QP: The Tapeworm Eating ODOT's Record Gas Tax Revenue

Governor Tina Kotek has called a special session of the legislature to secure more funding for the Oregon Department of Transportation (ODOT). She wants to raise gas taxes by six cents per gallon, double vehicle registration fees, and increase titling fees.The governor claims that ODOT revenue has been declining due to improved fuel economy of cars, but comprehensive annual reports online show the opposite, as does the Legislative Revenue Office presentation. In 2024 gas tax revenue hit an all-time high of $652 million, as nearly did registration and titling fees ($550 million) and weight and mile fees ($455 million). Total ODOT revenue increased by 30 percent between 2018 and 2024 while debt service increased 41 percent and is growing. The debt is not scheduled to be retired until 2049.It’s not a revenue problem; it’s a spending problem.First, since 2001, as part of the Oregon Transportation Investment Act bond program (OTIA), the legislature has forced ODOT to spend most new gas tax monies on construction projects while ignoring highway maintenance. Thus, while gas tax revenue has increased, the amount going to operations has decreased.Secondly, the legislature voted to sell nearly $4 billion in bonds backed by gas tax revenues. As a result, ODOT paid $358 million out of the gas tax revenues toward debt service last year compared to only $70 million in 2007.To paraphrase Warren Buffett, debt service is the tapeworm eating 55 percent of ODOT’s gas tax money.When legislators meet on August 29th, they should repeal gas tax restrictions put in place by OTIA Programs I, II and III. They should also pay down ODOT’s remaining bond debt of $3.9 billion with lottery funds. This would free up gas tax revenue to be spent on road maintenance and set a course correction ODOT and the people of Oregon need.