Oregon governor lays out special session details on ODOT funding: increases in gas, payroll taxes and registration fees

By DIRK VANDERHART/Oregon Public Broadcasting

SALEM — Gov. Tina Kotek said Wednesday she has a recipe to successfully divert mass layoffs at the state’s transportation agency — and it doesn’t look too different from a plan lawmakers failed to pass last month.

When she calls lawmakers into special session in late August, Kotek said she will ask them to bless a six-cent hike to the state’s gas tax, higher registration and titling fees, and a doubling of a tax Oregon workers pay to support public transit.

If that proposal is successful — as the governor said repeatedly she expected it will be — the state would avert laying off nearly 10% of its transportation workers. It would also shore up public transit agencies warning of steep service cuts and send a lifeline to city and county road departments.

“I am confident that next month legislators are going to show up, they’re going to approve the necessary funding for the state’s transportation needs, and I truly appreciate their partnership right now to address the crisis that is facing the state,” Kotek told reporters Wednesday.

Kotek’s office had not released a detailed summary of her proposal as of Wednesday morning. But the governor offered some details in a press conference, stating it would:

• Raise the state’s 40-cent-per-gallon gas tax to 43 cents beginning in January. That change is likely to raise around $150 million a year, according to past estimates.
• Hike vehicle title and registration fees Oregon motorists pay. Registration fees would increase by $42 and titling fees by $139, the governor said. Electric vehicles, which do not pay gas taxes, would be required to pay an additional $30 on top of existing fees.
• Double the payroll tax that currently takes 0.1% out of workers’ pay checks to support transit. The tax, created in 2017, sent roughly $130 million to state transit agencies last fiscal year. Transit agencies have asked lawmakers to increase the tax fivefold, but Democrats balked in this year’s session, advocating an increase to 0.18%. Kotek’s proposal is to raise it to 0.2%.
• Require drivers of electric vehicles and hybrids to enroll in the state’s OReGo program, which charges drivers for miles driven. Such a shift is considered necessary for funding road projects as EVs continue to gain popularity and gas tax revenue is expected to decline.
• Require more frequent auditing of the Oregon Department of Transportation so lawmakers have better insight into the progress and cost of major road projects. Those accountability measures are a response to backlash over huge cost increases of ODOT projects.
• Eliminate existing statutory language allowing for tolling on Portland-area highways. That language has caused heartburn for some lawmakers, even though Kotek paused tolling plans last year amid blowback. State Sen. Mark Meek, D-Gladstone, even used the statutory language to claim without evidence that his party was sneakily trying to reinstitute tolling plans with their transportation bill this year. Kotek said eliminating the language would assuage those concerns.

Kotek’s office did not release a formal analysis for how much money the package might raise. A spokeswoman said in a text message it’s roughly $650 million for the two-year budget cycle.

Related: Gov. Tina Kotek delays ODOT layoffs and announces August special session

On Tuesday, Kotek delayed that move by 45 days so lawmakers would have time to act. A special session is scheduled for Aug. 29. Kotek said Wednesday if lawmakers pass her proposal, the state would be able to avert layoffs — though might not avoid all impacts.

“Honestly, we have some staff who are making choices to potentially leave the agency regardless of what’s happening right now,” Kotek said. “So I hope we won’t have any disruption.”

Republican lawmakers have lambasted Democrats all year for plans to hike taxes to pay for roads. They have argued the state should repurpose existing funds, for instance money that supports public transit or EV purchases to pay for nuts-and-bolts road maintenance.

GOP leaders made clear earlier this week their stance hasn’t changed.

“Just weeks after the Legislature rejected the largest tax increase in Oregon history, the Governor is calling us back to Salem to try again, this time with less notice and less transparency,” Senate Minority Leader Daniel Bonham, R-The Dalles, said in a statement Tuesday.

But Kotek told reporters she had no sign from Republicans that they would attempt to scuttle a special session by not showing up. Both legislative chambers require a quorum of two-thirds of members to conduct business.

“Everyone is going to make an effort to be there and I believe we’ll have a quorum in both chambers,” Kotek said, adding that some lawmakers might be on vacation.

That latter point has been a repeated source of frustration for the governor in the weeks since lawmakers adjourned without passing new road funding. While she was perceived by many to be distant from transportation discussions during the session, she has been extremely engaged in the past month.

“I’m not complaining, but the minute the session ended I canceled all my plans,” Kotek told reporters. “We have been working on this nonstop with folks.”

• This story originally appeared July 23, 2025 on Oregon Public Broadcasting.