Oregon lawmakers must end the legislative session by March 8. Bills are still moving through chambers, but several major issues remain unsettled, among them balancing the state’s general fund budget and solving transportation funding. OPB political reporter Dirk VanderHart joins us to talk about the key bills and developments in Salem as the short session nears its end.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. There is less than a week left in Oregon’s 2026 legislative session. It has to end by Sunday. Lawmakers still have to pass a balanced budget. The contours of that budget have gotten a lot clearer in the last few days. Dirk VanderHart joins us from the Capitol to talk about where things stand right now. It’s good to have you back on the show.
Dirk VanderHart: Hey Dave, great to be here.
Miller: So one of the most consequential bills that Democrats muscled through in this session has to do with decoupling Oregon from federal tax changes. Can you just remind us what that means?
VanderHart: Yeah, this has roots in H.R. 1, that massive spending and tax cut bill passed by congressional Republicans last year. That bill created all these new tax benefits in federal tax law. But because of the way Oregon’s tax code works, they wound up impacting state revenues. Basically, the state uses federal taxable income to determine how much we all owe in taxes. So federal tax breaks matter here. H.R. 1 was expected to eat nearly $900 million into the state’s revenues – which is a lot in the context of the state budget, as you can imagine. So what Democrats did this session is ensure that three of those tax breaks included in H.R. 1 were no longer going to impact the state’s taxes.
Miller: How much state revenue is that expected to save?
VanderHart: We were told it would be about $310 million. But that verb, save, I have to say, Dave, is very much debated here in Salem. Republicans see this move as harming Oregon businesses, essentially hiking taxes on folks. They’ve really taken Democrats to task for it. Democrats are saying we’re just simply choosing our own destiny in our tax code and not letting Congress do it for us.
Miller: OK, but that decision did reduce the hole that lawmakers are attempting to backfill, or have to backfill. But there is still a hole, $128 million in general fund and more for the Department of Transportation in particular. How are Democrats proposing to address those gaps?
VanderHart: Look, the budget is made up of huge amounts of moving pieces. It’s really hard to track. So, even in some ways, characterizing this as a $128 million shortfall, I think is maybe not right. But I’ve had a hard time characterizing it myself. So it is true, the legislature is making cuts in those amounts. And they say they did that in relatively painless ways, actually. That includes keeping vacant positions vacant, reducing funding for supplies, swapping the sources of money from general funds to other sources. It’s all super complex. There’s a lot of accounting tricks. But they did cut in that amount.
At the same time, lawmakers are finding more money to put in some things [like] fire danger, industrial sites. This isn’t just a “cuts” budget. On the general fund side, you are right, the transportation budget gets a little more tricky. They’ve had to do a lot more cutting and repurposing money for the ODOT budget.
Miller: The only thing that lawmakers have to do in this short session, according to the Constitution, is to make sure that the budget is balanced. They did that last year. But then because of all the changes we’re talking about, they have to make sure that their work still holds. Does it seem like Democrats have the votes lined up to do that?
VanderHart: It does. I spent the morning actually watching … there’s four or five big budget bills that come out, and they all get rolled out at the same time and move in the budget subcommittee at the same time. And just to be frank, typically how it works in Salem is that by the time those bills reach that point that you’re actually seeing details, they are baked. All the negotiating has been done behind closed doors. So there is every reason to expect that these are going to pass out of the committees, hit the floor, and should have no problem passing.
Miller: Can you remind us about the drama that has unfolded in Salem over the referral of last year’s special session gas tax to voters?
VanderHart: I can try. It is so much drama. Legislative Democrats passed a bill to fund road maintenance last year that raised some transportation taxes and fees – that included a 6 cent increase to the state’s gas tax. Republicans hated it. Some of them immediately went out and collected signatures to refer it to the ballot this November, essentially asking voters if they would approve of these.
Democrats don’t like the November date. And they have now passed a bill, and the Governor has signed a bill that moves the vote to May, which has basically made Republicans apoplectic. They say Democrats are just trying to get a hot potato off the November general election ballot, which has the highest stakes. Democrats sort of acknowledged that, but they also have said that voting sooner is better, so we have clarity on what our budget looks like.
Miller: What kinds of walkout tactics have Republican lawmakers deployed this session?
