Oregon would raise its gas tax by 20 cents, create a new 1% tax on cars sales and require electric vehicles to pay an entirely new “use charge” under a proposal top Democrats say is necessary to maintain the state’s beleaguered roads and bridges.

In all, an ambitious funding framework unveiled on Thursday would raise more than $1.9 billion in new taxes and fees every two years once fully implemented. How much more remained unclear Thursday, as a major new charge within the package remained undefined.

The architects of the proposal – Sen. Chris Gorsek, D-Gresham, and Rep. Susan McLain, D-Forest Grove – described the plan as a restrained approach for raising enough money for road upkeep, while modernizing how the state pays for transportation.

“We’re looking at a substantial problem just to maintain our roads and bridges, so of course it’s going to cost a lot,” Gorsek said on Wednesday. “But we’ve not asked for the moon in these things.”

The long-awaited framework is Democrats’ first attempt to answer a question the Legislature has been puzzling over for years: Where to find new funding for the state’s highway fund as EVs and higher fuel efficiency vehicles eat into gas tax revenues, costs rise with inflation, and a handful of large construction projects soar beyond initial cost estimates.

“We are looking to make sure we are doing fair and equitable funding,” said McLain. “That means all users pay.”

The proposal is the first time lawmakers have seriously grappled with transportation costs since passing a round of tax and fee increases in 2017.

The question now becomes how the tax and fee increases will be received by the public and other lawmakers. Democrats have a three-fifths supermajority in both the House and Senate, meaning they can theoretically pass taxes without Republican support.

Unlike the 2017 bill, which was loaded with spending on highway mega projects, McLain and Gorsek say nearly 90% of the money they hope to raise will go to nuts-and-bolts road preservation and ensuring the Oregon Department of Transportation can carry out essential services such as repaving, road striping and staffing DMV offices.

But there’s also money in the plan that would allow the state to borrow billions of dollars needed to finish major highway projects in Portland’s Rose Quarter and on Interstate 205. Legislators thought they had fully funded those eight years ago, but they sit unfinished with price tags far beyond initial estimates.

This year’s package – dubbed the Oregon Transportation ReInvestment Package, or TRIP – includes:

• A staggered 20-cent increase to the state’s 40-cent-per-gallon gas tax. The tax would increase by 8 cents at the outset of next year, and another 4 cents in 2028, 2030, and 2032. It would be indexed to increase with inflation afterward.
• A new tax equal to 1% of the sale price of all cars sold in Oregon, new or used. McLain and Gorsek say Oregon is one of just five states without such a charge, which they call a “one-time system use fee.”
• A new “road usage charge” that electric and highly fuel efficient vehicles would pay – either as a flat fee or based on actual miles driven in Oregon. Existing electric vehicles would be subject to that still-undefined charge beginning in July 2026. New EVs, plug-in hybrids and cars with fuel economy of 30 miles-per-gallon or better, would be added in subsequent years.
• A separate usage charge for delivery vehicles used by companies with at least 10 such vehicles. The fee is meant to impact corporate delivery services like Amazon, according to a summary.
• Tacking an additional $66 onto Oregon vehicle registration fees, which vary by automobile.
• Adding $90 to vehicle titling fees, which currently range from $90 to $190.
• Increasing the state’s weight-mile tax on heavy vehicles by 16.9%. Taken together with higher taxes and fees for light vehicles, this change would ensure large trucks are no longer paying more than their fair share of road costs. The framework also envisions a tax structure for heavy trucks that is far simpler than the current system.
• A 3% tax on tire sales that would send $25 million a year to rail operations, safe highway crossings for wildlife and improving salmon habitat.
• An increase to an existing tax auto dealers pay for the “privilege” of selling cars in Oregon. The tax would be raised from 0.5% of the price of a vehicle to 0.8%.
• Adding $9.50 to an existing $15 tax on sales of new bicycles that cost at least $200. Funding from the tax goes to bike and pedestrian facilities.
• Increasing a tax dedicated to transit service that Oregon workers pay from their paychecks from 0.1% to 0.18%. That’s well under the 0.5% that transit agencies have pushed for recently.

In total, Democratic lawmakers say they are looking to raise an additional $1.5 billion every two years from existing taxes, and another $486 million via the new 1% tax on vehicle sales. They did not offer any notion of how much a new “road usage charge” on EVs, fuel-efficient gas vehicles and delivery trucks would yield.

New money would not be entirely reserved for state projects. The state splits most highway fund money with cities and counties. According to a summary, counties could expect an extra $510 million every two years, and cities would receive $340 million over the same period.

The funding framework has been a long time coming. Last year, lawmakers in both parties held a dozen hearings throughout the state to hear what residents and elected officials wanted out of the state’s transportation system. McLain and Gorsek say they heard a loud call for more funding for basic services, along with a lot more.

“They want more public transit, they want more connections, they want more amenities for bike and [pedestrians],” McLain said. “So you’re not only increasing [ODOT’s] mission, but you’re doing it through ways they told us on the tour that they would prefer.”

The funding proposal is also more ambitious than even some well-placed lawmakers seemed to anticipate. Last week, Senate President Rob Wagner, D-Lake Oswego, told reporters this year’s transportation would be smaller than the 2017 bill, which was expected to raise $5.3 billion in its first 10 years.

“I don’t know what the size is when we walk out of the building,” Wagner said. “Is it going to be $5 billion with all the projects and everything? I can confidently tell you that’s not the case.”

In fact, the proposal unveiled Thursday appeared likely to raise well more than $5 billion over the first 10 years, though officials said they could not offer an exact estimate. Few elements of the package came with distinct revenue estimates.

McLain and Gorsek stressed their proposal was realistic, and noted that it is smaller than Gov. Tina Kotek’s request for an additional $3.5 billion in transportation funds every two years.

“The governor’s budget was covering all the wish lists,” McLain said. “What we’re trying to do right here is make sure that we’re looking for efficiency, that we are looking for ways to make ODOT more streamlined and more [of] what I would consider successful on a wide variety of missions.”

The plan appears likely to meet stiff resistance from Republicans, who have so far railed against proposals for higher taxes this year. And polling shows that everyday costs rate among Oregonians’ top concerns.

Lawmakers looking to sell the package may have to overcome more than just skepticism over increased costs, too. ODOT has been under increasing scrutiny over rapidly rising project costs, along with a major accounting error that overestimated agency revenues by more than $1 billion.

As a nod to concerns about loose protocols in the agency, Democrats have tapped Republican state Sen. Bruce Starr, of Dundee, to lead the way on recommending ways to increase accountability at ODOT. The state is currently contracting with a pair of consultants, who have until May 31 to finalize a review of agency management.

“This is looking at getting back to basics, which is maintenance and preservation,” said McLain.

While the ultimate size of a roads package will be subject to negotiations in the session’s remaining three months, lawmakers are feeling pressure to raise at least some money. Without an additional $354 million in its next budget, ODOT says it will be forced reduce staff positions by roughly 1,000.

News Source : https://www.opb.org/article/2025/04/03/oregon-democrats-unveil-ambitious-road-funding-proposal-now-the-haggling-begins/