Oregon Moves Gas Tax Repeal Vote to May Primary Amid Surging Fuel Prices

SALEM, Ore. — Oregon Governor Tina Kotek on March 2 signed into law a bill that moves a contentious voter referendum on a gas tax increase from the November general election to the May 19 primary. The decision, passed by the state’s Democratic-controlled legislature, accelerates a public vote on transportation funding at a time when Oregon businesses and consumers are facing record-high fuel costs. The referendum seeks to repeal a tax increase passed by lawmakers last fall. The legislation was designed to fund road improvements and fill a gap in the state's transportation budget by raising the gas tax from 40 cents to 46 cents per gallon. Following the bill's passage, Republican-led groups successfully petitioned to put the repeal question before voters, setting the stage for a high-stakes ballot measure. For businesses across Oregon, the accelerated timeline and the tax itself introduce significant operational uncertainty. Our experience shows that state and local tax changes often have a more immediate and tangible impact on a company’s bottom line than federal policy shifts. A six-cent per-gallon increase directly raises costs for any business with a vehicle fleet, from local delivery services to regional logistics firms. It also indirectly affects costs by increasing commuting expenses for employees and raising prices from suppliers. Conversely, a successful repeal without a replacement funding mechanism could lead to deteriorating infrastructure, causing shipping delays and increased vehicle maintenance costs. This volatility highlights the critical need for robust financial risk management. We help clients model these scenarios, stress-test their budgets against potential cost increases, and develop strategies to mitigate the financial impact of policy decisions. To navigate this complex tax landscape, contact C&S Finance Group LLC at csfinancegroup.com. The bill to change the election date, Senate Bill 1599, passed the Oregon House on March 2 with a 31-20 vote before being signed by the governor hours later. Proponents argued that an earlier vote provides the legislature with more time to devise an alternative funding plan for the Oregon Department of Transportation (ODOT) should voters choose to repeal the tax. Without a solution, lawmakers have considered redirecting $288 million from other ODOT programs to cover maintenance and operations. “Let the people vote and let us get back to that table and let's make sure that we vote for funding tools that they can approve of,” said Rep. Susan McLain, D-Hillsboro, in support of the move. Rep. Paul Evans, D-Monmouth, noted he was initially undecided but ultimately voted in favor of the bill. However, the decision to move the vote was not unanimous among Democrats and faced criticism for shortening the period for public discourse. Five House Democrats joined all Republicans in voting against the bill. “I got a lot of emails from constituents letting me know they wished to vote in November. I am here to represent my constituents,” Rep. Lesly Muñoz, D-Woodburn, told the Statesman Journal. The accelerated timeline also bypassed a Feb. 25 deadline recommended by the Secretary of State, which would have allowed ten business days for the public to submit arguments for the official voter's pamphlet. The new deadline was set for March 12. The political and economic backdrop for the May vote is challenging for supporters of the tax. According to the Associated Press, widespread disruptions in the oil industry, attributed to a conflict with Iran, have pushed national gas prices above $4.50 a gallon, with prices in Oregon averaging about 80 cents higher. This has amplified voter sensitivity to any new costs. “It is a hell of a time to be raising gas taxes on people,” Portland resident Jeanine Holly said while filling her tank. The sentiment was echoed by others, who are feeling the squeeze on their household budgets. Michael Burch, a retiree, noted that he used to spend $70 for three-quarters of a tank for his truck but now pays $80 for just over half a tank. “I'm sick and tired of taxes,” he said. If the increase is upheld, Oregon’s 46-cent tax would place it in a tie with Maryland for the eighth-highest state gas tax in the nation, according to the U.S. Energy Information Administration. Chris Koski, a political science professor at Reed College in Portland, described the current environment as exceptionally difficult for such a measure. “It’s difficult to imagine a worse situation for a gas tax increase than right now in American politics,” Koski said. With the May 19 primary approaching, the outcome of the referendum will not only determine a key component of Oregon's transportation funding but also serve as a barometer of voter appetite for tax increases amid persistent inflation. Should the repeal succeed, the Oregon legislature will face renewed pressure to find a sustainable funding source for the state's infrastructure needs before the next legislative session.