Jyoni Shuler / Wikimedia Commons
Why It Matters
Oregon’s state aviation agency, which oversees 28 airports critical to wildfire response and rural communities, is staring down a projected $3 million budget shortfall in its 2027–29 cycle. The financial pressure stems largely from a jet fuel tax rate that has gone untouched for more than seven decades — and a failed attempt in 2025 to update it.
The agency’s airports serve a function that extends well beyond general aviation. Many of the state-owned airfields double as staging grounds for aerial wildfire operations across Oregon’s forests and mountains.
What Happened
The Oregon Department of Aviation draws roughly half its operating revenue from the state jet fuel tax — a rate that has not been adjusted since 1955. The remaining revenue comes from Port of Portland funding, aircraft registration fees, and hangar rental royalties. With costs climbing and the tax base stagnant, agency officials say a shortfall is all but certain without legislative action.
Oregon lawmakers raised the jet fuel tax in 2015, bumping it from 1 cent to 3 cents per gallon. Those proceeds, however, were earmarked specifically for airport grant programs rather than the agency’s day-to-day operating budget, doing little to relieve the structural funding gap.
A 2025 bill sought to push the tax to 6 cents per gallon, which would have directed new revenue toward the agency’s operations. The measure stalled in committee after drawing opposition from business groups, the Port of Portland, and commercial airports. Oregon voters earlier this year also rejected a Democratic-led transportation funding law that would have raised gas taxes and vehicle fees, signaling limited appetite for new levies on fuel and transportation.
By the Numbers
- 28 state-owned airports managed by the Oregon Department of Aviation
- 1955 — the last year the jet fuel tax rate was changed
- $3 million — projected budget shortfall in the 2027–29 budget cycle
- 15 total staff members, including a 3-person maintenance crew
- $24,000 per month — what the agency previously paid to rent a skid-steer it ultimately purchased for $180,000 in 2025
Agency Tightens Its Belt
Despite the looming shortfall, the Oregon Department of Aviation — established in 1921 as the first state aviation agency in the country — has worked to stretch its limited resources. Agency director Kenji Sugahara said the team has been actively seeking efficiencies wherever possible.
“Where we can find efficiencies and use technology, we have been doing it and figuring out ways to pinch pennies,” Sugahara said.
Among those cost-cutting moves: a $152,000 purchase of a paint-marking machine in 2023, which eliminated recurring rental costs, and the skid-steer purchase that replaced a $24,000-per-month rental bill. The 15-person agency manages, supports, and regulates small airports as well as emerging drone technology across Oregon.
The agency’s airports also carry outsized importance during fire season. Sugahara described the role those airfields play when wildfires break out across Oregon’s forests.
“Those airports are used constantly for wildfires,” he said. “Helicopters base there, and they fly a lot of missions, so without those, fires would be pretty much out of control.”
Oakridge State Airport, located in the Willamette National Forest in Lane County, is currently undergoing runway renovations and is scheduled to reopen July 31.
Zoom Out
The Oregon Department of Aviation’s situation reflects a broader challenge facing state agencies reliant on dedicated tax streams that were set at nominal rates decades ago and never indexed to inflation or rising operational costs. With commercial aviation interests and business groups blocking a rate increase, and voters resistant to broader fuel tax hikes, the agency has few obvious paths to close the gap before the next budget cycle.
What’s Next
Unless the Oregon Legislature revisits the jet fuel tax question in a future session, agency officials will face increasingly difficult choices heading into the 2027–29 budget period. With the 2026 session concluded and the 2025 tax bill having failed to advance, the $3 million shortfall looks likely to force operational cuts at an agency already running lean.
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