Oregon legislators propose phased fuel tax and new vehicle fees for transportation funding

Eugene's City Council is set to implement a phased increase in transportation funding, which aims to enhance local infrastructure and transit services. During the Intergovernmental Relations Committee meeting on May 7, 2025, officials outlined a comprehensive plan to raise additional revenue through various measures, including a gradual increase in the gas tax and adjustments to existing fees.

The proposed gas tax will rise by 20 cents by 2032, while other fees related to vehicle registration and weight-mile taxes for trucks will also see increases. A new system use fee, akin to a sales tax on new vehicle purchases, will be introduced. These funds will be allocated based on a 50-30-20 distribution model, where cities receive 20% of the total revenue, distributed according to population.

In addition to these measures, the plan includes a commitment of $250 million to complete existing transportation projects, such as the I-5 Rose Quarter project in Portland. Future revenue adjustments will be tied to inflation, ensuring that funding keeps pace with rising costs.

Electric vehicles (EVs) will also be integrated into the funding model, with existing EVs required to enroll in a road usage charge program over time. New vehicles achieving 30 miles per gallon or better will eventually be included in this program, alongside corporate delivery fleets, such as those operated by FedEx and Amazon.

Furthermore, an increase in the payroll tax for employees is anticipated, building on the statewide transportation improvement fund established in 2017. While transit advocates have called for a 500% increase, the current proposal reflects a more modest 80% increase, aimed at bolstering transit funding, particularly benefiting rural communities and smaller cities.

This strategic approach to transportation funding is expected to significantly enhance Eugene's infrastructure and transit capabilities, addressing both current needs and future demands. As the city moves forward with these initiatives, residents can anticipate improvements in transportation services and infrastructure development in the coming years.