Oregon Democrats are advancing a transportation funding proposal that has the potential to generate more than $1.8 billion annually by fiscal year 2029.
According to a revenue analysis that surfaced in the Capitol, that figure could rise to more than $2 billion each year by 2034.
This analysis, dated Thursday, marks the first comprehensive insight for Oregonians into what new tax and fee increases, outlined in House Bill 2025, may entail for taxpayers.
The analysis follows four public hearings held by Democrats regarding the bill this week, during which the absence of a clear financial estimate was a recurring concern.
The bill has emerged with a higher projected revenue than an earlier framework unveiled by Democrats in March, which estimated around $1 billion annually for road funding.
As the conversation surrounding the proposal gains momentum, opponents are voicing concerns regarding the financial burden on taxpayers.
Republicans have consistently disputed the necessity of the tax increases, leading some to prepare for a possible referral of the bill to voters if it passes, which could jeopardize its success.
Conversely, some advocates are urging Democrats to expand the package even further, expressing that it falls short in addressing electric vehicle infrastructure.
Currently, House Bill 2025 includes several key proposals:
– A 15-cent increase on the state’s existing 40-cent-per-gallon gas tax.
– An indexing mechanism for gas taxes to adjust with inflation.
– Increases in various vehicle registration and licensing fees.
– A 2% tax on new car sales and a 1% tax on used car sales exceeding $10,000.
– The implementation of a per-mile fee for electric vehicle and hybrid owners.
– Simplified taxation for heavy vehicles and diesel fuel.
– Designated funding for two unfinished highway megaprojects in the Portland metro area.
– Increased auditing requirements for the Oregon Department of Transportation.
The revenue from this initiative is aimed at addressing escalating road maintenance needs throughout the state.
Additionally, it seeks to fund ongoing highway megaprojects, enhance transit services, and facilitate the creation of more walkable streets.
The League of Oregon Cities emphasized the urgency of passing the transportation package, stating, “If the Legislature does not pass a transportation package this year, communities across the state can expect more potholes, reduced road safety for citizens, and less ability to respond to the challenges of maintaining transportation infrastructure in their communities.”
The structure of House Bill 2025 features staggered tax increases, which are anticipated to generate higher revenue over time.
The newly introduced ‘transfer tax’ on new and used vehicle sales could yield approximately $265 million annually once fully implemented, with projections showing a slight increase in revenue in subsequent years.
The expected revenue from the 15-cent rise in gas taxes is around $230 million each year, although this figure is likely to decline gradually as more Oregonians shift to electric and fuel-efficient vehicles.
Increases to vehicle registration and titling fees are estimated to contribute an additional $265 million annually.
Moreover, an escalation of the tax from 0.1% to 0.3% on workers’ paychecks could bring in over $400 million more each year specifically for transit services.
By the year 2029, projections indicate that House Bill 2025 could result in over $1.5 billion in new revenue directed toward the state highway fund, which is responsible for road and bridge maintenance and construction projects.
Additionally, around $300 million is expected to be allocated for transit and railroad initiatives, bringing the total anticipated funding to $1.9 billion.
The projected revenue is expected to increase further over the years.
With gas taxes linked to inflation, the state’s annual transportation budget is expected to reach $2 billion by fiscal 2034.
Democrats have framed their 2025 proposal as a transformative approach to financing transportation in Oregon, aiming to reverse years of disinvestment that have contributed to deteriorating road conditions.
To support this goal, a mandatory fee of 5% of the gas tax is proposed for drivers of electric and hybrid vehicles, calculated on a per-mile basis.
For example, if the gas tax remains at 40 cents per gallon, electric vehicle drivers would owe 2 cents for every mile driven, creating a new funding source as traditional gas tax revenues decline.
Although this ‘road usage charge’ aims to provide a sustainable revenue stream, state assessments suggest that initial implementation costs could outweigh the revenue generated in the early stages.
A significant area of ongoing discussion revolves around the taxation of heavy trucks under House Bill 2025.
There are concerns regarding whether the analysis accurately reflects the contributions heavy trucks would make towards road maintenance, especially given prior reports indicating that trucks have been overpaying in recent years.
Recent revenue assessments show substantial fluctuations in the weight-mile taxes contributed by trucks, indicating a potential decline from over $560 million in 2029 to merely $24 million just two years later.
These insights are receiving close scrutiny from lawmakers across party lines as the legislative session unfolds.
As of Friday morning, no additional hearings have been scheduled for House Bill 2025.
image source from：https://www.opb.org/article/2025/06/13/transportation-bill-spending-oregon-revenue/
