Following newly confirmed transportation funding changes, Oregon drivers will be hit from all sides. The new gas tax increase and fee hikes are part of Governor Tina Kotek’s urgent plan to solve the Oregon Department of Transportation (ODOT) funding crisis.
Lawmakers will hold a special session on August 29 to prevent the layoffs of hundreds of transportation workers.
Gas Tax Increase Could Hit Drivers Hard
The proposal includes a $6 gas tax hike, larger surcharges for high-mileage cars and electric vehicles, and higher vehicle registration and title fees. Gas tax would rise from $0.40 to $0.46 per gallon in Oregon. In Portland, drivers would pay city, federal, and state taxes, which total up to $0.744 per gallon. This amount would be among the highest rates in the U.S.
Half of the revenue collected from the gas tax hike would go directly to ODOT to prevent layoffs and keep maintenance stations open. The other amount would be split among countries and cities under the standard 50/30/20 formula (50% goes to the state, 30% to counties, and 20% to cities)
The amount that goes to the state is used to maintain state roads and highways, the amount that goes to the state is used for county road projects, while the amount disbursed to the cities is used for city streets and related infrastructure.
Registration and Title Fee Hikes Across the Board
Under the plan, vehicle registration fees would jump by $42 statewide, raising the base cost for passenger cars from $43 to $85. Trailers, mopeds, motorcycles, and low-speed vehicles would see a $42 increase. The total for these increase fees would see a $139 increase. As a result, the total base title cost would rise to $216 without additional surcharges.
Bigger Surcharges for EVs and High-MPG Cars
In addition to registration and title fee hikes, drivers would face more charges. The most hit are those who own fuel-efficient and electric vehicles. Registration surcharge almost doubles from $35 to $65 for vehicles getting 40+ miles per gallon. The surcharge for electric vehicles would rise from $115 to $145.
These increased fees are meant to replace the lost gas revenue as citizens in Oregon shift to low or zero-transmission vehicles.
Payroll Tax Increase for Transit Funding
The plan also proposes a 0.1% increase in Oregon’s payroll tax. The tax would be deducted from wages and salaries, and the money would be channeled to the statewide Transportation Improvement Fund to keep buses, trains, and transit services across the state.
Mandatory Road Usage Charge for EVs
The current voluntary Road Usage Charge (RUC) would be made mandatory for electric and certain hybrid vehicles. If the proposal passed, there would be options:
- Pay 2.3 cents per mile
- Pay a $340 annual fee.
The RUC would be rolled out in July 1,2027, for all existing Electric Vehicles and on January 1, 2028, for new EVs. Hybrid and plug-in hybrid vehicles would start paying on July 1, 2028. Note that those who pay the RUC will not pay the registration surcharge.
Accountability Measures and Oversight
To solve concerns about ODOT’s management, the proposal entails:
- Regular performance audits by the Secretary of the State.
- More intense legislative oversight of project scope, schedules, and budgets.
- A revised Continuous Improvement Advisory Committee to oversee major projects.
Supporters vs. Critics
Democrats supported the plan, saying that it is necessary to protect the jobs of ODOT employees who ensure that our roads and bridges are safe.
“We must protect the jobs of ODOT employees whom we rely on to keep our roads and bridges safe,” said Oregon Senate President Rob Wagner, D-Lake Oswego. “For decades, Oregon has underinvested in the safety and maintenance of our roads, bridges, and transit options. This proposal doesn’t solve all the funding challenges facing our statewide transportation system, but we have an opportunity with this legislation to keep Oregon on a path toward a fair and stable funding system that puts safety first,”
According to Oregon House Speaker Julie Fahey, D-Eugene, the proposal would ensure that Oregonians have working roads and transit systems.
“We’ve heard from mayors, county commissioners, and transit leaders across the state who have been clear that the stakes are real and the timeline is urgent. We need to take action before harmful cuts to transportation services take effect,” said Fahey.
Republicans had opposing views. House Republican Leader Christine Drazan, of Canby, termed the proposal “tone-deaf” because it ignores the needs of Oregonians. She accused the governor of choosing not to listen to the voices of Oregonians who complained that they couldn’t afford the proposed tax hikes. She also added that people are already paying too much.