With today’s release of Oregon Governor Tina Kotek’s 2025-2027 budget, the contours of big debates about transportation funding and priorities are coming into focus.
Kotek’s budget puts funding for the Oregon Department of Transportation at $7.3 billion over the next two years — that’s about $1.75 billion over what ODOT is asking for. That gap doesn’t mean ODOT gets more money. It means Kotek assumes the legislature will make up the difference in the 2025 session when they hammer out what’s expected to be a massive transportation funding package. That package is being viewed as a necessity, not just to build and maintain infrastructure, but to keep ODOT afloat.
ODOT says they face a severe financial crisis due to three main causes: declining gas tax revenue, high inflation that makes projects more expensive, and many strings attached to available funding.
The agency’s requested budget of $5.7 billion includes unprecedented layoffs and other cuts they say, “would be devastating to ODOT’s ability to maintain and operate Oregon’s transportation system safely and reliably.” To balance their budget, ODOT says they’d have to fire 1,000 employees — including 164 staffers from Region 1 alone. ODOT is dependent on the Governor and lawmakers to bail them out and the next eight months will reveal how political considerations mesh — or don’t — with state priorities.
With this challenging road ahead, members of the state’s Joint Committee on Transportation spent their summer break hosting 12 town halls and roundtable discussions in cities across Oregon. They heard a bevy of concerns and perspectives from over 1,100 Oregonians and are now using that feedback to inform in-depth discussions about what to fund — and how to fund it — in three months of meetings hosted by JCT members.
13 meetings have been held since mid-October. Three workgroups meet twice a month and are focused around three categories of interest. The workgroups are named: “Back-to-Basics Maintenance and Preservation”; “Public and Active Transit,” and “Finishing 2017 Priority Commitments.”
That last workgroup is grappling with how to fund the “unfinished business” of House Bill 2017, which are two mega-projects included in the previous transportation package and are billions of dollars short seven years later. ODOT and some lawmakers maintain that voters were “promised” the completion of expansions to I-5 through the Rose Quarter and I-205 through Clackamas County and Oregon City (including a new Abernethy Bridge). While some experts disagree about what was promised, the conventional wisdom in Salem is that getting those projects done in the 2025 package is essential to rebuilding trust in ODOT and the legislature.
I’m still working my way through the 13 meetings (they’re about 2-3 hours long each) and will be reporting out what I’ve learned from them in the days ahead.
As for the Governor’s budget, it doesn’t include any ideas for how to raise new transportation revenue. And the legislative workgroups haven’t made any official proposals yet either. But those are coming soon as conversations sharpen in the coming month.
Some of the ideas I’ve heard tossed around are: indexing the gas tax to inflation, expand the payroll tax to fund public transit, expand the current “vehicle privilege tax” (the one half of one percent tax dealers pay on sale of new cars), a bicycle tire tax (yes, seriously), EV charging taxes, congestion pricing, fees tacked onto home deliveries, and many more.
As ODOT triages its budget and difficult votes loom over lawmakers, we are entering a very interesting phase of debates about transportation funding and priorities that will shape our state for years to come. Strap in and stay tuned.
NOTE: 8:45 am on 12/4: There’s always confusion around ODOT and state budgets because planning is done on a two-year cycle. In this case, I’ve learned since this was posted that the Governor’s number of $1.7 billion is an annual estimate of what ODOT needs and ODOT estimates they need about twice that number. That means the number the legislature might ask for could be upwards of $3 billion.
Thanks for reading.
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A few questions from my time in discussing the annual PBOT cuts when I was on the TBAC, that might help you sift through all the crap:
During severe cuts, most transportation departments will try to do less maintenance projects and switch to long-delayed but already-funded capital projects. Often during deep cuts, PBOT had all kinds of tricks to try to get more funding from City Council, such as offering to cut power to city street lights and signals in a rolling blackout (never actually done, but apparently technically possible), but the usual trick was to inflate the number of workers it has by including “paper positions”, those they haven’t hired yet for future positions, as well as those who they know are leaving for various reasons (retirement, taking on a new position or role, temporary seasonal workers, limited-term employees, interns). When push came to shove in extreme cases, some of the maintenance workers could be “retrained” to do the same job under a different job title for a capital project.
Great thoughts – thanks, David. We really need more visibility into these aspects of ODOT’s budget. The fact that they can claim the dire necessity of widened freeways when they can’t even fill the potholes on Barbur fills me with rage.
