2025 1st Special Session

Oregon's first special session of 2025 began with a transportation agency warning that it could not sustain ordinary maintenance and operations and ended, seven months later, with voters rejecting the taxes and fees that legislators had chosen to close the gap. The formal legislative session ran from August 29 to October 1. Its substantive work centered on House Bill 3991, a 32-page enacted package that combined immediate revenue, long-term changes in how vehicles would pay for roads, transit funding, oversight of the Oregon Department of Transportation, and a significant shift in executive control. House Bill 3992 supplied the budget authority needed to administer those changes. Together they attempted to answer two different questions at once: how to prevent near-term layoffs and service cuts, and how to finance a transportation system when fuel efficiency and electrification erode the gasoline tax base.

Governor Tina Kotek called the Legislature after the 2025 regular session failed to enact a transportation package. Her proclamation said ODOT faced a shortfall of hundreds of millions of dollars and warned of layoffs, closure of maintenance stations, reduced winter and wildfire response, and diminished service to cities and counties. The official staff record placed the crisis in a longer fiscal history. Oregon first taxed gasoline in 1919. The Legislature raised the rate from 24 to 30 cents in 2009 and, through the 2017 transportation package, raised it in stages to 40 cents by 2024. But the rate was not indexed to inflation, vehicles used less fuel per mile, electric vehicles paid no gasoline tax, construction and labor costs increased, and debt and project obligations constrained the State Highway Fund. ODOT's own budgeting and project-management failures added a crisis of trust to the revenue problem.

HB 3991's immediate answer was a substantial set of charges on light vehicles and wages. It raised the motor-vehicle fuel and use-fuel taxes by six cents per gallon, from 40 to 46 cents. It raised the annual passenger-vehicle registration fee from $43 to $85 and the ordinary title fee from $77 to $216. The additional highway revenue retained Oregon's familiar distribution formula: 50 percent to the state, 30 percent to counties, and 20 percent to cities. The act also temporarily doubled the statewide payroll tax for public transportation from 0.1 to 0.2 percent, with the increase scheduled to end in 2028. The Legislative Revenue Office estimated that the whole measure, including provisions that would become operative later, would generate roughly $791 million in 2025–27 and $890 million in 2027–29. Those totals were forecasts, not guaranteed collections, and they bundled revenue streams with different purposes and start dates.

The law also tried to build a successor to the gasoline tax. It created a phased mandatory road-use charge for electric and hybrid passenger vehicles. Used electric vehicles would enter at registration renewal beginning July 1, 2027; new electric vehicles on January 1, 2028; and hybrid and plug-in hybrid vehicles on July 1, 2028. Owners could pay a per-mile charge set at five percent of the per-gallon fuel-tax rate or choose a $340 annual amount. The plan was not merely a new fee. It was an institutional wager that Oregon could measure in-state miles, reconcile fuel taxes, use private account managers, protect information, and hold collection costs down. The official revenue analysis expressly identified launch timing, contractor availability, and the cost of distinguishing Oregon miles as risks.

Heavy vehicles were treated differently. Beginning in 2027, the law simplified the weight-mile tax tables; beginning in 2029, it added a diesel tax while reducing weight-mile rates to create a hybrid system. The Legislative Revenue Office described the intended result as approximately revenue-neutral for heavy vehicles rather than a large new heavy-vehicle contribution. The design reflected Oregon's constitutional highway cost-allocation requirement, under which light and heavy vehicle classes are expected to pay their proportionate shares. The act strengthened retrospective review and authorized the Department of Administrative Services, after 2030 and after legislative inaction, to lower rates for an overpaying class. It could not raise rates administratively. This mechanism placed a limited corrective power outside the Legislature while preserving elected lawmakers' first opportunity to act.

Revenue was only half the package. The Legislature responded to distrust of ODOT by requiring the Secretary of State's Audits Division to conduct biennial performance audits of capital projects and State Highway Fund management. It expanded the Continuous Improvement Advisory Committee, required monthly meetings and quarterly reporting, and directed legislative review of projects costing at least $250 million and some local requests to expand project scope. It ordered an outside performance audit of ODOT management and its response to the review funded in Senate Bill 5550. Most consequentially for executive organization, it transferred authority to appoint and remove the ODOT director from the Oregon Transportation Commission to the governor, subject to Senate confirmation. That change made the director more directly accountable to the state's elected chief executive while reducing the commission's insulation from gubernatorial control.

The package contained several additional choices that did not fit neatly into the emergency narrative. It repealed the tolling program established by the 2017 transportation law. It increased funding for roadside rest areas. It revised diesel administration, motor-carrier permits, penalties, and weight-mile tables. It increased supplemental registration charges for high-mileage and electric vehicles and planned eventually to replace the electric-vehicle surcharge with the road-use charge. These provisions made HB 3991 a broad transportation-governance act, not merely an appropriation to keep maintenance crews employed.

