Kotek is asking the state Legislature to instead redirect existing transportation funds to core programs and to come up with a new plan for 2027

By Alex Baumhardt, Oregon Capital Chronicle

Oregon Gov. Tina Kotek spent months cajoling the state Legislature to provide billions for transportation infrastructure, safety and jobs. Now, she’s asking them to repeal that plan and start fresh.

Kotek’s direction Wednesday comes after a volunteer effort led by Republican lawmakers and an anti-tax group gathered enough signatures to refer parts of the $4.3 billion plan to the November ballot. That effort paused scheduled increases to the state gas tax, title and registration fees and a payroll tax to fund transit.

Kotek unveiled her strategy, characterized as “redirect, repeal, and rebuild” at a Wednesday meeting of the Oregon Transportation Forum, a nonprofit trade organization representing public and private transportation stakeholders. She also explained her change in tune.

“After a long summer and many twists and turns, the Legislature passed House Bill 3991, increasing funding for ODOT, local governments, and transit districts through changes to the gas tax, payroll tax, and registration fees,” she explained to the forum. “But you all know the score today. Those funding solutions are frozen following a signature-gathering campaign led by legislative Republicans and Oregon Taxpayers United.”

Kotek is asking lawmakers to repeal House Bill 3991, which passed during a special session in September.

She wants them to use the upcoming short session, which begins Feb. 2 and must conclude by March 8, to redirect existing transportation funding “core to operations and maintenance” while they come up with a different package in 2027.

Republican State Rep. Ed Diehl, of Scio, who is among those leading the referendum effort, said Kotek’s announcement is an admission that she “failed in an epic way.”

He said he’s opposed to the package being repealed in its entirety — he supports in particular a provision that requires an audit of the Department of Transportation’s spending and project costs — and that he wants voters to have the chance in November to weigh in on proposed tax and fee changes.

“This feels more like a campaign season, election move to deny voters the opportunity to weigh in,” he said. “It’s a mistake to repeal the bill without coming up with a real solution. She’s trying to make it moot for the election and then she’ll deal with it later.”

The $4.3 billion package passed in September, a reduction from grander plans that fell short during the 2025 legislative session, was meant to keep the transportation department operational and to prevent hundreds of layoffs, Kotek said. But with the ballot measure halting new revenue sources, the package is effectively an unfunded mandate to make new investments without any money.

“Leaving the law in place forces ODOT to bear implementation costs without new resources, prolongs instability, and delays the real conversation we need to have about long-term solutions,” Kotek said to the forum.

Kotek called the redirection of existing transportation dollars an “emergency action” needed to prevent layoffs during the spring and to maintain basic road services during the winter months.

She said every transportation program dollar should be on the table, with the exception of payroll tax revenues that fund local transit districts’ buses and trains.

“We cannot gut transit districts by redirecting existing payroll tax revenue. That would devastate service and harm those who can least afford it,” she said.

The transportation department’s budget gap has shrunk in recent months as employees have voluntarily left. Kotek said this was due to ongoing instability over potential layoffs. Notices were sent in July to hundreds of employees, then rescinded in September, then floated again as the ballot referral was underway.

“We lost engineers, maintenance workers, project managers, and critical IT staff. Service has continued to degrade, and our services are more vulnerable than ever,” she said.

Allocating any money from the general fund to cover costs is not an option, she added, due to expected budget deficits caused by the tax and spending megalaw passed by congressional Republicans during the summer. The state Legislature will begin the session accounting for a two-year budget that could be short $63 million under the state’s most recent economic forecast.

“The decisions we make in the coming weeks will determine whether Oregon’s transportation system continues to decline or whether we can restore certainty in needed essential services that Oregonians rely on,” Kotek said in a statement. “These decisions won’t be easy. There will be tradeoffs and consequences. Hundreds of people will be laid off this spring if we are not successful. Giving up is not an option.”

Alex Baumhardt has been a national radio producer focusing on education for American Public Media since 2017. She has reported from the Arctic to the Antarctic for national and international media, and from Minnesota and Oregon for The Washington Post. This story first appeared in the Oregon Capital Chronicle.