VanderHart: It has been pretty minor. We saw the Republicans in the Senate refuse to show up one day, which blocked legislative action that day. That was largely over that bill we’re talking about to move the gas tax election. We saw House Republicans toy with the idea of boycotts, but they didn’t really do one that was a big event. There have not been the kind of protracted boycotts we’ve seen in the past that really complicated the session, which is probably good because in a short session, one of those could really snarl things.
Miller: Have those efforts, limited though – as you’re saying – been successful? Have they accomplished something?
VanderHart: It’s a good question. It has not been totally clear to me at all times what Republicans actually gained by doing this, in terms of whether they got bills killed or they won agreement to pass a bill they wanted, which is often how things work. I would say one thing it did accomplish is making sure that SB. 1599, the bill we’ve been talking about that changes the gas tax election date … They made it pass later than it might have. I think that could be important for a legal challenge we expect to crop up over that bill.
Republicans have made the case, or indicated they are ready to argue that this bill, because it’s sort of rushing things onto the May ballot, it’s going to shortchange timelines, reduce public involvement. So I think having it pass later than earlier could help them make that case. And that may be one of the chief things they got for those delays.
Miller: The Republican lawmaker who successfully led that effort to refer gas tax and transportation funding increases to voters has said he’s going to do the same thing with, what we were talking about earlier, the erasure of automatically enabled income tax cuts in Oregon. But unlike the gas tax, this effort is going to be focused on more arcane things like capital gains minutiae or bonus exemptions. What’s the timeline for that potential referral? Importantly, as you were saying, we’re talking about hundreds of millions of dollars of potentially foregone state revenue.
VanderHart: You are talking about State Representative Ed Diehl here. He is one of the Republicans who led that gas tax referral campaign. On the floor as they were passing these disconnects, the federal disconnect as it’s known here, he said, “I’m gonna do it again. I got my army of folks and we’re going to go out and collect signatures.” And you’re right, I think if this moves forward, it is not as straightforward a selling point to voters. You’re not going to say, “hey, sign this if you don’t want your gas taxes to go up.” There’s potentially a lot more nuance and really complicated stuff to get into if you’re trying to explain it.
The way it actually works in State law is a deal would have 90 days from the day the legislature adjourns to begin to collect his signatures. But he can’t actually begin collecting signatures until the governor signs the bill. She hasn’t done that yet. But in any case, it would be months before we knew if any referral campaign, if it emerges, succeeds. I think you are right that it would really complicate matters for the state budget if, all of a sudden, these moves that lawmakers made were on ice and potentially went away. Because they have said that $300 million they’re getting from this is crucial to avoid more serious cuts.
Miller: What’s the latest on the Moda Center?
VanderHart: The latest on the Moda Center is there appears to be a good amount of momentum here in the Capitol to pay a lot of money in order to see it renovated. Lawmakers are moving a bill that would allow the State to borrow up to $365 million to chip in for that renovation project. The city of Portland and Multnomah County are talking about putting money in too.
I have to say, essentially it feels like elected leaders here are just very, very afraid that the Trail Blazers’ anticipated new owner, Tom Dundon, will move the team elsewhere if the public doesn’t pony up and get the Moda Center up to snuff in a way that lots of folks, I guess, who look at NBA arenas think that it’s not. So there’s a lot of fear, not a lot of negotiating from strength it feels in the Capitol, on this issue.
Miller: And just briefly, what other policy bills are you paying the most attention to in the coming days?
VanderHart: Yeah, it is always a crush. It’s always frankly very unpleasant at this time of session for me. There’s just a lot moving through the Capitol. So we are waiting to see what happens with campaign finance reform. You probably remember lawmakers passed new campaign giving limits two years ago. They’re supposed to take effect next year, but the law needs tweaks before that happens and there’s been a huge fight in Salem over what those tweaks are.
There’s an ongoing battle over how or whether ski areas and other recreational businesses can require people to sign liability waivers – that’s very messy. There’s a question about whether lawmakers will alter the state’s controversial, at times, tax on the estates of wealthy people. That feels like it’s moving, but we don’t know. I’m leaving out a lot of interesting stuff. This has just been a very, very busy session, Dave.
Miller: Dirk, it’s almost done. Thanks so much.
VanderHart: Thank you.
Miller: Dirk VanderHart is one of OPB’s political reporters.
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