Salem, Oregon – Oregon lawmakers have released a late-session plan to stabilize funding for the Oregon Department of Transportation, relying on redirected dollars and unfilled jobs rather than sweeping layoffs or deep service cuts.
The proposal, made public March 1 just days before the legislative session is set to end, outlines how legislators intend to close a $288 million shortfall at ODOT. Lawmakers described the budget as difficult but necessary, shaped by months of uncertainty and a broader state revenue squeeze.
To plug the gap, budget writers are proposing to shift $218 million in previously unobligated funds into ODOT’s core operations. The remaining savings would come from vacancy reductions.
Instead of laying off workers, legislators chose to leave 138 positions unfilled through the end of the current biennium, generating an estimated $38.9 million in savings. An additional $31.8 million in vacancy savings has already materialized after roughly 360 employees left the agency between July and December amid budget instability.
The redirected funds will come from a range of transportation accounts. The largest share — $85 million — would be achieved by swapping certain state highway funds with available federal dollars. About $35 million would be pulled from bridge, seismic, preservation and safety programs originally funded under the state’s 2017 transportation package. Lawmakers acknowledged that shifting those dollars could delay or cancel some infrastructure work.
Programs affected include Connect Oregon, which provides grants for rail, marine and aviation projects, as well as Safe Routes to School and the Transportation Operating Fund, often referred to as the “lawnmower” fund. Some unobligated funds, such as Community Paths for bicycle and pedestrian projects, driver education dollars and money tied to a canceled project, would be fully redirected. Grants for public transportation and funding for large-scale efforts like the Rose Quarter project would remain untouched.
The ODOT shortfall reflects long-standing challenges. Agency leaders have warned for years that declining gas tax revenues, inflation and restrictions on how funds may be spent would strain operations. Democratic efforts to pass a broader transportation funding package last year failed, prompting Gov. Tina Kotek to call a special session. Lawmakers eventually approved increases to the gas tax, payroll tax and vehicle fees, along with expanded road usage charges for electric vehicles. Opponents gathered signatures to refer those increases to voters.
The transportation fix is part of a wider effort to tighten the state’s budget. Overall spending through June 2027 would be reduced by $128 million, largely through hiring freezes and supply savings. State economists had earlier projected a budget hole following federal tax changes, though a more favorable revenue forecast later added nearly $253 million back into the general fund. Lawmakers also approved legislation intended to partially disconnect Oregon from certain federal tax provisions, expected to generate additional revenue.
Even so, legislative leaders cautioned that the current solution is temporary. With revenue pressures looming in future bienniums, they said the state will face even steeper decisions ahead.
More details are available on the Salem Statesman Journal.
