Oregon is on the verge of becoming the second state in the nation to require electric vehicle (EV) owners to pay fees based on how many miles they drive. The proposal, led by Governor Tina Kotek, aims to address a growing budget gap in transportation funding caused by the rise in electric vehicle usage, which reduces the revenue generated from traditional gas taxes. The legislation is set to be discussed during a special legislative session scheduled today.
Currently, Oregon has a voluntary program called OReGO that has been operating for about a decade, where EV owners can choose to pay a road usage charge (RUC) of 2 cents per mile driven. Under the new proposal, however, participation in the RUC program would become mandatory for electric vehicle owners by July 1, 2027, and for new EV purchases starting January 1, 2028. Hybrid and plug-in hybrid owners would also be phased into the program beginning July 1, 2028.
The essence of the bill is to institute a per-mile charge or an annual fee to offset the funds lost due to EV drivers not paying traditional gas taxes. The current rate under the voluntary program is 2 cents a mile, but the proposed legislation would increase that to about 2.3 cents per mile. EV drivers could alternatively opt to pay a flat annual fee of $340 instead of being charged per mile. This change means electric vehicle drivers will pay road usage fees more aligned with how much they actually drive, rather than the fuel they consume.
The transportation department highlights that this charge is intended to ensure all road users contribute fairly to the maintenance of Oregon’s infrastructure. The gas tax in Oregon currently stands at 40 cents per gallon but is proposed to increase by 6 cents to 46 cents to help close a $300 million budget gap. The rise in EV adoption means fewer gallons of gas are consumed, shrinking gas tax revenues, which traditionally fund road repairs and upkeep.
While the new bill phases out supplemental registration fees that EV owners pay now, such as the current $115 annual fee, the combined road usage charge and new registration structure could still result in EV owners paying more annually compared to drivers of gasoline cars that achieve about 20 miles per gallon. This potential cost increase has drawn criticism from environmental and EV advocates who warn it could deter people from buying electric vehicles at a time when the state and federal governments are scaling back EV rebates and tax credits.
Despite some opposition, the concept of a road usage charge has supporters on both sides of Oregon’s political aisle. Advocates argue that it is only fair that all drivers, regardless of their car type, contribute to the costs of maintaining the roadways they use. Some Republican leaders emphasize that EV owners have benefited from taxpayer subsidies and have yet to contribute adequately to transportation funding.
Tracking miles for the charge could be done in several ways, including smartphone apps, vehicle telematics, or non-GPS mileage counters, with the state exploring the most cost-effective and privacy-sensitive methods. Participation in the program will exclude paying additional registration surcharges, providing a tradeoff between paying a flat registration fee and variable fees tied to actual road use.
Oregon’s move follows closely behind Hawaii, which recently began phasing in a similar program where EV drivers pay $8 per 1,000 miles driven, capped at $50 annually or a flat fee of $50. With over 84,000 electric vehicles registered in Oregon (about 2% of all vehicles in the state), this legislation could significantly impact how transportation infrastructure is funded in the years ahead.
As the debate continues, the key challenge remains balancing the need for sustainable transportation funding and encouraging the continued adoption of electric vehicles, a critical component in reducing carbon emissions from the transportation sector, Oregon’s largest source of greenhouse gases.
The upcoming special session in Salem will be crucial to the future of vehicle fees in Oregon and could set a precedent for other states grappling with the transition to electric transportation.
