Cannabis, alcohol, second homes: Could new taxes help fund Oregon’s roads?

September 1, 2026

PORTLAND, Ore. (KATU) — As Oregon searches for a long-term solution to its transportation funding problems, state officials are examining dozens of potential ways to raise money, including taxes and fees with little to no connection to driving.

An Oregon Department of Transportation (ODOT) funding options analysis obtained by KATU lays out more than 50 existing, new, and conceptual funding options for the state’s transportation system. Some of the existing options included were already on the table when lawmakers attempted to pass a funding package in 2025, including a higher gas tax, increased vehicle registration and title fees, and an expansion of the road usage charge.

Potential new options include measures outside the traditional transportation space, including higher cannabis and alcohol taxes, an insurance surcharge, a tax on second homes, and others.

Some options include estimates of how much additional revenue they could generate for the state, while others do not yet have projected dollar amounts. For example, the analysis estimates each one-cent increase in the gas tax would generate about $16 million per year, while each $10 increase in the base passenger vehicle registration fee could bring in about $39 million annually.

Among the new options, a 1% increase in the cannabis tax is estimated to generate about $17 million annually, while a 1% statewide rental vehicle tax could raise about $3.5 million per year.

A retail delivery fee is estimated to generate $1.9 million annually for every penny charged per delivery.

One of the largest potential revenue sources analyzed is a vehicle transfer tax on new and used vehicle sales. At a 1% rate, the document estimates it could generate about $100 million annually from new vehicles and $150 million from used vehicles, roughly $250 million combined.

Other ideas, including an insurance surcharge, a tax on second homes, and a statewide clean energy fee on large companies, are listed only as concepts and do not yet include revenue estimates.

READ MORE | Lawmakers outline priorities and new ideas for Oregon transportation funding workgroup

It comes as Gov. Tina Kotek’s “Rebuilding Our Transportation Vision Workgroup” works to develop recommendations for lawmakers on how to fill ODOT’s looming budget shortfalls over the next several budget cycles. The group has had four meetings so far and will continue to meet monthly through November.

A spokesperson for the Governor’s office told KATU that the document is meant to lay out ideas for the workgroup and is not a judgment or ranking of the concepts.

The spokesperson said the workgroup will meet next on September 9th to narrow options and determine a “direction” the workgroup is leaning toward.

KATU reached out to legislative leaders on both sides of the aisle for comment on this document.

While most Democrats have backed tax increases to help maintain Oregon’s roads, Republicans have largely opposed raising taxes and instead called for cuts to ODOT services.

House Republican Leader Lucetta Elmer (R-McMinnville) said in a statement to KATU that she is open to reconsidering how Oregon funds transportation long-term, but argued lawmakers should first determine what ODOT should be responsible for and whether the agency can operate more efficiently.

“We need to define the services ODOT must provide, determine what it should cost to deliver those services efficiently, and identify reforms and efficiencies. Then we can determine whether there is actually a funding gap and have an informed conversation about the fairest way to address it,” said Elmer.

ODOT is facing a roughly $200 million budget hole in the next budget cycle, driven in part by rising costs and declining gas tax revenue. Without more revenue, the agency will need to eliminate more than 500 jobs, significantly impacting its ability to maintain roads and bridges across the state.

The full analysis is available below:

odot funding options matrixPDF preview

View PDF

This story will be updated.

 

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