Oregon鈥檚 highway officials say they鈥檙e tapped out 鈥� and that鈥檚 about to mean big problems from metro Portland to Madras to Medford.
As inflation has sent road costs soaring in recent years, gas taxes are sputtering like an overworked Geo Metro. The funding pinch has grown so troublesome that the Oregon Department of Transportation warned last winter it couldn鈥檛 even plow mountain passes reliably without an emergency infusion of cash.
By 2027, the agency says, it will have to nix paving projects on any crumbling road that鈥檚 not a federal interstate. And without a radical funding fix, ODOT promises, you can expect 鈥渓onger road closures, more trash and graffiti, worse winter driving conditions, more potholes, and slower DMV customer service.鈥�
All Oregon needs to do to avoid this theoretical future? Pony up an extra $1.8 billion a year 鈥� plus a couple billion more to finish paying for megaprojects lawmakers promised seven years ago.
鈥淭hese numbers are big,鈥� ODOT Director Kris Strickler , offering a dire picture of his agency鈥檚 finances. 鈥淭hese numbers are really big. We know that.鈥�
Oregonians are about to know it, too.
Next year, the question of how to ease ODOT鈥檚 woes promises to be one of the highest-profile 鈥� and most politically tricky 鈥� that will land on lawmakers鈥� desks.
To kick off the process, a committee of state senators and representatives has begun touring the state, soliciting opinions on how Oregon might spend any money from new taxes or fees.
They鈥檝e so far heard pleas from the pragmatic to the fanciful. One man in Tillamook called for spruced-up highway rest areas, while some in Portland demanded a transit tunnel that could zip riders beneath downtown.
Splashy projects have been a cornerstone of past 鈥渢ransportation packages,鈥� the term of art in Salem for bills that levy more money for roads. After all, bringing home a much-desired boon for their district is a time-tested way to get lawmakers on board with a tax increase.
But legislators and lobbyists who鈥檒l be hashing out this year鈥檚 package insist this time is different.
鈥淭his really is a back-to-the-basics, fundamental transportation package going forward,鈥� said Jim McCauley, a lobbyist for the League of Oregon Cities. 鈥淚t鈥檚 not a lot of new bright shiny projects.鈥�
Whether lawmakers can live up to that expectation remains to be seen. A key question heading into next year鈥檚 session is where the Legislature might look for money 鈥� and maybe more importantly, whether fractious lawmakers can find the will to vote such a proposal into law.
Here鈥檚 what you need to know as the conversation gets underway.
Why is ODOT short on money?
Oregon gets money for its roads from a huge variety of sources. The federal government chips in about $700 million a year. Taxes on Oregon employee payrolls, car dealers, and sales of new bicycles also generate money. But the main pot of funding ODOT uses is the State Highway Fund, made up of DMV fees, a weight-mile tax levied on heavy trucks, and money from fuel taxes like Oregon鈥檚 40-cent-per-gallon gas tax.
The fees and taxes that make up the highway fund aren鈥檛 indexed to inflation, which means the state鈥檚 buying power has withered as costs in recent years.
Meanwhile, the state gas tax isn鈥檛 as potent as it used to be. As drivers buy more electric vehicles and cars with higher fuel efficiency, ODOT says it reaps about $40 a year less for every driver than it used to. ( and the are facing a similar problem.)
That doesn鈥檛 mean gas taxes are down. The tax actually increased by two cents per gallon in January 鈥� a change set in motion in the Legislature鈥檚 2017 transportation bill. According to the , ODOT expects revenue from fuels taxes to crest during the current fiscal year at about $694 million, before gradually declining moving forward.
Lastly, ODOT doesn鈥檛 get to keep all the money in the state highway fund. Cities and counties also get a share of the money to pay for their own roads.
So how much money are we talking about?
That depends on how you think about the problem.
In its , ODOT laid out a seemingly endless list of areas where it expects its next two-year budget to come up short. That includes a $205 million shortfall for basic operations and maintenance, and a nearly $1 billion hole in the annual amount ODOT says is necessary to repair decrepit roads and increase safety on its roadways.
To paper over all of its predicted funding gaps, ODOT says it will need an additional $1.8 billion a year.
Strickler, the agency鈥檚 director, told lawmakers ODOT will focus any new money first on maintenance priorities like plowing and re-striping roads, then on improved customer service, and last on safety improvements and road preservation.
That鈥檚 a departure from the state鈥檚 last transportation package in 2017, when big-ticket megaprojects dominated.
鈥淚t鈥檚 a little awkward to be in front of you and not be asking for a bunch of projects,鈥� Strickler said in the February hearing. 鈥淎n agency director of a transportation agency always goes to the Legislature and says, 鈥榃e need a bunch of projects.鈥欌��
Strickler would know 鈥� he has decades of experience in Oregon and Southwest Washington, including serving as project director of the failed megaproject known as the Columbia River Crossing that promised a new bridge on Interstate 5 connecting Oregon and Washington.
ODOT鈥檚 pledge that it wants to focus on the basics has found receptive ears.
