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SALEM 鈥� Plugging the Oregon Department of Transportation’s budget gap will mean聽keeping dozens of the agency’s positions vacant and redirecting funds from Safe Routes to School, Connect Oregon and projects related to seismic improvements, among other programs, lawmakers said Feb. 28.

鈥淭his is not a good budget,鈥� Ways and Means Committee co-Chair Sen. Kate Lieber, D-Portland, told reporters. 鈥淭his is a very, very, very difficult budget.鈥�

Lawmakers also proposed modest reductions to the state’s general fund, mostly via vacancies.

Details were published March 1 while lawmakers were away from the Capitol for the weekend, and just days before the session must end March 8.

Lawmakers entered the 2026 legislative session expecting to make significant cuts to balance the state’s budget. At fault, Democrats said, was the passage of President Donald Trump’s One Big, Beautiful Bill Act just days after lawmakers finalized the current state budget.

State economists later predicted a healthy surplus had transformed into a budget hole, and Gov. Tina Kotek ordered all agencies to immediately implement cost-saving measures. State agencies were also told to prepare and present plans to reduce their budgets by 2.5 percent and 5 percent. Those plans ultimately did not have to be used following a positive revenue forecast that increased the state’s expected general fund by nearly $253 million.

Democrats also passed a bill to partially disconnect Oregon from the One Big, Beautiful Bill Act. Senate Bill 1507 disconnects from three of the federal reconciliation bill’s provisions to claw back some lost revenue. It’s expected to net an additional $311.6 million for the state.

State budget writers Rep. Tawna Sanchez, D-Portland, and Lieber said agencies will instead be asked to draw on their ending fund balances, hold off on hiring, and cut back on supplies and services. No direct services or programs will be impacted, they announced.

Lawmakers are proposing redirection of $218 million聽in聽unobligated funds聽to close a $288 million budget gap聽at ODOT. The remainder will come from vacancy savings. An estimated 360 employees have left the agency this biennium because of budget uncertainty, Lieber said.

Members of the Joint Subcommittee on Transportation and Economic Development heard from ODOT about potential areas to cut in a Feb. 10 informational hearing.

ODOT presented members of that subcommittee with a total of $585.8 million in potential cuts. Vacancies and layoffs made up $242 million of that total; the remaining $343.8 million was unobligated funding from various projects, programs and funds.

Legislators opted to avoid layoffs, instead electing to keep 138 positions vacant for the remainder of the biennium to save $38.9 million. Another $31.8 million in existing vacancy savings comes from employee departures from July 2025 to December 2025.

The remaining $218 million will come from moving money that is not yet obligated. Swapping ODOT state highway funds for federal funding would be the largest chunk of those savings at $85 million.

Other cuts, about $35 million, would be to ODOT’s bridge, seismic, preservation and safety funding from the 2017 transportation package. Cuts would mean pushing back or canceling projects focused on safety and preservation, according to an ODOT spokesperson.

Also impacted by the proposal are Connect Oregon, which provides grants for rail, marine and aviation projects; Safe Routes to School, for safety projects near schools; and the Transportation Operating, or 鈥渓awnmower鈥� fund, which is funded by non-road gas tax funds and pays for things other funds can’t be used for.

Some unobligated funds, like Community Paths, which go to bike and pedestrian projects, money for driver’s education and a canceled project, would be used in their entirety.

Grants for public transportation, funding for megaprojects like the I-5 Rose Quarter Improvement Project and some smaller amounts of unobligated funds were not impacted by the proposal.

Republicans have previously called for fund reallocations that Democrats rejected during the 2025 session. Lieber said those proposals were different because Republican reallocations would have been permanent. Democrats are hopeful that a new transportation proposal in 2027 will offer a different solution to fund ODOT.

鈥淭his idea that permanently redirecting these funds is the solution, I think that should be examined very closely because it is damaging for our infrastructure, for that agency, and for the Oregonians who use the streets,鈥� Lieber said.

The ODOT cuts reflect a compromise on 鈥渢ough choices,鈥� Gov. Tina Kotek told reporters on Feb. 24.

鈥淣o one loves the proposal,鈥� Kotek said, but added that it’s necessary to fund the agency’s basic maintenance and operation.

ODOT has long warned of an impending budget crisis due to a projected decline in gas tax revenue, limitations on where money can be spent, and inflation.

Attempts by Democrats to pass a transportation package in the 2025 legislative session were unsuccessful, prompting Kotek to call a special session to stave off layoffs.

A bill ultimately passed, mostly along party lines, to increase the gas tax, payroll tax and vehicle fees in addition to new accountability measures and an expanded road usage charge for electric vehicles.

Then hundreds of thousands of signatures were collected to refer the cost hikes to the ballot. The House on Monday passed Senate Bill 1599, which will move up the referendum to the May primary.

The state’s current budget, which is in place through June 2027, will be trimmed by $128 million under lawmakers’ new plan.

The reductions will come from vacancies and supply savings.

Kotek said she expected state expenditures to decrease by about 1 percent overall and did not anticipate 鈥渂asic services鈥� would be impacted.

鈥淭he 1 percent reductions and the $300 million will allow the state not to hurt services and it will allow us more importantly with the disconnect not to make any more reductions for K-12, universities and community colleges,鈥� she said.

That $300 million could be in jeopardy. Rep. Ed Diehl, R-Scio, a leader of the gas tax referendum effort, said he would work to refer the bill parts that disconnect from the federal tax code. The increased tax credits that would bring more money to Oregonians would not be referred, he said.

Lawmakers had planned to pay for those increased credits through savings from the disconnects.

鈥淲hat I think Oregonians should understand is, if this makes it onto the ballot, it means cutting essential services for Oregonians,鈥� Lieber said.

Editor’s note: This article first appeared in the Statesman Journal and then was distributed on the USA TODAY Network via Reuters Connect.