Oregon lawmakers want to fix roads and beef up transit. Where will they find the money?

As lawmakers prepare to craft a major transportation package in next year’s legislative session, numerous organizations and local officials are jockeying for a seat at the table.

County and city leaders say they don’t have enough money for basic street maintenance. The state transportation department says it needs an annual $1.8 billion boost to meet Oregon’s needs. And environmental advocates, labor unions and business groups all want input on the package.

Meanwhile, two massive transportation projects in the Portland area that lawmakers funded seven years ago remain unfinished and underfunded.

The state’s current transportation budget falls way short of meeting the state’s needs, officials say. To pass an effective package, lawmakers will not only have to make one-time investments but find and agree on new revenue streams to support the system long-term, something that will come with logistical and political challenges.

“We are in a position where the transportation system is hemorrhaging, and our ability to support Oregon the way that we would like to and the way we need to is struggling,” said Kris Strickler, director of the Oregon Department of Transportation.

Where lawmakers will find the billions that the transportation system needs and how they will spend that money were the main questions raised in a packed classroom at Portland Community College on June 4.

The meeting was the fourth stop on the Joint Transportation Committee’s daylong tour to learn about transportation needs in the Portland area, their first such tour of 12 across the state. Earlier that day, lawmakers zipped around on a TriMet bus from a bridge maintenance facility to a DMV office to several sites of projects underway to improve pedestrian and driver safety. Along the way, everyone from Multnomah County Chair Jessica Vega Pederson to a bridge maintenance worker asked them for state funding and support.

The day’s crammed schedule reflected the high number of projects and issues that lawmakers will have to consider while creating the package. During the two-hour roundtable at Portland Community College, local officials and more than 30 representatives from Portland area organizations gave suggestions on where lawmakers should focus their attention.

Some of the requests will have broad support. Strickler, Portland Bureau of Transportation Director Millicent Williams and several others urged lawmakers to allocate significantly more money to basic maintenance and operations of roads than they did in 2017, the last time the Legislature approved a major transportation package. In that package, lawmakers allocated $5.3 billion to support Oregon’s transportation system over 10 years, established a payroll tax to fund public transit programs and allocated more than $480 million for 37 highway projects, nearly all of which are complete or scheduled for completion, according to Strickler.

Seven years later, though, officials say the state’s transportation budget cannot support basic road maintenance. “Every jurisdiction that I’ve spoken with, I don’t have a single one that has said, ‘We have enough money to do the things that we need to do to serve Oregonians,’” Strickler said.

Other requests have received less overarching support, and some conflict with each other. Labor unions want the promise of more lucrative jobs. Port of Portland executives want lawmakers to invest in their shipping container services. Truckers want freeway expansions to create less congestion. Safety advocates want safer roads and improved pedestrian infrastructure. Transit advocates want more frequent and accessible bus service. Environmentalists want less air pollution from gas-powered cars and more electric-powered buses.

“I think that the Legislature is in a very difficult position going into the 2025 package,” said Cassie Wilson, transportation policy manager for environmental group 1000 Friends of Oregon. “But I think it’s also a good opportunity to think about where we’re spending the money, that we’re raising our transportation system … and looking at what is possible moving forward in our transportation priorities.”

Oregon’s transportation budget

Perhaps lawmakers’ biggest challenge to meeting the plethora of requests: Oregon’s current transportation revenue sources aren’t bringing in enough money, officials say.

Revenue from the state gas tax, which makes up about 40% of Oregon’s largest transportation revenue pool, has fallen amid a rise in electric vehicle usage and increased fuel efficiency of new cars, and the money coming in isn’t going as far due to high inflation rates, according to the Oregon Department of Transportation. The costs of labor, maintenance equipment and project materials have also risen, leaving cities in all corners of the state without sufficient funding to repair potholes and improve street safety, officials say.

Oregon’s primary transportation budget, the State Highway Fund, is sitting at $1.72 billion for the biennium that ends next summer. The Oregon Department of Transportation, which received about 40% of that funding, says it needs an additional $1.8 billion per year to pay for capital projects, better serve DMV customers and maintain the roughly 8,000 miles of roads it is responsible for.

Aside from the gas tax, the State Highway Fund receives revenue from DMV fees and a tax on heavy trucks above 26,000 pounds, based on their weight and miles traveled.

The state transportation agency also receives about $700 million annually from the Federal Highway Administration for construction projects and planning and $150 million from the Federal Transit Administration to pay for public transit. In 2017, lawmakers also created a 0.1% employee payroll tax to fund public transit programs and implemented other taxes on the sales of bikes, cigarettes and new cars to pay for public transit, bicycle and pedestrian paths and rebates for electric vehicle owners.

But officials say it’s not enough.

“We have a very big deficit right now,” said Sen. Chris Gorsek, a Democrat from Gresham and co-chair of the Joint Transportation Committee. “And the longer we let that deficit keep us from doing the maintenance that we need to do, the worse everything is going to become.”

Cities and counties, meanwhile, are also struggling to pay for their own transportation needs. Local jurisdictions receive funding from the State Highway Fund after accounting for the state transportation agency’s cut and administrative and transfer fees. They also receive funding through local general fund dollars and revenue from public parking fees. About two dozen cities, including Portland, also have a local gas tax to supplement their transportation budget.

But cities in all corners of the state say they need more money to pave their roads and maintain infrastructure for drivers, cyclists and others.

“I think that the most significant issue that’s brought up to our City Council on a recurring basis is the condition of our streets, and it all ties back to funding,” La Grande City Manager Robert Strope said. “Our roads are in pretty poor condition and the cost of maintaining roads just far outpaces the revenues that we get from the state.”

