we can use the funding we receive from state and federal sources. Federal funding, including from the recent infrastructure package, cannot be used for maintenance or agency operations, with few exceptions. Of the funding we receive from state transportation taxes, almost half is sent to cities and counties. Another quarter is dedicated by the legislature to paying for construction projects and paying debt connected to past projects. We’re not able to shift money specifically dedicated to projects or programs to pay for maintenance.  

As a result, before the one-time infusion of funding identified above, the state funding available for maintenance and agency operations went down compared to last biennium, even as our costs are increasing. 

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.

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.