What’s next for ODOT after Oregon voters reject the gas tax hike?

SALEM, Ore. (KATU) — Oregon lawmakers are now facing more pressure to find a long-term funding solution for roads, bridges, and transit in 2027 after voters rejected Measure 120, the statewide transportation tax package that would have raised the gas tax and vehicle fees.

Its rejection will not result in any immediate cuts to jobs or services. That is because lawmakers moved money around within the agency during the 2026 session to cover the agency’s nearly $300 million shortfall for the current budget cycle.

“ODOT remains grateful that Governor Kotek and the Oregon Legislature worked together this year to stabilize core services through the end of 2027 regardless of the outcome of Measure 120,” the agency said in a statement.

However, the measure’s failure to pass will make it tougher for lawmakers to find solutions to ODOT’s structural budget concerns.

PAST COVERAGE | Voters reject Oregon’s Measure 120 to boost transportation taxes

Transportation officials have repeatedly warned that the state still faces major long-term funding challenges.

According to presentations prepared for the governor’s new transportation funding workgroup, Oregon’s transportation revenue is failing to keep pace with inflation and rising construction costs.

ODOT says the state highway fund has 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.

The agency also says gas tax revenues are eroding as vehicles become more fuel-efficient and more drivers switch to electric vehicles.

Oregon lawmakers are now facing more pressure to find a long-term funding solution for roads, bridges, and transit in 2027 after voters rejected Measure 120, the statewide transportation tax package that would have raised the gas tax and vehicle fees.

Its rejection will not result in any immediate cuts to jobs or services. That is because lawmakers moved money around within the agency during the 2026 session to cover the agency’s nearly $300 million shortfall for the current budget cycle.

Separate documents presented to the workgroup warned that the state could see worsening pavement conditions, more weight-restricted bridges, and deeper maintenance backlogs without additional funding.

The report says ODOT may only be able to pave interstate highways beginning in 2027 and beyond under current funding projections.

The same report warned that without additional revenue, between 15 and 20 DMV offices could permanently close because of staffing shortages and budget constraints.

Gov. Tina Kotek blamed the political and economic environment surrounding the vote for its failure, including rising fuel prices tied to growing conflict in the Middle East.

“President Trump’s reckless war with Iran has increased prices at the pump and made Measure 120 nearly impossible for voters to support,” Kotek said in a statement. “Oregonians deserve a safe and reliable transportation system, and I am committed to working in a bipartisan fashion to achieve our state’s future goals.”

The Governor convened a Rebuilding Our Transportation Vision Workgroup to provide recommendations to lawmakers on how to fund transportation in the long term.

The bipartisan panel, made up of lawmakers, transportation experts, business leaders, and advocates, held its first meeting on May 1 and will meet monthly to finalize those recommendations at the end of the year.

Are tax increases still an option?

Critics of Measure 120 said the result sends a message that voters want lawmakers to focus on cutting unnecessary spending and maintaining roads with existing revenue rather than approving new taxes and fees.

“The people have spoken. They’re not happy with what Governor Kotek tried to do, and they’re telling her resoundingly, ‘No, we do not want these. We want an ODOT that’s accountable for the money they are already collecting’,” said Rep. Ed Diehl (R-Scio) on Tuesday, one of the leaders of the No Tax Oregon campaign that put the tax increases to voters.

KATU asked state leaders whether they would consider tax increases in 2027 to plug future budget holes after Tuesday’s vote.

In response, Senate President Rob Wagner said the rejection of Measure 120 does not eliminate the state’s transportation needs.

“A prosperous Oregon demands a healthy and functioning transportation system – keeping people and goods moving across our state. While voters this week rejected a plan to fund investments in that system, the needs remain,” said Wagner in a statement. “I will continue engaging with communities across Oregon to learn more about those needs and am committed to working with state leaders from both parties to develop a funding plan during the 2027 legislative session.”

Meanwhile, Republican lawmakers signaled strong skepticism toward future transportation tax increases.

Rep. Lucetta Elmer told KATU she believes the vote sends a clear message that Oregonians do not support additional taxes or fees for transportation funding.

“They voted it down on the ballot,” said Elmer. “Oregonians are still saying no, we cannot afford it, we do not want new taxes,” Elmer said.

Elmer said Republicans would likely strongly oppose another transportation tax package if it again centered on raising taxes and fees, though she stopped short of ruling out every possible proposal entirely.

“If the governor’s workgroup comes back and their only solution is to raise taxes, we have to get more creative,” she said.

Following the May 1 meeting, co-chair of the workgroup and former Republican House Speaker Bruce Hanna said lawmakers and transportation leaders need to be more transparent with Oregonians about the true cost of maintaining the system.

“Long-term solutions are going to take increases,” Hanna told KATU. “Our big thing is what’s fair to the Oregon public, what will make Oregon’s roads safer and better for transportation, and that’s really what we’ve got to look at, can we bring a package back, present something to the Oregon legislature that they can take forward?”

Hanna also said future transportation proposals would likely need to focus heavily on accountability at ODOT.

The Workgroup will hold another meeting on June 1 and will deliver recommendations to lawmakers before the end of the year.