Potential solutions and challenges in 2025

It’s too early to know if next year’s package will include as many one-time allocations as the 2017 package, lawmakers say. Members of the transportation committee say they are eager to fund public transit and help cities meet their local needs, but recognize they will have a finite amount of money to do so.

Lawmakers say they will also consider several options to increase Oregon’s ongoing transportation funding. They could incrementally increase the heavy truck and gas taxes to account for inflation. They could introduce road user fees, which would charge Oregon drivers for the number of miles they drive on public roads. They could also add additional fees for electric vehicle drivers, who do not pay the gas tax, but do pay $316 to register their vehicles, more than double the fee for gas-powered cars.

The one option that wouldn’t immediately go into effect if lawmakers decide to implement it is imposing tolls on freeways, per an order from Gov. Tina Kotek pushing back consideration of the widely unpopular tolling option until at least 2026.

It is unknown which, if any, of those potential revenue sources are feasible because any proposal to increase taxes requires a supermajority, or three-fifths, vote in the Legislature. Democrats in both the House and Senate lost their supermajorities in 2022, meaning some Republican support would be necessary to approve any new taxes. However, that dynamic could shift after the November election; Democrats would have to flip just a single seat in both the Senate and House to regain a supermajority in both chambers.

Barring a Democratic supermajority, securing Republican votes will require convincing lawmakers that “the revenue will be directly used to not only maintain, but improve our transportation system,” said Rep. Kevin Mannix, a Republican from Salem who sits on the transportation committee.

“I think people will be happier when we tie specific services to the actual costs” of any new revenue sources, Mannix said.

Passing and implementing any of those funding options would come with challenges.

Local officials are concerned that raising or introducing new taxes would hurt drivers with low incomes or those who rely heavily on their cars. Implementing a road user fee could involve the complicated process of mandating that Oregon drivers install devices in their cars to track mileage. Drivers in rural areas generally oppose the road-user charge, lawmakers say, because they typically drive more than individuals in cities. A 2016 Oregon State University study determined that rural drivers would likely pay marginally higher fees than city drivers if Oregon implemented a road-user charge.

Lawmakers will have to carefully balance the needs of big cities with those of rural communities in crafting the package. Rural communities want to see continued funding for the Small City Allotment program, which lawmakers established in 2017. The program allocates $5 million annually to help cities with populations of 5,000 or lower improve street and pedestrian infrastructure.

“That’s a really important program,” said Jim McCauley, legislative director of the League of Oregon Cities, because the state funding tends to mostly benefit big cities while smaller cities “aren’t going to be getting very much funding.”

Truckers, meanwhile, oppose the tax on heavy vehicles and would likely fight any effort to increase it. In January, a group of Oregon trucking companies sued the state and top lawmakers, alleging that truckers have paid more than their fair share of taxes to maintain Oregon’s roads for years. That lawsuit is ongoing in Douglas County Circuit Court.

Unfinished and underfunded projects

Another sore spot for truckers and many others is the unfinished projects from the 2017 package. That year, the Oregon Trucking Association agreed to support an increase in heavy vehicle taxes if a portion went to expand Interstate 5 in Portland’s Rose Quarter to reduce congestion.

But seven years later, construction on the expansion project has not begun and another project included in that package, the seismic retrofitting of the Abernethy Bridge, which spans the Willamette River between Oregon City and West Linn along Interstate 205, is incomplete.

“It’s really a slap in the face that (truckers) haven’t gotten the project that they asked for, that they are overpaying … and now they’re expected to be this willing partner to a new conversation,” said Rep. Shelly Boshart Davis, R-Albany, co-vice-chair of the transportation committee and co-owner of her family’s trucking business.

The Rose Quarter project has ballooned in scope and estimated cost since 2017 due to inflation and high prices for materials and safety features. Construction on the project was originally scheduled to begin in 2021 and is now slated to start in 2026, according to Oregon Department of Transportation spokesperson Kevin Glenn. The project was originally estimated to cost between $450 million and $500 million. Now, the state transportation agency says costs could reach $2 billion.

There is currently not enough state funding to push the project forward. The project has received $158 million from the state transportation agency, partially from an annual $30 million lawmakers allocated to the agency beginning in 2022 to be used on the Interstate 5 expansion and several other projects.

Because current state funding will not cover the projects’ costs, lawmakers will likely have to allocate more money next year to push the expansion project and the Abernethy Bridge seismic retrofitting closer to completion, according to Strickler.

Lawmakers say they don’t know how much more they will allocate to those projects. Rep. Susan McLain, a Democrat from Hillsboro and co-chair of the transportation committee, said she hopes to secure more federal funding to minimize the state’s investment. The state transportation agency received a $450 million federal grant for the Rose Quarter project this March and recently applied for a $750 million federal grant, according to Glenn.

“The question is not, ‘What is the number?’” McLain said. “The question is, are we working all the processes to get as much as possible from” the federal government and figuring out “the most efficient, effective way to finish the projects.”

Before lawmakers convene next January to craft the transportation package, the list of groups hoping to benefit will continue to grow. The legislative transportation committee has 11 more stops on its statewide tour scheduled between June and September. The next stop will take place in Tillamook on June 18.

“There’s a very integrated aspect that we have to take into consideration when you’re talking about such a big system such as infrastructure and transportation,” McLain said. “What are the investments that we have to make in both budgets for transit and budgets for maintaining our roads and our highways and all of our paths, for our bikes and (pedestrians) and rollers? How do we do that? There’s no easy answer.”

— Carlos Fuentes covers state politics and government. Reach him at 503-221-5386 or [email protected].

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