鈥淭his is one time where you鈥檒l find me almost being a shill for 鈥楤ig Highway,鈥欌�� said Sarah Iannarone, director of the Street Trust, a nonprofit that pushes safe streets for all modes of transportation. 鈥淚 say fully fund the ODOT safety budget in addition to operations and maintenance. At the end of the day, I think every Oregonian who lives here and works here wants to see a sidewalk their kids can get to school on, and safe places for people to just get around their community.鈥�
Didn鈥檛 you say something about incomplete highway projects?
Yep. Even if ODOT鈥檚 $1.8 billion figure is accurate, it鈥檚 not the full scope of the budget problem. The agency is also sitting on two massive projects that were promised when lawmakers last passed a transportation package in 2017, but are now in limbo.
One will ensure the Abernethy Bridge, where Interstate 205 crosses the Willamette River, can . Construction is already underway, but ODOT had been counting on tolling the bridge to come up with around half of its $750 million price tag. When Gov. Tina Kotek in March, that money disappeared.
ODOT is also a billion dollars short for its controversial plan to add auxiliary lanes to Interstate 5 as it passes through Portland鈥檚 Rose Quarter. The project is a longtime demand from business groups and the state鈥檚 trucking industry, who are furious construction hasn鈥檛 even begun.
鈥淥ur number-one priority is still sitting there in the same state it was,鈥� said Jana Jarvis, president and CEO of the Oregon Trucking Associations. 鈥淗ere we sit now seven years later. ODOT is coming back to say they don鈥檛 have enough money for that project. They don鈥檛 have enough for the other projects. They don鈥檛 have enough for maintenance.鈥�
In fairness to ODOT, the Rose Quarter project has hardly been an easy task. It鈥檚 despised by climate advocates and other groups, who say adding capacity to the freeway will only invite more cars with their planet-warming carbon emissions. They鈥檝e hoping to force the agency to scale back its plans.
The project has also seen enormous changes in scope, which were necessary to secure the backing of Portland City Hall and other key constituencies. The most significant: a massive cap that will , stitching together a historically Black neighborhood that was decimated when I-5 was built 鈥� a facet of the project that recently landed a $450 million federal grant.
In total, ODOT says it needs up to $2.6 billion to finish projects lawmakers thought they鈥檇 fully funded in 2017.
鈥淲e said back to basics and we mean back to basics,鈥� said state Rep. Susan McLain, D-Forest Grove, a co-chair of the Legislature鈥檚 Joint Transportation Committee. But she added: 鈥淲e are feeling like we need to finish off a couple of anchor projects.鈥�
How do counties and cities figure into this?
They鈥檙e responsible for maintaining a in their own right 鈥� and they鈥檙e also clamoring for more money.
鈥淚f the Legislature fails to pass a transportation package in 2025, communities across the state will see more potholes, unmaintained streets and traffic signals, and other critical failures for both the local and state systems,鈥� the League of Oregon Cities said in a recent memo offering talking points to its 241 member cities.
One thing that makes the job of finding new money for ODOT tricky is that, under the state鈥檚 current funding formula, cities and counties are entitled to roughly half of the state highway fund. That means if lawmakers want to plug the state鈥檚 budget hole, they need to raise almost double that amount to ensure cities and counties get their share.
Not everyone supports that arrangement. State Rep. Paul Evans, D-Monmouth, sits on the Joint Transportation Committee tasked with writing the bill. He鈥檚 argued in recent months that the state should rejigger its formula and focus on state roads.
鈥淭he state in this environment should be focusing on state priorities,鈥� Evans said in May. 鈥淚 don鈥檛 know that county roads are state priorities.鈥�
But that sentiment is far from universal. Many lawmakers seem to agree that they need to take local roads into account.
鈥淐ity and county roads are in as bad of shape as state roads,鈥� said state Sen. Chris Gorsek, D-Gresham, another co-chair of the legislative transportation committee. 鈥淭hese cities and counties would not be able to exist in terms of the transportation issues they face without [state funding].鈥�
Other governments have tried 鈥� and failed 鈥� in recent years to fund transportation projects.
Voters in 2020 enthusiastically torpedoed a $7 billion transportation plan spearheaded by Metro, the Portland area鈥檚 regional government, that included shiny projects like a proposed light rail extension but also included back-to-basics maintenance and safety improvements on deadly state-owned roads in Portland proper and its suburbs. That package came to a vote in the heart of the COVID-19 pandemic, but it ran afoul of business groups, which aggressively opposed the payroll tax it would levy on private employers.
Earlier this year, Portland voters tax that charges 10 cents per gallon for upkeep of local roadways.
OK, so we鈥檙e talking about a lot of money. Where will it come from?
That鈥檚 the $5 billion question 鈥� or however much the Legislature winds up deciding to press for.
