Oregon Governor Tina Kotek has outlined a sweeping funding proposal aimed at stabilizing the state’s transportation system and averting deep cuts to the Oregon Department of Transportation (ODOT). The plan, announced Thursday, will be presented to lawmakers during a special legislative session scheduled for August 29.
The proposal seeks to address what the governor’s office describes as a looming fiscal crisis for ODOT, driven by declining fuel tax revenues and increasing maintenance costs. Without intervention, the agency warns it will face significant layoffs, closure of maintenance stations, and delays to planned projects beginning later this year.
At the core of Kotek’s proposal is a combination of tax and fee increases designed to generate sustainable revenue. The package includes a six-cent per gallon increase to the state gas tax, bringing it to 46 cents per gallon. When combined with federal and local taxes, drivers in Portland could see total fuel taxes rise to roughly 74 cents per gallon. The plan also calls for doubling the statewide payroll tax dedicated to public transit from 0.1% to 0.2%, a change projected to boost the Statewide Transportation Improvement Fund.
Vehicle-related fees would also rise under the plan. Title fees would increase by $139 to $216, and car registration would jump $42 to $85. Additional surcharges for fuel-efficient vehicles, electric vehicles, motorcycles, and trailers would also see substantial increases. These adjustments are intended to reflect the higher costs of maintaining infrastructure while ensuring all road users contribute, regardless of fuel type.
A major component of the proposal is the introduction of a mandatory Road Usage Charge (RUC) for electric and certain hybrid vehicles. Under this system, drivers would pay 2.3 cents per mile driven, with the option of a $340 annual flat fee. Implementation would be phased in starting July 2027 for existing electric vehicles and January 2028 for new models, with hybrids joining the program later that year. Drivers participating in the RUC would be exempt from certain registration surcharges.
The revenue generated would be distributed through Oregon’s established formula: 50% for state roads, 30% for county roads, and 20% for city roads. Half of the funds would go directly to ODOT to maintain staffing levels, keep maintenance facilities open, and preserve core services.
Kotek’s plan also includes new oversight measures. These would authorize the governor to hire and remove the ODOT director, require performance audits by the Secretary of State, and expand the role of the Continuous Improvement Advisory Committee in monitoring large projects. Legislative review of major project budgets and timelines would also be strengthened.
ODOT has paused layoffs through September 15, but the agency has warned that a second wave of staffing reductions could begin in January 2026 if the Legislature does not approve additional funding.
Supporters of the proposal, including legislative Democratic leaders, argue that the plan is essential to protect transportation services and prevent further deterioration of the state’s infrastructure. Critics, including Republican leadership, have labeled the plan as poorly timed and overly burdensome on residents, suggesting the state instead draw from emergency reserve funds.