Oregon voters have blocked a new law that would have raised gas taxes and registration fees to fund road projects and make up for lost revenue from rising electric vehicle adoption.
Oregon Gov. Tina Kotek signed House Bill 3991 in November 2025 after a special legislative session, increasing the state gas tax by 6 cents per gallon to 46 cents, raising registration fees for some vehicles and raising title fees across the board. Part of the bill takes effect on December 31, 2025, with annual registration fees for electric vehicles rising from $115 in 2025 to $145 in 2026. However, a referendum led by a series of Republican lawmakers in Oregon effectively suspended the rest of the emergency transportation bill, including gas taxes, other registration fee increases and title fee increases.
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About 250,000 Oregonians have signed a referendum petition directing gas tax and registration fee increases to those who will be affected in November 2026. This is accomplished through the state’s direct democracy mechanism, which allows voters to initiate new measures or veto upcoming legislation through a simple petition and then vote on it in the next election cycle. The petition is led by Oregon Rep. Ed Diehl, state Sen. Bruce Starr, and supported by the lobbying group No Tax Oregon.
“Oregonians from every corner of the state spent the holidays collecting signatures. Because of their hard work, the will of Oregon voters will not go unnoticed,” Oregon Senator Bruce Starr said in a statement. “This success is due to the tireless volunteers from across this great state – they are nothing short of amazing.”
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Oregon’s current registration fee structure is based on MPG, with less efficient cars paying lower registration fees and more efficient models and hybrids paying higher registration fees. In addition to the proposed increase in EV fees, the proposed price increase would also raise the annual registration fee to $65 from $35 last year for a vehicle with a combined rating of 40 mpg or more, bringing the total two-year registration fee to $216. Notably, under the new bill, two-year registration fees for vehicles with combined ratings of 0-19 mpg and 20-39 mpg will remain at $126 and $136 respectively. This registration fee structure is designed to ensure that all owners pay their fair share, as drivers with lower combined mpg ratings end up paying more in gas tax, while drivers with more efficient vehicles pay higher registration fees upfront.
These registration increases are primarily intended to make plug-in hybrid, mild hybrid and battery electric vehicle owners pay more. Zero-emission vehicles currently make up a little more than three percent of Oregon’s more than 4.5 million registered vehicles, but the combination of strong adoption of electric vehicles and overall improvements in fuel efficiency has significantly reduced gas tax revenue for the Oregon Department of Transportation. Scott Boardman, policy advisor for ODOT’s Innovation Initiative, told Oregon Public Broadcasting in August 2025 that the current “road funding gap” is partly due to improvements in fuel efficiency and “more electric vehicles on the road than ever before.” Oregon isn’t the only state facing this conundrum, with states like California and Washington both seeing their gas tax revenue decline as fuel-efficient and electric vehicles become more popular.
Registration fees for trailers, motorcycles and medium-speed electric vehicles are expected to essentially double, while vehicle title and re-title prices will rise to $216 from a baseline of $76. All told, transportation costs will raise an estimated $4.3 billion over the next 10 years to maintain Oregon’s roads. The frozen funding is intended to fill a growing deficit in Oregon’s operational road maintenance fund, leaving the state’s transportation industry in financial trouble in the new year.
Oregon Governor Tina Kotek. Mathieu Lewis Rolland – Getty Images
An ODOT spokesperson said informing the public about these price increases would leave the agency facing a “significant funding gap,” forcing the agency to make “significant spending cuts” in the new year. With a current budget gap of $242 million in 2026, ODOT said it may have to curb spending by laying off more than 400 employees and closing some road maintenance stations. Meanwhile, the agency said it has paused sending registration renewal notices due to uncertainty surrounding the petition. Likewise, Governor Kotek today (January 7) called for the repeal of the Emergency Transportation Act to prevent these tax and fee increases from being completely eliminated in November. It’s unclear how this situation will play out, but the balance between safe roads and affordable permitting fees in Oregon remains up in the air.
“The decisions we make in the coming weeks will determine whether Oregon’s transportation system continues to decline, or whether we can restore the certainty of essential essential services that Oregonians rely on,” Gov. Kotek said in a press release Wednesday. “These decisions will not be easy. There will be trade-offs and consequences. If we don’t succeed, hundreds of people will be laid off this spring. Giving up is not an option.”
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