I think their claim would be the legislature specifically instructed them to build the Rose Quarter project, but the potholes on Barbur fall under their regular (and oft delayed) maintenance, which is only funded to the extent the legislature gives them money.
In other words, the problem lies with the legislature rather than ODOT.
I would agree with your theory, Watts, if it wasn’t belied by my own experience with ODOT. They seem to *LOVE* mega-projects and building projects of all kinds, but they have no joy in everyday maintenance. What I’ve seen is empire-building: a fixation with getting bigger and bigger budgets by promising shiny new things. They then raid the maintenance budget, or neglect it entirely. That’s my experience.
I don’t doubt this is true, and they may even suggest priorities to the legislature. However, at the end of the day, the legislature controls the budgets and sets priorities, and you have representation there. You have none at ODOT.
If you want something to change, talk to your legislator and senator and governor, all of whom know they’re going to get your vote in the next election regardless of what they do.
These two things contradict each other.
Not at all… you have representation there, and they take you for granted because you never vote for the alternative.
Do you think Democrats will take the votes of Michigan Arabs for granted again?
You said
But why would they do anything I talk to them about if they know they’re going to get my vote regardless of what they do? In which case, they don’t really represent me even if their job title is “representative”.
Unfortunately I’m afraid the Democrats are going to take all the wrong lessons, even though yes many were screaming that they’re not going to win by appealing to suburban Republicans with the Cheneys at the expense of the left (or Arab) of their party. Instead they “went too far left” or some nonsense.
Just a side tangent though. I’m not feeling optimistic about things electorally these days. In the same way you (and I) don’t know how to change people’s minds and behavior (like to get them to bike more), I don’t know how to change the behavior and actions of our politicians, especially if they’re depending on the supposedly unchangeable minds of their voters.
“But why would they do anything I talk to them about if they know they’re going to get my vote regardless of what they do? “
That’s just it. Tell them that unless they do this tangible thing A in support of active transportation you and your friends will be voting for their opponent, even if at the State level it is (gasp) a Republican. The next election cycle whoever wins will know you mean business.
“Instead they “went too far left” or some nonsense.“
On the National level yeah, they did. They ran the Vice President who had too much California style policy baggage that she couldn’t and didn’t even try to refute.
Because it’s their job?
But you’re right — they know they’ve got your vote locked in, and if they do what you ask they’ll lose a bunch of other votes, so I’m not sure what leverage you really have with them, especially if you are asking them to take a fairly radical stance likely to alienate the vast majority.
But however little leverage you have, it’s more than you’ll get appealing to the bureaucrats at ODOT, whose job description includes building the stuff the legislature tells them to build (and pays for), and does not include appeasing you.
Nationally, the Democrats were screwed by Biden and his circle, plain and simple. He ran when he shouldn’t have, waited too long to withdraw, then immediately endorsed Harris, which had the effect of coronating her. A lot of people warned this was going to end in tears (including several right here in this forum), and they were right. I don’t thing Democrats went too far left so much as Harris never had a clear message about much of anything (except how bad Trump was, which clearly did not resonate). On a positive note, I think Trump is a one-man-show, and his eventual exit from the scene is going to leave Republicans in such a state of disarray that even the Democrats may be able to capitalize on it.
In Oregon, we have a different problem — a political monoculture with no credible alternatives in most places. Sometimes you get lucky with that, sometimes you don’t. My state rep is great in many ways, but on transportation, he goes along to get along, and he’ll be in his job as long as he wants it. I’d count him as a no vote on any radical transportation proposals.
Minor difference in opinion in that Biden was forced out in his meetings with Pelosi and Schumer and then out of what can only be surmised as spite endorsed Harris which as you say had the effect of coronating her when he knew she was a weak candidate (which is why she was selected as a VP as she was insurance to prevent this very event) instead of allowing an actual mini-primary.
I agree with you that Trump is a one man show, but since the DNC can’t seem to comprehend what went wrong (cue the “she ran a perfect campaign and if only half the country wasn’t misogynist morons we would have won” denialism) they will continue down a rabbit hole away from the working class (as shown in the Hispanic gains by the RNC) and won’t be able to capitalize when Trump is no longer the driving personality of the RNC.
Or in other words no credible alternative that is acceptable to the densely packed urban areas. We have that as well up here in Washington and I am subjected to the same clarion calls to change course when a certain party has been in charge for awhile and they are not willing to actually change from what they have been doing, but it sure gets people angry at the incompetence of the past that they also voted for and supported. I just don’t understand.
