Public hearing: Oregon Department of Aviation outlines $45.5 million governor’s budget, new UAS insurance proposal

The Transportation and Economic Development Subcommittee held a public hearing on Senate Bill 5504, the governor’s budget for the Oregon Department of Aviation. Director Kenji Sugahara and agency staff presented an overview of staffing, programs and five policy option packages in the governor’s request.

The proposed budget totals about $45,500,000 for the 2025–27 biennium and retains the agency’s staffing level at 15 full‑time equivalents. Agency staff said the decrease versus the prior biennium is driven largely by the phase‑out of one‑time general fund investments. The department described revenues as a mix of federal funds (chiefly FAA grants, about 47% of the budget) and state “other funds” (primarily a jet fuel tax that accounts for roughly 38% of revenues), plus aircraft registration and lease revenues.

Program highlights and proposals: - ASAP (Aviation System Action Program): staff said ASAP has provided grants and match for federal projects across Oregon, raising roughly $26 million to date and helping match nearly $9.8 million in FAA grants; ASAP programs include critical services, resilience and state‑owned airport improvements. - General aviation entitlement projects (POP 101): about $8 million in planned projects at multiple airports; these are typically FAA‑eligible projects with a 90% federal match and 10% state match funded by aircraft registration revenues. - Milano State Airport waterline and hangar improvements (POP 105): estimated at about $3,000,000 (95% FAA match). - Oak Ridge Airport project: Connect Oregon grant of approximately $1.7 million with an ASAP match. - Aircraft registration and airport leasing software: IT modernization requests to replace aging systems and reduce manual paperwork. - UAS/Commercial drone insurance (POP 102): the department proposed a requirement that commercial unmanned aircraft systems carry liability insurance that explicitly covers aviation risks and a 5% surcharge on premiums to fund UAS programs and sensor network concepts; staff forecast roughly $722,000–$775,000 in revenue beginning in 2026 if adopted.

Operational measures and concerns: staff reported 91% of runways in “good or better” condition statewide (target 100%) and noted differences between airports the agency owns and other public airports it inspects. The department said it completed nearly all FAA‑required inspections and that it has a pavement maintenance program funded through fuel taxes (the department asked legislators to note that a 10% budget cut would reduce pavement maintenance and could defer runway maintenance at multiple airports).

Several legislators raised questions about key performance measures and resiliency: Representative Watanabe asked whether runways would remain usable after a major earthquake; staff said a resiliency report exists and offered to share it with the committee. Representative Woods asked for detailed project and expenditure breakdowns for Aurora State Airport; staff provided a short answer that the next master‑plan public meeting is Feb. 11 and said the only planned small project for Aurora in the upcoming biennium is a backup generator phase‑1 design (~$85,000).

Customer service and communications were also discussed: staff acknowledged low survey response rates (about 5%) and described an agency website and communications overhaul to improve outreach and service delivery. The department said it will share requested follow‑up materials with the committee.