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Oregon cities would be allowed to raise gas taxes without asking voters under proposed bill

A gas pump nozzle rests in a vehicle, filling the tank with gas.
Michael Clapp
/
OPB
A gas pump nozzle rests in a vehicle, filling the tank with gas.

As state lawmakers search for billions of dollars to maintain deteriorating roads, it's one of many options under consideration.

Dana Merryday began hearing the grumbling when he moved to Cottage Grove more than a decade ago.

Roads in the Lane County town of around 10,000 were pocked with holes. Some were so spider-webbed with cracks they looked like the back of an alligator. State funding and the city鈥檚 three-cent gas tax weren鈥檛 enough.

鈥淚t鈥檚 a constant complaint,鈥 Merryday said. 鈥淧eople say, 鈥楾he roads, the roads.鈥欌

This much was clear to him: The city needed more money if it was going to make the progress citizens were demanding. So after Merryday was elected to the city council in 2022, he and other leaders began studying what it might take.

Their answer was a two-part proposal put before Cottage Grove residents last year. The council asked citizens to OK a five-year property tax increase, and a six-cent hike to the city鈥檚 3-cent-per-gallon gas tax.

鈥淲e thought this is the bare minimum that we can possibly ask for and actually have an effect,鈥 Merryday said.

Voters disagreed. Both measures suffered lopsided defeats in the November 2024 election, with nearly 75% opposing the gas tax hike.

The results shocked Merryday, he said, but perhaps they shouldn鈥檛 have. Cottage Grove residents had shot down another proposed gas tax increase eight years earlier.

鈥淭here was a very anti-tax sentiment,鈥 he said. 鈥淧eople say, 鈥榃ell, you鈥檙e just going to waste the money.鈥欌

In coming months, the plight of Cottage Grove and cities like it will have the Legislature鈥檚 attention. A bill that could raise billions of dollars to repair, maintain and upgrade degraded roads across the state is perhaps the 2025 legislative session鈥檚 weightiest task.

And as lawmakers scrounge for new money, some are touting an idea that would have made Merryday鈥檚 job far easier.

Senate Bill 687 would roll back a state law 鈥 created when lawmakers took up transportation funding 鈥 that requires cities to seek voter approval before passing local fuel taxes. It would also allow every county in Oregon to implement or hike vehicle registration fees without a vote, an option currently only available to the four counties with more than 350,000 residents.

Sen. Khanh Pham, D-Portland, is sponsoring a bill that would make it easier for cities to raise gas taxes.
Kristyna Wentz-Graff
/
OPB
Sen. Khanh Pham, D-Portland, is sponsoring a bill that would make it easier for cities to raise gas taxes.

鈥淩ight now we鈥檙e tying cities and counties鈥 hands and taking out one tool,鈥 said state Sen. Khanh Pham, D-Portland, the bill鈥檚 chief sponsor. 鈥淚 want to make sure that we鈥檙e untying their hands as much as we can.鈥

The bill emerged after Pham and other lawmakers attended an extensive tour of the state last year, listening to local officials and residents in a dozen cities talk about the challenge of maintaining roads and bridges.

The gist of many of those arguments: Property taxes, which are the lifeblood of local governments, aren鈥檛 able to rise fast enough to meet the cost of services, and state funding for local roads is inadequate. A by the Association of Oregon Counties last year suggested that counties need another $830 million every year to meet demand 鈥 a figure that doesn鈥檛 account for state- or city-owned roads and bridges.

Pham and her cosponsors believe SB 687 is part of the answer, freeing up local leaders to enact new taxes they view as necessary without seeking voters鈥 blessing.

鈥淓very year, cities and counties get poorer and poorer and their infrastructure gets older and older,鈥 said state Rep. Mark Gamba, a Democratic sponsor of the bill and the former mayor of Milwaukie. 鈥淭hat鈥檚 a recipe for bad things.鈥

Gamba said voters too often act like 鈥減etulant children鈥 standing in the way of taxes that are necessary to replace vital infrastructure like roads, sewage plants and libraries.

鈥淪omeone needs to be the responsible adult in the room,鈥 he told OPB. 鈥淎nd I mean that so emphatically that I would be thrilled if you quoted me.鈥

Not every city rejected gas tax proposals like Cottage Grove did last year.

Voters in Portland opted to renew the city鈥檚 10-cent-per-gallon tax, the highest in the state, rather than letting it lapse. And in Newport, almost 54% of voters agreed to raise their 3-cent-per-gallon tax to 5 cents.