It’s because, for all the faults of the Democratic party – and there are many – their one argument is that they are better than Republicans. And so it’s just a pathological outcome of a two party system, in a state that leans left, we’ll never be voting in Republicans. I sure wouldn’t, and I hate the Democrats.
I mean, it’s like “Democrats are bad, lets vote for something worse!” And, well, no.
This is the heart of the problem. I don’t know if it’s for the reasons you think though. At some time (I think Reagan time but I don’t know exactly), the Democrats started getting this perverted notion that “working class” is somehow a different thing than the political “left”, when literally the epitome of left/right politics is that the left wing is supposed to cater to the working class. Or maybe they didn’t get that notion, but they continue to be called the “left wing” party while moving further to the right. We have two right wing parties and in this election the Republicans appealed to the real grievances of the working class (while offering no or unrealistic solutions of course). And the Dems seemed to appeal to… I dunno, people who have nostalgia for Dick Cheney?
In other words… “I hate the Democrats, but I’ll never do anything to tell them not to take my vote for granted.”
You’re the one that said it! I’m not even sure I agree (although it’s mostly true), but you’re the one that said they don’t worry because they have our vote no matter what.
I don’t choose who you vote for; I’m only telling you the result of voting for the same people every time, whether you like what they do or not.
I don’t disagree with the larger point of your post whatsoever, its just this part of it really resonated. Why Harris thought dragging a war criminal and his warmonger daughter into being a large part of her campaign is beyond me. I clearly remember the environmental horror (outside of the straight up nightmare of the wars themselves) inflicted upon the world by Cheney so his corporation could profit. When the Cheny’s were celebrated by the Harris Campaign is when I knew it was over. While not wildly liberal anymore myself, I know plenty of older liberals who couldn’t vote for anything associated with the Cheney’s.
Hello Jonathan, thanks for your reporting. I am a bit confused: did the governor propose a $7.3 billion budget, $1.7 billion above what ODOT had asked ($5.7 billion)? It seems like that would be good news for ODOT, or?
Hi Stephan. Sorry this wasn’t more clear. Yes that is what happened. But it’s not necessarily good news for ODOT because the budget isn’t finalized and the Governor’s budget is only assuming that the legislature will come up with enough new revenue to fill that $1.7 billion gap.
Much of this is political. ODOT wants their budget to raise alarms in order to create political urgency for more funding. So ODOT made their budget reflect 900 or so fewer positions and a threat that if more money isn’t raised by the legislature this coming session, all those folks will be out of a job. And for Gov Kotek, she could not propose a budget that assumed 900 jobs would be lost at ODOT, so she added phantom funding to her budget and put the onus to raise it back on herself and legislators. Hope that makes sense.
Ironically, the $1.7B amount is also the most recent 2026 kicker estimate. So, it may not be hard for the legislature to find the revenue, there just won’t be a kicker in 2026 and they’ll probably go after new taxes as well because, well, Oregon.
From my brother:
I need a tl;dr version of your explanation.
tl;dr: we can’t use the kicker. Also, we won’t see such a large kicker moving forward.
TLDR – kickers should all but disappear in the future.
1.) The kicker isn’t being used because it has been included in the budget for infrastructure improvements. It is either convenient math or coincidence at this point.
Altering the methodology for forecasting after the most successful series of biennium in history seems like a guarantee for having shortfalls in the future.
Changing the methodology when the forecasts failed repeatedly to accurately predict revenue is a no brainer.
None of this changes *actual* revenue – it just changes how much of it we can use.
HB2017 not only included freeway mega projects, it also included tolling to pay for the projects and manage traffic. Keeping the freeway projects while slashing toll schemes, and plugging budget holes with general fund revenue won’t restore my trust in the government.
Worse yet is how they want to plug project budget gaps with revenue created through bonding which creates debt. ODOT current “debt service” (paying back loans) line item is $648 million over two years. For context, the entire Public Transportation Division (which includes bikes) is $513 million.
The process of borrowing funds (municipal bonds) now to pay for current and future projects is typically referred to as “deficit financing”, which has been encouraged by the Feds since at least the 1950s – some people blame Robert Moses, others Hausmann from the 1850s – it’s a rare jurisdiction that doesn’t do it. It’s not just highway departments that do it, it’s also common for water, sewer, dams, police armored cars, fire engines, housing projects, and oil pipelines. The City of Portland has a huge debt. And it’s not just used to pay for projects either, but also for over-generous pension plans, PERS, and perks.
