Oregon lawmakers will return to Salem next week for a packed legislative session in which they hope to address a projected budget deficit, strengthen the state’s economy and challenge federal immigration enforcement policies.
They will have a maximum of five weeks to debate those priorities and an array of other proposals, including an expected short-term plan to pay for the state’s bridge and road maintenance. By law, the session must end by March 8.
In contrast to several recent legislative sessions, lawmakers are facing an expected budget gap and will have to either find new revenue sources, trim agency spending or dip into the state’s savings accounts to balance the general fund. That means there will be little extra money to fund lawmakers’ pet projects or new initiatives that don’t have significant support from top Democrats.
“I don’t think this is the time to honestly be starting a whole bunch of new programs,” Senate President Rob Wagner of Lake Oswego told reporters this week. He said lawmakers will have to prioritize programs that will “protect or serve as many people as we can and ... do the least amount of harm to families across the state knowing that we’re heading into a really difficult period.”
That budget landscape has not deterred lawmakers of both parties from proposing initiatives with anticipated new costs, such as proposals to ease expenses for first-time homebuyers or expand the state’s earned income tax credit.
Gov. Tina Kotek has also included budget requests in at least one of her three priority bills, which aim to boost housing production, expand the state’s behavioral health workforce and make Oregon more business friendly.
Meanwhile, lawmakers from both parties have put forward proposals to address the state’s persistent crises of poor education outcomes, low housing production rates and insufficient support for those struggling with addiction, homelessness and mental health.
Democrats have also outlined a package of bills to address federal immigration enforcement, but they have not yet put forth concrete plans to close the state’s funding gap or keep the Oregon Department of Transportation afloat without raising taxes. Some of those proposals are expected to emerge soon after state economists deliver an updated revenue forecast Wednesday.
Politically, the short session will provide top Democrats and Kotek an opportunity to redeem themselves and unify their caucus after they failed in last year’s session to pass multiple versions of a transportation funding package, a top priority for the party.
Republicans will again enter the session in the minority and with new leaders in both chambers as the party continues to grapple with frequent leadership turnover. One Republican in each chamber is also running for governor, meaning the session will likely bring plenty of political grandstanding.
Here’s what we know so far:
Budget deficit
In August, state economists predicted a $370 million deficit in the current biennium after a legislative report found that President Donald Trump’s signature tax-cutting bill would cost the state nearly $900 million. That’s because Oregon generally copies federal tax law automatically, so any new federal tax cuts result in copycat reductions in state taxes.
In November, state economists said the deficit had shrunk to $63 million. But the wide-reaching federal law is also expected to place additional pressure on the state budget not reflected in that estimate. Earlier this month, the Oregon Department of Human Services and the Oregon Health Authority said they need $340 million more in state funding between now and June 2027 to comply with new demands from the law.
In the long term, federal cuts mostly to Medicaid and food assistance programs are expected to cost the state more than $15 billion through mid-2031, according to Kotek’s office.
Lawmakers have been preparing to address the budget deficit for months, but each potential solution brings its own complications and opponents.
They could cut agency budgets, potentially resulting in layoffs and reduced state services. They could disconnect from some or all of the tax breaks included in the federal law, which would increase state tax revenue but essentially raise taxes on Oregonians and businesses. Or they could tap the state’s reserve funds, which are restricted and would only provide temporary funding for various programs.
During a media event Wednesday, top Democrats said they will not disconnect the state from two of the most popular tax breaks in the federal bill – those that apply to overtime pay and tips – but didn’t explicitly say which other provisions are still up for consideration.
“What I care about is, do any of those tax breaks actually generate economic growth and jobs here in this state?” said House Speaker Julie Fahey, a Eugene Democrat. “If they do, then let’s stay connected. If they don’t, why would the state of Oregon give our tax resources away to a company that might be creating a job in Delaware or in Florida?”