State Rep. Mark Gamba, D-Milwaukie, says cities must have more tools to raise money for roads.
Kaylee Domzalski
/
OPB
State Rep. Mark Gamba, D-Milwaukie, says cities must have more tools to raise money for roads.

In all, 33 cities and counties have implemented local gas taxes, according to the Oregon Department of Transportation.

Local vehicle registration fees are less popular. Just three Oregon counties 鈥 Multnomah, Washington and Clackamas 鈥 currently tack on the charges. The Association of Oregon Counties said in a recent analysis that many others might not find the tool worth their while.

鈥淩egistration fees in Eastern, Southwest, and Coastal Oregon would not have a meaningful impact on those county鈥檚 road department funding gaps,鈥 the organization said.

But both Pham and Gamba say freeing city and county leaders to make taxing decisions can only help. Pham argues voters wouldn鈥檛 be cut out entirely.

鈥淚f the town residents don鈥檛 like any potential new fee hikes, they can hold their electeds accountable in the next election,鈥 she said.

SB 687 currently sits in the Senate Revenue Committee, and it isn鈥檛 scheduled for a hearing. It鈥檚 still being analyzed by groups representing cities, counties, motorists, and other road users.

Danelle Romain, a lobbyist for gas stations around the state, said her clients forcefully oppose 鈥渁ny attempt to take away the right of Oregonians to vote on local fuel taxes that directly impact their cost of living.鈥

But the bill is just a piece of a larger question about how to find a huge amount of money for state roads in the next two-year budget.

Faced with a gas tax that is losing potency and escalating costs brought on by inflation, ODOT says it needs a major budget bump to perform basic upkeep services and avoid laying off nearly 1,000 employees.

Gov. Tina Kotek called on lawmakers to find an additional $1.75 billion for the agency in the recommended budget she unveiled in December. But because the state only keeps about 50% of transportation funding 鈥 sharing the rest with counties and cities 鈥 the Legislature would actually need to raise $3.5 billion to get to Kotek鈥檚 number. Even that could potentially leave the state short billions of dollars it needs to complete major projects promised to .

Exactly where lawmakers might look for new money is one of the big questions of the session.

Last week, the Legislature鈥檚 Joint Transportation Committee received a report considered by members of a state workgroup examining the question. They include: hiking the state鈥檚 40-cent-per-gallon gas tax; raising registration fees; slapping new fees on retail deliveries, rental cars and rideshare services like Uber; taxing public electric vehicle charging stations; creating a 鈥渞oad usage charge鈥 that taxes people per mile they drive; and more.

Democrats, who hold supermajorities in both chambers of the Legislature and can hike taxes on their own, have been clear they will examine all options as they look for more money. But that doesn鈥檛 mean it will be easy.

According to an analysis prepared by the Legislative Revenue Office last month, it would require the equivalent of a 79-cent-per-gallon increase to the state鈥檚 40-cent gas tax for lawmakers to generate an extra $3 billion for the next budget.

Republicans, meanwhile, have said they will refuse to support new taxes.

鈥淸ODOT] is an agency that needs to go on a diet,鈥 said House Minority Leader Christine Drazan, R-Canby. 鈥淚t鈥檚 an agency that needs to look internally and decide, 鈥榃hat can we do to be more efficient and more accountable鈥 before they put their hand out and say that anybody should write them a blank check for anything.鈥

While the particulars of any transportation bill likely won鈥檛 come into focus for months, Pham and Gamba hope SB 687 is part of the formula.

It鈥檚 an idea that appeals to Merryday in Cottage Grove, who said he has soured on the roads problem since last year鈥檚 defeat.

鈥淚 went out and beat the bushes and went out on a limb and really pushed and pushed and pushed,鈥 he said. 鈥淛ust to have it thrown back in your face that way, I鈥檓 kind of like, 鈥業鈥檓 done.鈥欌

But Merryday sees the appeal in allowing city leaders to raise fuel taxes without asking voters 鈥 even if that would almost certainly sink his political future.

鈥淚 personally am not trying to make a career out of being a city councilor,鈥 he said, 鈥渟o I would be happy to support something like that.鈥

Dirk VanderHart covers Oregon politics and government for Oregon Public Broadcasting, a JPR news partner. His reporting comes to JPR through the Northwest News Network, a collaboration between public media organizations in Oregon and Washington.
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