Which pension plans are over-generous? Any public employee hired after 2003 is getting a pittance – guaranteed to be poor in retirement.
Thanks David. I’m aware of that. Just because it’s so common, doesn’t mean it’s a good thing to continue to do. And it’s a balance that is needed and it’s not good when ODOT gets too stretched with bonding. There’s clear sentiment among stakeholders right now that increasing debt won’t be easy to vote for because it just takes a larger and larger share of ODOT’s revenue to service…. which means less money for other needs.
That is correct. The State of Illinois is one extreme of this, it’s nearly bankrupt – they blame generous state pensions for employees – but in reality it’s poor budget management over a very long period of time, not to mention corruption bad enough to jail a few governors. Some cities have in fact gone bankrupt. Some states simply ban long-term government debt and require balanced budgets. Most states with huge deficits are hoping the federal government will eventually bail them out.
Most of the jurisdictions to do business on a pay-as-you-go basis, with no debts, tend to be very small and very conservative.
“ODOT says they face a severe financial crisis due to three main causes: declining gas tax revenue, high inflation that makes projects more expensive, and many strings attached to available funding.”
I don’t find that very compelling.
The State Highway Fund revenues continue on an upward trend (see Table 7). Maybe not quickly enough to keep up with inflation, but they’re going up.
The Fund brought in $3,287 million in 21-23 and is projected to bring in $3,375 in 23-25 and $3,455 million in 25-27, etc. Gas tax revenues are projected to increase through 2025, and CCD and DMV income is expected to continue to increase through 2033, meaning their overall revenue is projected to increase continually.
As their revenues aren’t actually decreasing, one could say their crisis is due to bad financial management — examples include continually massively underprojecting the costs of their highway megaprojects by hundreds of millions and billions of dollars (in periods of low inflation and high inflation), spending tens of millions of dollars on PR and lobbying for highway expansions, and so forth.
Great point about PR spending. I have the impression that about half of the Rose Quarter budget is to convince the Black community in North Portland that the project a good idea and will somehow undo the harm done in the 1960s and 70s.
And if convincing won’t work, bribing may.
Construction cost index is way up, even when compared to CPI. While it is true that gas tax revenues have increases a small amount over that period, the numbers are effectively flat when compared with the massive increase in construction costs.
https://www.mortenson.com/cost-index
And given the talks about deportations and tariffs, it seems that our construction costs will only balloon further. This is going to be a major issue for any capital project in the future.
The link you shared shows construction cost is flat since 2022.
ODOT’s staff should know about construction inflation and give honest and accurate price estimates.
Instead, they underestimate things strategically so people will approve their huge highway expansions – then, once they’re approved, ODOT uses the sunk cost fallacy and people say “well, we’ve started it – stopping it now would be a waste of money.” All this is the Robert Moses script. Been doing this since the 1930s.
It will be interesting to see whether the 700 million the Feds give Oregon for highways goes up or down the next few years. If the head of Cemex is hired as Tranportation secretary I bet it goes up.
We likely can kiss off any funding for mass and alternative transit from DC.
Do you mean “kiss goodbye”?
I read on one of JM’s Monday Roundups from a few months ago a report that not even 20% of the highway funding approved by Congress during the Biden administration even got out of the door – transferred from DC to states and cities it was intended for – because of project delays, lack of matching funds, not enough local capacity to build stuff – reasons for delays we are all familiar with. And this wasn’t unique to Biden, all previous presidents (including Trump version 1) have had these same issues.
If I was Musk and trying to find $2 Trillion to cut, I’d go after all these unspent highway projects, at least as far as Dubya in 2000 – you don’t build it now, then Uncle Sam’s taking back his money – and end these highway boondoggles ASAP.
… and spend it on more Hyperloops between parking garages. Most of the incoming admin is focused on looting, not cost-savings. Any ‘savings’ found will go straight ino pockets, not to more-useful projects or – heaven forfend – the taxpayers.
My assumption is that states like Texas will receive the horn of plenty for 30-lane freeway projects in Houston, and states like Oregon will just get the horn.
Trump and Musk are on the populist platform, and most hate traffic and believe we can build our way out of it. I have coworkers who believe that we should have been “intelligent” like in Houston and built 10 lane freeways everywhere despite traffic being better here. Musk has a direct conflict of interest in funding highway boondoggles, as the extra road space is essential for his dream of autonomous vehicles. It’ll be the cutting of social welfare and the increase of highway boondoggles IMO. If anything, we are going to see the restrictions on the unspent money removed and freed up for highway boondoggles.
good explainer on that: https://www.youtube.com/watch?v=040ejWnFkj0
This was an interesting video. I disagree with a lot of how the presenter thinks things will play out, but I agree with him that AVs are coming, so we’d better get ready; and I agree with about 80% of the specifics of how he suggests we prepare, to the extent it’s politically feasible.
