SALEM, OR – In a significant move to address Oregon’s critical transportation funding gap and avert widespread layoffs, the Oregon House of Representatives narrowly passed House Bill 3991 on Monday, September 1, 2025. The legislation, which includes a series of tax and fee increases, aims to generate approximately $4.3 billion over the next decade to support road maintenance, public transit, and the operational stability of the Oregon Department of Transportation (ODOT).
The bill, a product of a special legislative session called by Governor Tina Kotek, cleared the House on a 36-12 vote. It now heads to the Oregon Senate for final consideration, marking a crucial step after previous attempts to secure long-term transportation funding failed during the regular legislative session. The passage followed intense negotiations, particularly concerning concessions to Republican lawmakers who had voiced strong opposition to the initial, more expansive proposals.
Averting Layoffs and Service Cuts
The urgent need for legislative action stemmed from ODOT’s projected $300 to $350 million budget shortfall, which threatened to result in hundreds of layoffs – potentially impacting up to 700 employees – and the closure of several road maintenance facilities. Governor Kotek’s office had previously announced a postponement of initial layoff notices to allow time for a legislative solution during the special session. The passage of HB 3991 is intended to halt these impending job losses and maintain essential services, such as snow plowing, pothole repair, and bridge maintenance.
The final package represents a scaled-back version of earlier proposals, reflecting a compromise between the urgency of the funding crisis and concerns over the financial burden on Oregonians. The bill now requires approval from the Senate to become law.
Key Tax and Fee Increases Detailed
House Bill 3991 introduces several adjustments to existing taxes and fees, as well as some new ones, to bolster transportation funding:
* Gas Tax: The state’s gas tax will increase by six cents per gallon, rising from $0.40 to $0.46. This change, effective January 1, 2026, is projected to generate about $90 million annually. The revenue will be distributed with 50 percent going to the state, 30 percent to counties, and 20 percent to cities.
* Vehicle Registration Fees: Annual registration fees for passenger vehicles are set to increase from $43 to $85, an addition of $42. Fees for utility vehicles, light trailers, low-speed vehicles, and medium-speed electric vehicles will rise from $63 to $105. Moped and motorcycle registration fees will increase from $44 to $86.
* Vehicle Title Fees: The fee to title a passenger vehicle will increase significantly from $77 to $216, an increase of $139.
* Transit Payroll Tax: A temporary doubling of the payroll tax that supports public transit is included, increasing from 0.1% to 0.2%. This provision is slated to last from January 1, 2026, to January 1, 2028, a concession made to secure broader legislative support.
* EV and Fuel-Efficient Vehicle Surcharges: Annual registration surcharges for vehicles with a 40+ MPG rating will increase from $35 to $65. For electric vehicles, the surcharge will rise from $115 to $145.
EV Road Usage Charge Mandate
A significant component of the bill addresses the declining revenue from gas taxes due to increased fuel efficiency and the growing adoption of electric vehicles (EVs). House Bill 3991 mandates the implementation of a road usage charge (RUC) program for EVs and hybrid vehicles, beginning in phases from July 2027.
Under the RUC program, drivers of eligible vehicles will have the option to either pay a per-mile fee, assessed at five percent of the per-gallon fuel tax rate at the time of assessment, or opt for a flat annual fee of $340. This measure is designed to ensure that all vehicle types contribute to the maintenance of Oregon’s transportation infrastructure.
Navigating Political Division
The path to passing HB 3991 was fraught with political challenges. During the regular legislative session, a more ambitious $11.7 billion transportation funding package failed due to a lack of bipartisan support and internal Democratic dissent. Republicans consistently argued for alternative solutions, such as reallocating existing funds rather than raising taxes. Governor Kotek’s call for a special session underscored the severity of the ODOT funding crisis.
The eventual passage in the House saw some bipartisan cooperation, with one Republican representative crossing the aisle to vote in favor, while one Democrat voted against the bill. Key concessions, particularly the temporary nature of the transit payroll tax increase, were critical in garnering enough votes.
Looking Ahead
Supporters of the bill emphasize that it is a necessary step to ensure the safety and functionality of Oregon’s transportation system, prevent job losses, and provide reliable public transit services. While the concessions made were significant, some Democrats and transit advocates have expressed concern that the temporary nature of the transit payroll tax increase could create future funding challenges for public transit agencies.
The bill’s progression to the Oregon Senate sets the stage for further debate and potential amendments. The outcome in the Senate will determine whether Oregon can secure a stable funding mechanism for its vital transportation network and avert the immediate crisis threatening ODOT’s workforce and services.
