The Oregon Legislature‘s failure to pass a transportation funding bill is beginning to impact projects around the state.

On Friday, the Oregon Department of Transportation sent a notice that it was canceling a chip seal project on Route 34 near Corvallis. Work was set to begin on Monday. Other chip seal projects were canceled in Union and Grant counties in eastern Oregon.

“ODOT is experiencing a significant and immediate funding shortfall that is resulting in staff layoffs and reduced capacity across the agency,” the department stated.

ODOT began implementing layoffs on Monday, with 483 employees let go. That number was expected to rise to 600 to 700 later in the day. A second wave of layoffs is planned for early 2026 without further funding from the Legislature, the governor’s office stated Monday.

“Consequences to essential transportation services are imminent across the state,” Gov. Tina Kotek stated on Monday. “This is not business as usual. These layoffs constitute an emergency in Oregon’s transportation system that will hurt every part of Oregon.”

Hundreds of vacant positions held open in the past four years will be permanently eliminated, the governor’s office warned.

The layoffs list totals 11 pages, and includes engineering specialists, transportation maintenance specialists and information systems specialists. Unionized staff who receive layoff notices may be able to move into other positions, both vacant and filled, following specific processes, an ODOT spokeswoman stated in an email. As such, the impacts to specific regions and programs may not be known for months.

Kotek cautioned that Oregonians would begin noticing reduced services, including fewer potholes getting filled, reduced pavement maintenance and road striping. Brush clearing and fire-prevention work will also be scaled back.

As winter approaches, drivers can expect slower and less frequent snow and ice removal, particularly in rural and mountainous areas, the governor’s office stated.

“This emergency was preventable, and we still have time to intervene,” Kotek stated. “I have not and will not stop fighting for Oregonians who rely on us to keep our roads safe and people and products moving. Come winter, without a shared commitment to solve this crisis from partners and lawmakers, Oregonians will be left out in the cold — literally.”

The funding shortfall leaves ODOT relying on diminished gas tax revenue, vehicle registration fees and other sources. A monthslong effort to pass a landmark transportation bill failed after opposition from Republicans and some Democrats in the Legislature.

Some observers have called on Kotek to reconvene legislators in a special session.

Beyond short-term maintenance needs, the agency’s funding troubles put the state’s big freeway projects — including the Interstate 5 Rose Quarter Improvement Project — at risk, said Joe Cortright, president of City Observatory and a longtime ODOT critic.

The transportation bill’s failure “puts them in a really dire situation,” he said. “The question is whether ODOT should be taking on a $2 billion project for which it has no money at the same time it’s laying off hundreds of employees. Doesn’t make much sense to me.”

Cortright also questioned how much of a $450 million federal grant, announced in March 2024, for highway cover design and initial construction of the I-5 project will be realized.

“It’s very much a question up in the air as to how much of that money continues to be available,” he said.

The Legislature in this session approved $250 million for the Interstate Bridge replacement program. That followed the 2023 Legislature’s approval of House Bill 5005, which identified Oregon’s eight-year plan to allocate $1 billion for its share of the project. An updated price tag is expected soon; the most recent estimate was $6 billion.

Editor’s note: This story has been updated to reflect that the 2025 Oregon Legislature approved $250 million for the Interstate Bridge replacement program.

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