We have a once-in-a-lifetime chance to reshape urban transportation, if only we’d be forward looking enough to embrace it.
Here’s my take on the new ideas to fund transportation:
The bike tire tax is really really stupid. I buy my tires online, from international retailers (since my bike is unusual and has rare tires). How will the state collect those taxes, exactly? And yes – it will cost the state more to collect these taxes than they will net, but I say let ’em do it so we can continue to defuse the ridiculous argument that “cyclists don’t pay their fair share.” I’ll also pay a per-mile cycling tax as soon as the state does the same for motor vehicles and it’s indexed to weight of the vehicle/bike.
https://bikeportland.org/2017/07/13/bike-tax-a-big-moment-for-cycling-movement-says-oregon-congressman-blumenauer-234586
Sounds similar to what Blumenauer was saying back in 2017.
If the bike tax didn’t change that sentiment, why would a bike tire tax?
It might not, but the more “skin in the game” we cyclists have, the better for us in the long term.
I’m in favor of any fee for cycling as long as it’s scaled with trucks and cars. I’d say a cyclist should pay something like one one-hundredth of what a car driver pays and one one-thousandth of what a truck driver pays. Base it on the total weight of the vehicle. Ford Expedition: 5623 lbs; my bike: 32 lbs. I should pay 1/175th of what the Expedition driver pays.
Unfortunately the weight mile tax for cyclists will never fly – it unfairly taxes those of us who are well over 6′ and have rather massive bone and musculature (at a <10% body fat level I had a 25BMI).
So, PTHTHPTPTHT!
(kidding of course – since we’ll all be required to carry beacons so smart cars can see us, it will be very easy to track us on the main roads 🙂 )
Just scale the tax in increments of 500 pounds, and as a nice tax break to everyone, round down to the nearest 500 pounds.
BMI measures seem to be way off in general – they don’t distinguish between muscle and fat (and muscle weighs a lot more than fat).
I do too, from Bike24 out of Dresden Germany – great supplier of Schwalbe – and they do in fact collect the 6.75% sales taxes for my locality here in NC, same as Wiggle in the UK, but at least I’m exempt from the 21% VAT they charge their European customers. Trust me, they are quite familiar with all of our various local taxes, as our online retailers are of theirs.
I’m the “Director of Information Systems” (I wanted “Head Dogcatcher” dangit) for a multi-state distributor. Trust me, collecting and paying the correct taxes in each state is a huge part of any multi-state entity. Setting up our new ERP systems to handle that was a big, big part of my job in Feb & Mar.
WA is a serious pain since the combination of State, County and City Sales & Use taxes means that even to retailers in the same city might have a different tax rate for store supplies.
Tax negative externalities. For the love of sanity and basic math, tax the things you want to discourage and don’t tax the things you want to encourage.
That requires (at least) an agreement on what should be encouraged or discouraged.
Absolutely! Also, taxation of so called vices such as alcohol, cigarettes or gambling make for some interesting alliances as when a state says such things are bad and we will tax and age restrict them to lessen use, but profits so greatly from the tax that they are loathe to actually stop the behavior they say is wrong. Somehow it always seems to come down to mere profit generating with any morality tacked on as a means to make the profit generating amenable to the public.
Cheers Jake9! I think you are straw-manning the argument for sin taxes. Proponents of them would argue that addictive products have large social costs that should be partially recouped from the markets that profit from addicting folks. I’m thinking of things like increased medicaid reimbursements for prevalent lung cancer among smokers. Also not sure I’m down with characterizing government revenue as ‘mere profit generating’, but your point about the political appeal of punishing others’ behavior that we deem immoral via tax policy is insightful.
Hi
I’m a big fan of outlawing things that cause health problems and not taxing them for the government to profit off of products that cause health problems that generate large social costs as you say. High on the list would be high fructose corn syrup and any sweeteners developed out of alcohols.
And what would 51% of the voters want to discourage or encourage?
Politicians are at the will of the voters (if they want to be re-elected) so what taxes do you seriously think (not pie in the sky) would be ok/not ok for the average voting citizen?
So repeal the tax on earned income?