Oregon Must Find a New Way to Fix Roads and Bridges After Voters Reject Measure 120 Gas Tax Hike

Oregon voters recently rejected the state’s proposed increase in gas taxes, but the state still needs a long-term funding solution for roads, bridges, and transit in 2027

Oregon Voters Reject Gas Tax Increase

Voters rejected Measure 120, the statewide transportation tax package that would have raised the gas tax and vehicle fees.

While lawmakers reallocated money within the agency during the 2026 session to cover the agency’s nearly $300 million shortfall for the current budget cycle, by next year, they may have to consider cuts to jobs or services.

Oregon’s transportation revenue is already failing to keep pace with inflation and rising construction costs, and transportation officials have repeatedly warned that the state still faces major long-term funding challenges:

• The state highway fund lost roughly 27% of its purchasing power since 1998 after adjusting for inflation, and projects that revenues will continue to decline in real terms over the next decade.
• Gas tax revenues are eroding as vehicles become more fuel-efficient and more drivers switch to electric vehicles.

Without the additional gas tax, pavement conditions could worsen, more weight-restricted bridges may be introduced, and deeper maintenance backlogs may emerge.

ODOT may be able to pave interstate highways only beginning in 2027 under current funding, and between 15 and 20 DMV offices could permanently close due to staffing shortages and budget constraints.

Although lawmakers agree that long-term solutions are going to take increases- and that voters don’t want more taxes, no definitive alternative funding solution has emerged yet.

Governor Tina Kotek is working with state leaders from both parties to develop a funding plan during the 2027 legislative session. Another meeting is scheduled for June 1, and the workgroup will deliver recommendations to lawmakers before the end of the year.