Oregon DOT Faces $354M Budget Shortage; Job & Service Cuts Proposed

Oregon drivers may be seeing more potholes and face worse winter road conditions as early as next year, according to a report from the Oregon Department of Transportation.

The department said a structural revenue problem was driving proposed cuts to DOT staff and services. If not addressed, the Oregon DOT said drivers can expect, among other issues, longer road closures, worse winter driving conditions, increased crash response times and more potholes. All state, county and city roads would be affected as they all rely on the same state highway fund to fund services and maintenance.

Potential changes include cutting 1,000 ODOT jobs, closing 17 of 88 maintenance stations and purchasing half the winter materials (like salt) that it has traditionally purchased,

The department faces a $354 million deficit between the expected funds it will have for the 2025-2027 biennium and required funds to maintain current staffing and service levels. The department estimates it has the funding to keep services stable until mid-2025. A transportation modernization package is being prepared in the 2025 legislative session.

A key reason behind the deficit is falling gas tax revenue, which ODOT chalks up to cars’ increased fuel efficiency and the growing prevalence of electric vehicles. Gas tax receipts, in addition to fees on vehicles and freight haulers, supply Oregon’s State Highway Fund, from which transportation agencies receive their funding.

Additionally, Oregon law stipulates that half the State Highway Fund go to cities and counties, then half of what remains pays back bonds for past projects and invests in new ones. This means only 20% of every available dollar can go toward highway maintenance.

ODOT also cited inflation raising the costs on materials and labor as a contributing factor. Unlike some other states, Oregon’s gas tax is not tied to inflation, and neither are vehicle and freight hauler fees.

Potential options given for raising funds include indexing transportation fees to inflation, establishing road tolls and electric vehicle fees.

ODOT receives about $700 million from the Federal Highway Administration each year for construction projects but cannot use that money  for day-to-day maintenance services or ODOT operations.

In its budget report, ODOT stated its leadership is hopeful that Oregon Governor Tina Kotek and the Legislature will identify funding to prevent cuts.