New OR transportation package could raise $2B annually once fully implemented, draft shows

SALEM, Ore. (KATU) — A new transportation funding package proposed by Oregon Democrats on a Joint Transportation Committee this week will raise more than $2 billion annually in new revenue through taxes and fees by 2034, according to a draft estimate from the state’s Legislative Revenue Office shared with KATU.

The package includes a hike in the gas tax, higher title and registration fees, a new road-usage charge for electric and hybrid cars, a new tax on car sales, along with an increase in the payroll transit tax.

The vast majority of the funding from the package -- dubbed the Oregon Transportation Reinvestment Package -- would be divvied up among the state, the counties, and the cities.

By the mid-2030s, the new taxes and fees would pump more than $1 billion in new money to the Oregon Department of Transportation along with cities and counties across the state for maintenance and operations costs, according to the legislative estimate.

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The funding -- from the State Highway Fund -- is split, with 50% going to ODOT, 30% to counties, and 20% to cities.

The package phases in a 15 cent-per-gallon increase in the gas tax by 2028. The tax would increase by 10 cents on Jan. 1, 2026, and five cents on January 1, 2028. The gas tax would then permanently adjust with inflation with a 3% limit on its annual growth. The current statewide gas tax is 40 cents per gallon.

The funding package also increases title and registration fees by $70 and $50 respectively, which could raise more than $250 million a year by the mid-2030s.

The plan also phases in a new road usage charge (RUC) for electric and hybrid vehicles. The charge is a per-mile fee for those with an electric or hybrid vehicle to offset the lack of gas usage.

It’s estimated to raise nearly $170 million by fiscal year 2035. That year runs from July 1, 2034, to June 30, 2035.

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A new tax on car sales -- 1% on used and 2% on new -- is estimated to raise a shade under $130 million in its first year of implementation in fiscal year 2027 before growing to $285 million in new revenue by fiscal year 2035.

The transit payroll tax would also grow from .1% to .3% by 2030 and raise an additional $297 million in its first year of implementation. The payroll tax revenue grows by more than $450 million in fiscal year 2035, according to the draft.

The funding package phases in the new taxes and fees but starts raising money for cities, counties, and the state by next year. It’s estimated to generate $240 million in new revenue by July 1, 2026, followed by $745 million in fiscal year 2027 and $950 million in fiscal year 2028.

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Democrats on the Joint Transportation Committee say the funding is necessary to maintain infrastructure across the state.

"Think of it as a reset on how we've done things so that we can fund ODOT in a way that we don't end up where we are today and we're able to adequately pave and build bridges and all that," Sen. Chris Gorsek told KATU in February.

Republicans have largely panned the plan and called it a tax that Oregonians can’t afford.

"We think that we owe Oregonians that somebody is asking questions on whether that money is being spent wisely and whether [funding] has to be increased in order to go back to the core function or the core mission of what ODOT is supposed to be doing on behalf of Oregonians," Republican Rep. Shelly Boshart Davis told KATU in February.

A spokesperson for Senate Democrats cautioned the revenue estimate is a draft and could change as things are ironed out.

The joint committee wrapped up three public hearings on the legislation this week. It could move out of committee next week before floor votes in the House and Senate. The legislative session must end by June 29.