Confronted by a grassroots backlash, Democrats consider repealing unpopular gas tax hike

Repealing the controversial bill could deprive Republicans of a powerful campaign issue in an election year.

 

By Nigel Jaquiss

Oregon Journalism Project

At politically oriented holiday parties all over the state, the hot topic is what Democrats will do in the face of a remarkably successful Republican effort to refer a gas tax increase to the November 2026 ballot that lawmakers passed in September.

The option that’s getting the most serious consideration, according to numerous Democrats speaking on background: repealing all or parts of House Bill 3991 in next year’s legislative session.

“My recommendation has been to just take the pain early and repeal it in February,” says one Democratic lawmaker, speaking on condition of anonymity.

By now, many Oregonians know that one of the Legislature’s top priorities for 2025, bailing out the financially troubled Oregon Department of Transportation, turned into a slow-motion train wreck and fueled a populist rebellion.

The original funding bill, the result of more than a year’s worth of meetings around the state, emerged relatively late in the regular session. Even after Democratic leaders offered slimmed-down versions of the bill, they could not find the support to pass it.

That failure threatened layoffs at the agency and led Gov. Tina Kotek to call a special session in late summer to pass an even narrower package: a 6-cent-per-gallon gas tax increase; a doubling of some vehicle registration fees; and a doubling of a payroll tax to fund public transit — but only for two years.

In passing the more modest bill, Democrats neutralized groups critical of more expensive versions of the bill that have paid to fund a referral. But critics of the bill, led by Senate Minority Leader Bruce Starr (R-Dundee), state Rep. Ed Diehl (R-Scio), and Jason Williams of the Taxpayer Association of Oregon, mounted a guerrilla campaign to refer the gas tax increase.

Last week, their group, No Tax Oregon, delivered the latest blow to Democrats’ plans for ODOT when they turned in just shy of 194,000 signatures — wrapped like Christmas presents and delivered by horse-drawn wagons — to Secretary of State Tobias Read’s office.

The ability of the anti-tax opposition to House Bill 3991 to gather so many signatures so quickly — and with virtually no funding — surprised many lawmakers as well as political insiders.

“I was flabbergasted,” says political pollster John Horvick of DHM Research, who has no stake in the issue.

The anti-tax group’s success has convinced many Democrats the referral would not only pass easily — killing the tax increase — but that it would also give Republicans a powerful tool to use against legislative Democrats in contested districts and against Gov. Kotek as she seeks reelection in 2026.

Democrats told OJP that in view of the success in signature gathering, they see three options: 

1. Take the loss earlier. That could mean moving the gas tax referral to the ballot in May rather than allowing it to go on the November ballot.
2. Take the loss on schedule. If Democrats do nothing, that allows Republicans to capitalize on the unpopular tax in campaign messaging for the next 11 months.
3. Repeal all or parts of HB 3991 in the short session that begins Feb. 4.

Several Democratic lawmakers and political consultants say the third option — repeal — makes sense both practically and politically.

The practical consideration is that, by gathering signatures far in excess of the threshold required to qualify for the ballot (78,116 valid signatures), No Tax Oregon put the gas tax and other increases on hold until the matter is decided. (Otherwise, the increases would have gone into effect Jan. 1, 2026.)

If Democrats are going to lose on that question in November, the thinking goes, why not start in February to figure out a solution for ODOT that Republicans will accept?

The political question is more nuanced. Absent the gas tax issue, Democrats could capitalize in 2026 on widespread dislike of the GOP’s standard-bearer, President Donald Trump. History shows that midterm elections typically favor the party that lost the presidential election. The unpopularity of the gas tax increase threatens that Democratic advantage.

Kotek waited to sign HB 3991 for nearly the maximum time allowed after lawmakers passed it. That tactic shortened the window for her opponents to gather signatures. It didn’t work. Now, Kotek says she wants to cooperate with critics to find a solution for ODOT.

“The governor is committed to working with lawmakers of both parties, ODOT leadership, stakeholders, and local leaders to find a path forward,” her spokeswoman Roxy Mayer says. “Her guiding principle is to avoid, as much as possible, immediate service cuts that will impact Oregonians.”

Mayer declined to comment on which Democratic strategy — including a repeal of HB 3991 — Kotek favors.

Senate President Rob Wagner (D-Lake Oswego) and House Speaker Julie Fahey (D-Eugene) were similarly noncommittal.

“We are considering several options for moving forward — as always, any legislator who shares that goal and is willing to work in good faith has a seat at that table,” Fahey says, adding, “The Republican politicians behind the referral effort don’t have a backup plan, and the transportation needs facing every corner of the state won’t fix themselves.”

Wagner highlighted the challenges the signature-gathering poses for motorists. “Our focus right now is on ensuring the basic safety and maintenance of our roads now that emergency funding is on hold,” he says. “We are ready to work with the governor’s office, ODOT, and our local partners to manage this situation through the upcoming legislative session.”

Pollster Horvick says the nearly 200,000 signatures gathered put Democrats in a tough spot.

“If you assume the referral is going to pass — and pass overwhelmingly — it makes more sense to take the pain sooner than later,” he says. “Still, it’s not a great look for Democrats, and it would look a little weird for the governor to sign a repeal after calling a special session.”

Diehl, one of the leaders of the repeal campaign, says he’s heard secondhand that Democrats may seek to frustrate his group’s path to the November ballot. A repeal of the measure, of course, would be a victory of sorts. But Diehl says he’d need to see the details.

For one thing, HB 3991 included a number of nontax items, including the resolution of a long-running dispute between truckers and the state over the apportionment of road-user charges. “There are some parts of the bill I like,” Diehl says.

Extreme weather over the past week caused flooding and landslides in parts of the state. That led some Republicans to call for emergency funding for ODOT, even as the referral freezes new money; Democrats said the recent damage to state highways and roads points to the need for HB 3991 funding.

Diehl says he hopes the disagreement will lead to a more thorough examination of how ODOT operates. He remains convinced the agency is poorly run and could prioritize its spending much more efficiently.

“We’ve got to put maintenance and safety first,” he says. “This is our one chance to really hold an agency accountable.”