The Economic Impact of Oregon's Proposed Transportation Package - A28 Update

Updated Impact Estimates 

The updated HB 2025–A28 introduces several significant revenue and spending changes. The smaller overall package reduces the tax increase and associated spending by approximately $255 million in the 2025–27 biennium and by $1.0 billion in the 2033–35 biennium.

Figure 1

Figure 2 shows the differences in projected revenue between the prior version of HB 2025 and the newly released version, sorted by the “FY 2033-2035” column in descending order.[i] Overall (in parentheses are the 2033-2035 estimates): 

•   The newest version increases the Vehicle Privilege Tax substantially (+$445 million).
•  Other taxes that were increased compared to the prior version include: 

•  Titles (+$245 million)
•  Use Tax (+$111 million)
• Heavy-Medium Use Tax (+$10 million).

•  On the other end, the newest version lowers the revenue increase from:

• Eliminates the Motor Vehicle Tax on new/used vehicles (-$566 million)
• Lowers the Heavy vehicle impact (WM & FF & RUAF) (-$405 million)
• Lowers the vehicle registration impact (-$307 million)
• Eliminates the inflation indexing of the gas tax (-$219 million)

• Lowers the revenue increase from many other components shown in the table (-$374 million).

These changes reflect a strategic reshuffling—some tax categories see increased reliance, while others are scaled back or eliminated.

Figure 2

Given the large policy changes from the prior version, the economic impact changes, shown below.

Key Findings

• Oregon’s Transportation ReInvestment Package (TRIP), legislatively known as House Bill (HB) 2025, has large economic impact potential, with negative and positive economic impact components. On net – when considering both the tax increase and spending portions – the proposal generates: 

•  A 1,893 increase in jobs by 2030 (all figures in this list are 2030).
• A $560 million increase in GDP.
•  A $290 million increase in Personal Income (mostly workers’ income), but a $82 million decrease in Disposable Personal Income.
• A $900 million increase in business sales (Output).
• Prices rise marginally, by 0.23% in 2030.

Figure 3

•  Portions of the proposals have positive returns compared to others that turn out to be losers when viewed from the lens of Oregon’s future economic position.
• Of the three main components – expanded highway construction and maintenance, maintaining existing rail service and expansion to select areas, and public transit, the highway portion is responsible for the return on investment.

•  On the payroll tax/transit component: Overall, using the payroll tax to pay for current/expanded transit services reduces employment by 457 jobs, business sales by $29 million, and disposable personal income by $352 million. The downside effect from higher payroll taxes outweighs the potential positive effects from transit construction. Most of the downside impact is felt through reduced disposable personal income.

Figure 4

• The state may want to consider using some of the growth in personal income tax derived from transportation-related activities to fund some or all of the proposed projects. For instance, the current General Fund revenue biennium revenue forecast made in March 2025 suggests total revenue collected of $28.0 billion.  A 6% growth rate on top of the $28.0 billion would be $1.68 billion in new, biennial revenue. Presuming approximately 17% of the $1.68 billion stems from transportation-related sectors, then $286 million of the tax increase could be avoided by simply shifting growth to more productive resources, such as expanding the economic infrastructure in the state. This is especially relevant given declining population growth and less demand for other government services.
• Given that development is typically a one-time component, and that population may shift from growth to decline in the coming two decades, policymakers may be best served aligning the desired development spending with one-time rather ongoing tax revenue increases. Of course, a portion of the proposal includes an ongoing maintenance component that would be best served with ongoing funding.

Our full report on the prior version of the transportation package is available on our website: https://www.commonsenseinstituteus.org/oregon/research/infrastructure/the-economic-impact-of-oregons-proposed-transportation-package.