Transportation
Lawmakers have spent more than a year trying and failing to secure more permanent funding to maintain the state’s roads and bridges. Now, heading into the session, they still must find a short-term solution to keep the state transportation department afloat.
In a special session last fall, Democratic lawmakers approved a series of tax increases as part of a larger transportation package to help the state continue paying for road and bridge maintenance. But Republican opponents gathered enough signatures through a referendum campaign to halt the taxes and place them on this November’s ballot.
The success of the referendum means lawmakers now need a new plan to address the Oregon Department of Transportation’s $242 million budget deficit while maintaining funding to fix and preserve the state’s highways and bridges. Those dollars are likely to come from other state transportation programs, such as megaprojects or initiatives to improve pedestrian infrastructure.
After some back-and-forth with the governor and legislative lawyers, Democrats have said that they hope to move the tax vote up to the May election, a move Republicans have blasted as a political effort to prevent Kotek from appearing on the same ballot as tax hikes she backed.
Top Democrats also indicated this week they are unlikely to repeal non-tax provisions from the special session package that had broad support and weren’t subject to the referendum, such as simplifying the tax structure for truckers and increasing oversight of the transportation department.
That means lawmakers will have to find the resources to implement those new provisions while cutting funding for other agency programs. Although Kotek earlier had asked lawmakers to repeal the entire package, she took a more nuanced stance Wednesday.
“The point that I’ve been taking to the table with legislative leaders is, if you want these things, we have to pay for them,” Kotek told reporters. “Otherwise, they gotta come out of the law.”
Response to federal policies
Democrats say they plan to push back on a raft of Trump’s signature efforts, including the administration’s violent immigration crackdown, plans to sell public lands and pursuit of people’s personal information.
Earlier this month, a group of Democrats unveiled an outline of various proposals. They include bills that would prevent the federal government from unlawfully withholding money from Oregon, allow Oregonians to sue federal agents for violating their constitutional rights and require school districts to strengthen their protocols for responding to immigration agents on school grounds.
“There’s no question that there’s a lot of fear, there’s a lot of concern, a lot of anger and people asking questions as, what can the state do?” Rep. Ricki Ruiz, a Democrat from Gresham, told The Oregonian/OregonLive this week. “I think we’ll be able to get a lot of those things ready by day one. … We got commitment from the governor that as soon as any bill regarding immigration gets to her desk, she will sign it as soon as she can.”
Federal agents working in Oregon have shot people, pointed guns at others, smashed car windows and dragged people out of cars. The targets have included teenagers. The officers often wear masks. During demonstrations, federal officers have sometimes used tear gas and pepper spray or injured protesters. Federal authorities have defended such actions, often characterizing them as self defense.
U.S. citizens also have been caught in the dragnet or detained for documenting the crackdown. Federal officers have detained nearly 1,900 people in Oregon as of mid-December, according to Oregon for All, composed of various community advocacy organizations.
Expected bills would bar local and state collaboration in the sale of federal public lands, strengthen rules for state agencies to follow when immigration authorities demand data and prevent federal agents from covering their faces, although similar anti-masking laws passed in other states have been challenged in court by the federal government.
Democrats have said they hope some of those proposals will receive bipartisan support, but Republicans have largely stayed silent on federal immigration enforcement or other controversial Trump initiatives.
During the Wednesday media event, Republican leaders suggested that some federal cuts are overdue and said allowing local law enforcement to cooperate with federal agents could reduce violent encounters.
“We do need to remember that these are law enforcement people at all levels,” House Republican Leader Lucetta Elmer of McMinnville said. “I respect law enforcement. I stand with law enforcement. Wow, do they have a hard job to do.”
Governor’s priorities
As she prepares to hit the campaign trail for her reelection bid this year, Kotek has proposed three of her own bills that could help grow the state’s behavioral health workforce, make the state more friendly to businesses and encourage more housing development.
A behavioral health workforce group, chaired by Kotek’s wife, recently laid out some initial recommendations for lawmakers to take up this session. Two of those recommendations included in one of Kotek’s priority bills propose creating a centralized credential system to streamline provider care and consolidating licensing oversight of social workers and therapists to reduce processing times for licenses.
Kotek has also proposed a package to make it easier to develop homes across the state. One policy in that plan would provide cities with a one-time tool to expand their urban growth boundaries to build manufactured homes and affordable housing for seniors.
The proposal builds on similar legislation from 2024, also backed by Kotek, that provided a one-time tool for cities to quickly expand their growth boundaries by 50 or 100 acres if they met certain criteria for housing needs. Environmentalists have previously opposed these types of policies, saying they contradict Oregon’s famously protective land use laws.
Kotek acknowledged that the bill could face opposition. “I’m not saying everyone will be 100% supportive, but I think people understand, even our land use advocates understand what we’re trying to achieve, and I think we’re going to have bipartisan support for the bill during session,” she said.
Lastly, Kotek will be backing proposals as part of what she is calling her economic “prosperity roadmap” to accelerate the permitting process for major projects and allocate up to $40 million for the preparation of industrial sites.
Other proposals
With roughly 50 committees and subcommittees preparing agendas for the session, lawmakers will also consider a flurry of legislative proposals brought forward by state agencies, political groups, individual legislators and others.
Lawmakers are expected to address their campaign finance reform law, passed in 2024, that will limit political contributions and overhaul the state’s system to track spending in Oregon politics in the coming years. The Secretary of State’s Office has requested $25 million to keep the law’s implementation on track — the limits are set to go into effect next January — but has warned that amount is only an initial, rough estimate.
Facing a tight budget, lawmakers could decide to delay some or all provisions of the law, as some members of both parties have already indicated support for. But it’s unclear if they would delay the limits or the other portions of the law that aren’t set to roll out until 2028.
On Wednesday, Kotek said she would oppose any effort from lawmakers to delay the contribution limits set to go into effect in January.
Leading up to the session, Democrats have placed much emphasis on their desire to boost affordability and make Oregon more friendly to businesses. But they have not gathered widespread support behind any significant proposals to help meet that goal.
To help lower Oregonians’ high costs of living, House Majority Leader Ben Bowman, a Tigard Democrat, said members of his caucus will sponsor proposals to expand Oregon’s earned income tax credit for low-income workers, increase access to free school meals and close loopholes used by predatory lenders to profit off borrowers, among other initiatives.
At least two Democrats have also proposed what is sure to be controversial legislation that would redirect some of Oregon’s popular “kicker” tax rebate, which returns taxpayer dollars to Oregonians when the state sees higher-than-expected revenues, to other services such as wildfire funding or education.
Another potentially controversial bill backed by the Portland Trail Blazers would allow the state to redirect state income tax revenue generated by players and team employees away from the general fund and toward a $600 million Moda Center renovation that is seen as critical to keeping the team in Portland. Team executives have generated support for the proposal from the governor and other local leaders.
“I don’t suspect we’ll have any specific dollar amounts on the table,” Kotek said. “We just need to know what are the options we have to put a proposal in front of the new owners to say, this is what Oregon can do to have the Moda Center modernized and to keep the Trail Blazers.”
Republicans, meanwhile, are eager to roll back some of the Democratic-backed proposals that they view as unnecessary or hostile to businesses. For example, Republicans are sponsoring a bill that would repeal a controversial law passed last year that granted unemployment benefits to striking workers, a large win for unions. With Democrats holding supermajorities in both chambers, the repeal is unlikely to happen.
At Wednesday’s event, leaders of both parties expressed a desire to work together to address the long list of Oregon’s crises. It remains to be seen whether they will succeed.
“I’m hopeful ... that we come together to solve the challenges facing Oregonians, and we leave some of the more controversial and divisive bills that are out there,” Senate Republican Leader Bruce Starr of Dundee said. “I’m hopeful that my colleagues on the other side of the aisle will thoughtfully engage with the minority as we move forward on a limited agenda.”
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