The process revealed how narrow the governing coalition was. The Joint Special Session Committee on Transportation Funding held its hearing and work session on August 31. Its recording log lists state and local officials, transit agencies, public employees, transportation and environmental organizations, economists, and individual residents. The committee rejected, 5–7, an alternative that would have redirected money from electric-vehicle, multimodal, passenger-rail, transit, and other dedicated programs into highway operations instead of imposing the enacted package's central new charges. It then advanced HB 3991 by 7–5, with the Democratic members present voting yes and the Republican members present voting no. The House passed HB 3991 on September 1 by 36–12 after a call of the House; twelve representatives were excused. HB 3992 passed 35–8, with seventeen excused.

The Senate did not immediately complete the package. On repeated convening dates in September, the presiding officer found no quorum and adjourned to another day. The journal does not require inference to show the institutional effect: the absence of a quorum delayed final action for nearly a month. When the Senate reconvened with sufficient members on September 29, it rejected two motions to suspend the rules and adopt Republican amendments, each 11–17. One of those amendments would have sent the entire act to voters at the next general election; another would have replaced most of the package with authority to redirect existing dedicated transportation funds. The Senate then passed both HB 3991 and HB 3992 by 18–11. It adopted the adjournment resolution on October 1, ending the session.

The journals preserve competing explanations rather than a single account of what the vote meant. Supporters argued that maintenance stations, snowplows, wildfire routes, local road work, transit, and hundreds of public and private jobs could not wait. They emphasized that half the new highway money would flow to cities and counties and that accountability provisions addressed ODOT's failures. Some yes voters nevertheless wrote that the process was troubled, public trust had been damaged, and household affordability made the vote difficult. Opponents argued that the package raised more money than the immediate operations gap required, burdened drivers and workers during a period of high costs, and rewarded an agency before its management failures had been corrected. Others preferred the reallocation of existing transportation funds. The record therefore supports a conflict among several values—service continuity, user-pays finance, household affordability, multimodal investment, and institutional trust—not a simple contest between people who favored roads and people who did not.

Governor Kotek signed HB 3991 and HB 3992 on November 7, 2025. HB 3992 took effect as an emergency measure. HB 3991 was scheduled to become effective December 31, but Oregon's constitutional referendum changed its operation. Petitioners qualified portions of chapter 1 for a statewide vote. The Legislature then moved the election to May 19, 2026 through Senate Bill 1599. The Secretary of State's certified ballot directive described Measure 120 as a vote on the six-cent fuel-tax increase, the principal registration and title fee increases, and the temporary payroll-tax increase. A no vote retained the 40-cent fuel tax and rejected those increases. Voters chose no.

That result did not repeal chapter 1 as a whole. The referendum targeted the prominent revenue sections; nonreferred provisions remained law. The surviving structure included ODOT accountability provisions, the shift in appointment power over the director, toll-program repeal, road-use-charge development, supplemental high-mileage and electric-vehicle fees, and motor-carrier and cost-allocation changes, subject to each provision's own operative date. The session's legal consequence must therefore be described with precision: voters defeated the Legislature's principal immediate revenue plan, but did not erase the administrative and long-term financing architecture bundled with it.

The fiscal crisis returned in the 2026 regular session. ODOT's official legislative summary says lawmakers addressed an approximately $296–297 million maintenance-and-operations shortfall through two bills. HB 5204 reduced ODOT's authorized spending by about $78 million. SB 1601 redirected $218 million in unobligated or unprogrammed transportation money, including funds associated with 2017 highway projects, Connect Oregon, Safe Routes to School, Community Paths, electric-vehicle charging, innovative mobility, passenger rail, and driver training. The shift prevented the threatened layoffs and deep service reductions, but delayed or reduced other transportation investments. It also resembled an alternative rejected in the 2025 special-session committee: use already dedicated program funds to stabilize highway operations rather than impose the disputed charges.

From the citizen's perspective, the sequence is a concrete example of Oregon's referendum power acting as part of lawmaking rather than merely commenting after the fact. The Legislature made a complex bargain whose revenue and accountability elements were politically joined. Petitioners and voters separated them. The price of that separation was not a return to the status quo: administrative reforms continued, while the 2026 Legislature moved money away from other transportation purposes to keep core operations functioning. A voter could oppose the tax increases without endorsing each later transfer, just as a legislator could support emergency maintenance without approving every feature of HB 3991.

The session's deepest significance is therefore institutional. It exposed a mismatch among the time horizons of Oregon government. Maintenance crews and DMV offices needed biennial operating money; vehicle electrification required a multi-year transition in user charges; ODOT's trust problem required sustained oversight; and the public retained a constitutional power to suspend and reject portions of the Legislature's solution. By August 31, 2026, Oregon had achieved temporary operational stability but not a lasting transportation-finance settlement. The 2025 special session belongs in the larger story of Oregon governance as the moment when revenue scarcity, administrative legitimacy, and direct democracy collided—and produced a law whose most durable effects were not the taxes that dominated its debate, but the institutional provisions that survived their rejection.