Dana Merryday began hearing the grumbling when he moved to Cottage Grove more than a decade ago.
Roads in the Lane County town of around 10,000 were pocked with holes. Some were so spider-webbed with cracks they looked like the back of an alligator. State funding and the city’s three-cent gas tax weren’t enough.
“It’s a constant complaint,” Merryday said. “People say, ‘The roads, the roads.’”
This much was clear to him: The city needed more money if it was going to make the progress citizens were demanding. So after Merryday was elected to the city council in 2022, he and other leaders began studying what it might take.
Their answer was a two-part proposal put before Cottage Grove residents last year. The council asked citizens to OK a five-year property tax increase, and a six-cent hike to the city’s 3-cent-per-gallon gas tax.
“We thought this is the bare minimum that we can possibly ask for and actually have an effect,” Merryday said.
Voters disagreed. Both measures suffered lopsided defeats in the November 2024 election, with nearly 75% opposing the gas tax hike.
The results shocked Merryday, he said, but perhaps they shouldn’t have. Cottage Grove residents had shot down another proposed gas tax increase eight years earlier.
“There was a very anti-tax sentiment,” he said. “People say, ‘Well, you’re just going to waste the money.’”
In coming months, the plight of Cottage Grove and cities like it will have the Legislature’s attention. A bill that could raise billions of dollars to repair, maintain and upgrade degraded roads across the state is perhaps the 2025 legislative session’s weightiest task.
And as lawmakers scrounge for new money, some are touting an idea that would have made Merryday’s job far easier.
Senate Bill 687 would roll back a state law – created when lawmakers took up transportation funding in 2009 – that requires cities to seek voter approval before passing local fuel taxes. It would also allow every county in Oregon to implement or hike vehicle registration fees without a vote, an option currently only available to the four counties with more than 350,000 residents.
“Right now we’re tying cities and counties’ hands and taking out one tool,” said state Sen. Khanh Pham, D-Portland, the bill’s chief sponsor. “I want to make sure that we’re untying their hands as much as we can.”
The bill emerged after Pham and other lawmakers attended an extensive tour of the state last year, listening to local officials and residents in a dozen cities talk about the challenge of maintaining roads and bridges.
The gist of many of those arguments: Property taxes, which are the lifeblood of local governments, aren’t able to rise fast enough to meet the cost of services, and state funding for local roads is inadequate. A report produced by the Association of Oregon Counties last year suggested that counties need another $830 million every year to meet demand – a figure that doesn’t account for state- or city-owned roads and bridges.
Pham and her cosponsors believe SB 687 is part of the answer, freeing up local leaders to enact new taxes they view as necessary without seeking voters’ blessing.
“Every year, cities and counties get poorer and poorer and their infrastructure gets older and older,” said state Rep. Mark Gamba, a Democratic sponsor of the bill and the former mayor of Milwaukie. “That’s a recipe for bad things.”
Gamba said voters too often act like “petulant children” standing in the way of taxes that are necessary to replace vital infrastructure like roads, sewage plants and libraries.
“Someone needs to be the responsible adult in the room,” he told OPB. “And I mean that so emphatically that I would be thrilled if you quoted me.”
Not every city rejected gas tax proposals like Cottage Grove did last year.
Voters in Portland opted to renew the city’s 10-cent-per-gallon tax, the highest in the state, rather than letting it lapse. And in Newport, almost 54% of voters agreed to raise their 3-cent-per-gallon tax to 5 cents.
In all, 33 cities and counties have implemented local gas taxes, according to the Oregon Department of Transportation.
Local vehicle registration fees are less popular. Just three Oregon counties – Multnomah, Washington and Clackamas – currently tack on the charges. The Association of Oregon Counties said in a recent analysis that many others might not find the tool worth their while.
“Registration fees in Eastern, Southwest, and Coastal Oregon would not have a meaningful impact on those county’s road department funding gaps,” the organization said.
But both Pham and Gamba say freeing city and county leaders to make taxing decisions can only help. Pham argues voters wouldn’t be cut out entirely.
“If the town residents don’t like any potential new fee hikes, they can hold their electeds accountable in the next election,” she said.
SB 687 currently sits in the Senate Revenue Committee, and it isn’t scheduled for a hearing. It’s still being analyzed by groups representing cities, counties, motorists, and other road users.
Danelle Romain, a lobbyist for gas stations around the state, said her clients forcefully oppose “any attempt to take away the right of Oregonians to vote on local fuel taxes that directly impact their cost of living.”
But the bill is just a piece of a larger question about how to find a huge amount of money for state roads in the next two-year budget.
Faced with a gas tax that is losing potency and escalating costs brought on by inflation, ODOT says it needs a major budget bump to perform basic upkeep services and avoid laying off nearly 1,000 employees.
Gov. Tina Kotek called on lawmakers to find an additional $1.75 billion for the agency in the recommended budget she unveiled in December. But because the state only keeps about 50% of transportation funding – sharing the rest with counties and cities – the Legislature would actually need to raise $3.5 billion to get to Kotek’s number. Even that could potentially leave the state short billions of dollars it needs to complete major projects promised to voters in 2017.
Exactly where lawmakers might look for new money is one of the big questions of the session.
Last week, the Legislature’s Joint Transportation Committee received a report that detailed more than a dozen options considered by members of a state workgroup examining the question. They include: hiking the state’s 40-cent-per-gallon gas tax; raising registration fees; slapping new fees on retail deliveries, rental cars and rideshare services like Uber; taxing public electric vehicle charging stations; creating a “road usage charge” that taxes people per mile they drive; and more.
Democrats, who hold supermajorities in both chambers of the Legislature and can hike taxes on their own, have been clear they will examine all options as they look for more money. But that doesn’t mean it will be easy.
According to an analysis prepared by the Legislative Revenue Office last month, it would require the equivalent of a 79-cent-per-gallon increase to the state’s 40-cent gas tax for lawmakers to generate an extra $3 billion for the next budget.
Republicans, meanwhile, have said they will refuse to support new taxes.
“[ODOT] is an agency that needs to go on a diet,” said House Minority Leader Christine Drazan, R-Canby. “It’s an agency that needs to look internally and decide, ‘What can we do to be more efficient and more accountable’ before they put their hand out and say that anybody should write them a blank check for anything.”
While the particulars of any transportation bill likely won’t come into focus for months, Pham and Gamba hope SB 687 is part of the formula.
It’s an idea that appeals to Merryday in Cottage Grove, who said he has soured on the roads problem since last year’s defeat.
“I went out and beat the bushes and went out on a limb and really pushed and pushed and pushed,” he said. “Just to have it thrown back in your face that way, I’m kind of like, ‘I’m done.’”
But Merryday sees the appeal in allowing city leaders to raise fuel taxes without asking voters – even if that would almost certainly sink his political future.
“I personally am not trying to make a career out of being a city councilor,” he said, “so I would be happy to support something like that.”
