SALEM, OR – As Oregon grapples with a significant transportation funding crisis, a comprehensive tax and fee proposal aimed at shoring up the state’s infrastructure is facing sharp criticism from editorial boards and industry groups. While the Oregon Department of Transportation (ODOT) warns of drastic service cuts and potential layoffs without new revenue, critics argue that fundamental issues of fiscal accountability and project management at ODOT, coupled with a controversial executive order from Governor Tina Kotek, must be addressed before Oregonians are asked to bear an additional financial burden.
A Looming Transportation Crisis
ODOT is currently facing a projected $354 million budget shortfall for the 2025-2027 biennium. This deficit stems from a confluence of factors: declining gas tax revenues due to increased vehicle fuel efficiency and the rise of electric vehicles (EVs), the escalating costs of materials and labor driven by inflation, and legal restrictions that limit how much of the State Highway Fund can be used for maintenance and operations, dedicating a significant portion to debt service and past projects. Without intervention, the agency has warned of potential service reductions, including fewer snow plows, longer highway closures, slower emergency response times, and the layoff of nearly 1,000 employees. The situation highlights a structural problem in how Oregon has funded its transportation system for decades.
The Proposed Revenue Package
To avert these cuts, Governor Tina Kotek and legislative Democrats have put forth a package designed to generate approximately $1.9 billion per biennium. The proposal includes a multi-pronged approach to revenue generation. Key elements involve increasing the state’s gas tax by six cents per gallon over several years, raising vehicle registration and title fees, increasing supplemental fees for EVs, and doubling the payroll tax that supports public transit. It also outlines a phased-in road usage charge for EVs and hybrids, intended to replace declining gas tax revenue as vehicle electrification increases. A substantial portion of the generated funds would flow to local governments, with 50% designated for ODOT, 30% for counties, and 20% for cities.
Concerns Over Cost and Accountability
The Oregonian Editorial Board and other critics contend that Oregonians are being asked to shoulder substantial new taxes without sufficient assurance of fiscal responsibility. Concerns are amplified by ODOT’s recent track record. An audit revealed that the agency overestimated federal funding by over $1 billion in the current biennium, a significant error attributed to an over-reliance on flawed forecasting models. Further compounding the issue, the audit found that ODOT could not demonstrate the proper use of nearly $100 million in state highway funds. Moreover, many megaprojects funded by the 2017 transportation package have faced substantial cost overruns and delays, leading to public scrutiny and calls for greater oversight. For example, the I-5 Rose Quarter widening project, initially approved at $450 million, is now projected to cost $1.9 billion, and the Interstate Bridge Replacement project’s estimated cost has ballooned from $4.8 billion to over $7.5 billion.
Governor’s Executive Order Fuels Debate
A significant point of contention is Governor Kotek’s December executive order mandating Project Labor Agreements (PLAs) on state construction projects where labor costs exceed 15% of the total project cost. While proponents, including labor unions, argue that PLAs ensure fair wages, timely completion, and a skilled workforce, industry groups like the Associated General Contractors (AGC) and Oregon Business & Industry (OBI) assert that these agreements inflate project costs by an estimated 10% to 20%, reduce competition by discouraging non-union contractors, and disproportionately harm small and emerging businesses. The legality of the executive order itself is also being challenged, with a court order temporarily blocking its implementation, raising questions about the Governor’s authority to unilaterally impose such requirements without legislative input.
A Call for ‘Better Guardrails’
The critical news from The Oregonian editorial board is that lawmakers should not proceed with new tax increases while the Governor’s PLA order remains in effect and ODOT’s accountability issues are unaddressed. While some Democrats acknowledge the need for reforms and Republicans propose redirecting existing funds and cutting non-essential programs rather than raising taxes, the core demand from critics is for improved fiscal management and transparency before new revenue is levied. The debate highlights a fundamental tension between the urgent need to maintain Oregon’s aging infrastructure and the public’s demand for responsible, efficient, and accountable use of taxpayer dollars.