鈥淪ince the need is so great, we are going to try to get as much that is palatable to the Legislature and in turn palatable to the public,鈥� said Gorsek. 鈥淚f we don鈥檛 do anything, we鈥檙e going to be in terrible shape.鈥�
Simply hiking the state gas tax is not a solution. Not only is the tax growing less efficient (see above), it would require a massive increase to $1.36 per gallon to get ODOT the $1.8 billion it鈥檚 looking for every year, according to the agency generated earlier this year.
鈥淣o one is going to survive that,鈥� said state Sen. Brian Boquist, R-Dallas, noting the political peril that can befall lawmakers who vote in favor of tax increases.
One popular option for creating a more reliable source of road funding is to expand on an idea that Oregon pioneered in 2015: charging people for the miles they drive, as opposed to for the fuel they use.
To date, Oregonians have been able to voluntarily participate in the state鈥檚 , which uses a and charges 2 cents per mile, refunding money motorists spend on gas taxes. That approach could become a requirement as the state moves away from a gas tax.
鈥淲e have to talk about a road usage charge,鈥� state Rep. Kevin Mannix, R-Salem, said in May, echoing what鈥檚 become a common sentiment.
Lawmakers could also opt to increase vehicle registration fees to generate money, or raise a 0.1% employee payroll tax that currently funds transit service around the state.
Or they might try more innovative ideas. Gorsek mentioned the possibility of a 鈥渞etail delivery fee,鈥� a charge levied on delivery drivers for every stop they make in order to fund road upkeep. That鈥檚 an approach , with more states showing interest.
鈥淚 want us to go as far as we can,鈥� Gorsek said. 鈥淲e鈥檝e got a lot of dangerous roads out there.鈥�
Whatever options lawmakers ultimately favor, ODOT is urging them to ensure that fees and taxes grow with inflation to ensure the state鈥檚 buying power isn鈥檛 eaten away as prices rise.
Lawmakers don鈥檛 always get along. Is this even possible?
No one knows, and transportation packages have blown up before.
An attempt to pass a funding bill in 2015 fell prey to forcing lawmakers to delay until 2017.
鈥淚f the governor and legislative leadership want a transportation package, I鈥檓 pretty certain there will be one,鈥� said Evans, the Monmouth Democratic state representative.
鈥淥ne thing we don鈥檛 have control over is votes,鈥� said McCauley, the lobbyist for the League of Oregon Cities. 鈥淭hat comes down to leadership trying to figure out what they can get votes on.鈥�
In order to pass new taxes, each chamber needs to find support from a supermajority of three-fifths of lawmakers. That translates to 18 yes votes in the Senate, and 36 thumbs up in the House. It鈥檚 in cobbling together those votes that many people familiar with legislative wrangling see a risk: that the transportation bill that鈥檚 supposed to be about paying for basic services and fulfilling a couple outstanding promises could quickly become loaded with pork-barrel projects.
鈥淟ast time we said we weren鈥檛 going to do projects, either,鈥� said Boquist, the Dallas Republican who helped pass the 2017 funding package. 鈥淚t snowballs 鈥� We had to do a lot of projects in 2017 to get to 18 and 36 [votes].鈥�
There are also pre-existing tensions.
In 2015, a funding bill failed partly because Republicans insisted, unsuccessfully, that Democrats kill a policy that at gas pumps. This time around, many Republicans are just as insistent on another point: ensuring that car drivers pay their fair share for road construction costs.
Under the state constitution, lighter vehicles like cars and SUVs are supposed to pay for their portion of road costs via the gas tax, and heavy trucks are supposed to pay their share in the form of taxes based on their weight and how much they drive. But the system is out of balance. found light vehicles are underpaying into the system, while trucks that weigh more than 26,000 pounds are overpaying.
Republicans have for majority Democrats to correct the imbalance. Democrats have demurred, saying they鈥檇 take up the matter in 2025.
鈥淭hey鈥檙e stalling,鈥� said Boquist. 鈥淲e鈥檙e way out of balance.鈥�
Trucking interests have , meaning a judge could force the state鈥檚 hand without action. If nothing else, Boquist and other Republicans say, the Legislature needs to find a way to bring the funding system into balance.
鈥淚鈥檓 betting in 2024 the only thing they鈥檒l do is raise the gas tax somewhere in the neighborhood of 12 cents,鈥� said Boquist. 鈥淭hat gets the courts off their backs.鈥�
Others aren鈥檛 sure even that鈥檚 possible.
鈥淲e鈥檙e walking into a situation where outside politics and intraparty pressures are actually going to be driving decisions far more than what members want to do,鈥� said Evans, adding that the specter of a Republican walkout is never out of the question if the party鈥檚 hit a major stumbling block. 鈥淚 don鈥檛 know how people measure success.鈥�
The message from the state鈥檚 most powerful lawmakers has been clear. Senate President Rob Wagner, D-Lake Oswego, and House Speaker Julie Fahey, D-Eugene, say they intend to do something to fill ODOT鈥檚 massive funding hole.
鈥淲e need to be able to have some courageous conversations about how to fill that gap,鈥� Wagner said in May. 鈥淲e need to act.鈥�
