A battle over Oregon gas taxes dominated much of state politics over the past year. Now voters might be in for a sequel.
Gov. Tina Kotek signed a bill Thursday that will functionally hike taxes by more than $300 million. A campaign to refer that bill back to voters kicked into gear immediately.
Two Republican state lawmakers — Rep. Ed Diehl of Scio and Rep. Dwayne Yunker from Grants Pass — are leading a charge to collect 78,116 signatures to put Senate Bill 1507 on the November ballot.
To do so, they’ll rely on the same network of volunteers that speedily collected around 250,000 signatures last fall to give voters a say in hikes to transportation taxes passed by Democrats. Those increases will get a vote in May, and are expected to fail.
The new effort, calling itself “No Tax Clawback,” is looking to collect 100,000 signatures by mid-May, according to Nick Stark, executive director of the Oregon Freedom Coalition. The group focuses on engaging grassroots Republicans to push policy changes. The hard deadline for signatures is June 4.
“Oregon Freedom Coalition and No Tax Oregon have proven their ability to defend Oregon taxpayers when Salem imposes its will on their wallets,” Stark, a co-petitioner alongside Diehl and Yunker, said in a press release. “We will give voters a voice on SB 1507, which essentially amounts to small business robbery.”
SB 1507 was a key piece of Democrats’ plan to avoid layoffs and cuts to state services as they grappled with a budget gap in this year’s legislative session.
The bill was a response to H.R. 1, the so-called “One Big Beautiful Bill” passed by President Donald Trump and Congressional Republicans last summer. Because of tax cuts within that massive legislation, Oregon expected to lose out on roughly $890 million in state taxes in its current budget. SB 1507 was geared toward getting a portion of that money back.
The bill severed Oregon’s tax code from three of the breaks included in H.R. 1. One offered a tax deduction for interest paid on loans for new cars. Another created a tax exemption for profits made from selling the stocks of what are known as “qualified small businesses,” a provision sometimes tapped by founders of startup companies. The final — and largest — allowed businesses to immediately claim tax breaks on large purchases, a boon known as bonus depreciation.
According to the campaign, the “No Tax Clawback” referendum is attempting to block two of those: the benefits tied to depreciation and car loans. That would erase around $300 million that Democrats had planned on bringing back into state coffers.
The effort would not touch the provision on small business stocks, which some in the tech world had begun to push back against furiously in an attempt to get Kotek to veto the bill. It also wouldn’t change expanded tax credits to low-income Oregonians and some businesses that create jobs included in SB 1507.
SB 1507 was among the 2026 session’s most contentious bills. It was viewed as economically harmful by Republicans, but too weak by some progressive groups, who forcefully urged majority Democrats to protect state services by eliminating what they considered tax loopholes passed by the Trump administration.
Kotek nodded to both sides of the debate Thursday.
In a letter she issued while signing the bill, Kotek wrote that the tax changes included in Trump’s tax cut bill “are in large part paid for by draconian cuts to Medicaid and other federal programs that lower- and middle-income Oregonians should have access to. Having Oregon magnify that damage by automatically copying every new tax break in H.R. 1 is neither fair nor responsible.”
But Kotek, who announced last year that boosting Oregon’s economy is one of her top priorities, acknowledged the bill “could affect Oregon’s economic competitiveness.”
“At this critical time for Oregon’s economic growth trajectory, we need to take steps to ensure we are attracting and keeping business investment in Oregon,” she wrote. Kotek, who is running for reelection, said she plans to introduce a bill next year to “address” the qualified small business stock changes made in SB 1507.
The question now is whether the governor is forced to act sooner.
If the No Tax Clawback campaign collects enough signatures to force a vote on SB 1507, Oregon voters would have an opportunity to shoot down the tax changes in November. That would blow a hole in the balanced budget lawmakers passed in March, and could require lawmakers to meet in special session in order to make changes.
Stark and Diehl, who is running for governor, said this week they are confident they’ll be successful again.
“This is not the gut punch to the big corporations that it was sold as,” Stark told OPB Friday. “It hurts a lot of small business and working families disproportionately.”
But some Democrats doubt the new referendum campaign, which would benefit only some taxpayers if successful, will have the salience of the fight against gas taxes that most Oregonians pay.
While no one is standing up for the gas tax increases that are likely to be killed by voters next month, progressive groups say they’re ready to fight for SB 1507 if it does come down to a vote.
“Let’s call the effort to repeal SB 1507 what it really is: an attempt to copy-paste Trump’s disastrous economic policies here in Oregon — gutting food and childcare assistance for children and families, healthcare for seniors and veterans, and critical public safety services our communities depend on,” a coalition of some of the state’s most politically active organizations said in a statement Friday. “SB 1507 expands tax relief for Oregon families and job creators and protects stable funding for schools and healthcare by closing tax loopholes. That’s something every Oregonian can get behind. And we’ll fight to keep it.”
This story comes to you from the Northwest News Network, a collaboration between public media organizations in Oregon and Washington.
