La Grande developing city gas tax to address street maintenance budget
By Garrett Christensen on Monday, March 2nd, 2026 in More Top Stories Northeastern Oregon News
LA GRANDE – For the past several months, discussion has continued in the city of La Grande regarding the state of the city’s budget and possible long-term solutions to increase municipal funding without major cuts to local services. Most prominent among these discussions is the state of city streets and the status of upkeep and repair projects.
Residents who have attended prior city council meetings, community town halls, or even spoken directly to staff may be aware of the concerns over the remaining city ARPA funds, and how La Grande’s street maintenance capacity will be impacted when they inevitably run out. A solution now being seriously considered by the La Grande City Council, and to be voted on by residents in the future, is the establishment of a local gas tax to fund street upkeep.
For those unfamiliar with the situation, the City of La Grande previously received American Rescue Plan Act (ARPA) funds that, according to City Manager John O’Brien, resulted in a “banner year” for city street upkeep in 2025. The funding injection, however, still only allowed for roughly 5% of needed street repairs to be achieved, and remaining funding is expected to be expended soon. While the city works to develop a longer-term economic plan to, hopefully, prevent future service cuts, O’Brien and other city staff and council members believe a more immediate solution is needed to address the condition of city streets. As explained by O’Brien in a recent interview with Elkhorn Media Group:
“Bottom line is, we recognize that we need to do better than what’s been being done, and at a minimum, 5% per year needs to be accomplished. But the cost for us to be able to do that is not within our current budget allowances.”
A memo sent to the city council during a city work session on February 6 by La Grande Public Works Director Kyle Carpenter noted the city receives around $950,000 from the State Gas Tax and $400,000 from the current Street User Fee fund annually for major street rebuilds and maintenance. While O’Brien expressed that, ideally, the city would prefer not to rely on new taxes or fees, the street maintenance budget remaining below 5% capacity (I.E. pre-ARPA funding) could result in a backlog of upwards of 50-100 years’ worth of repairs in the most extreme case. These factors have led the city to develop the gas tax proposal.
If actually implemented, the gas tax would, tentatively, add a $0.03 cent (potentially up to $0.05 cent) per gallon fuel tax at all gas stations within La Grande city limits. This would be an at-the-pump tax and would apply to all vehicle traffic, not exclusively La Grande residents. According to previous estimates from ODOT, around 50% of all vehicles purchasing fuel in La Grande are from non-resident drivers. The exact tax amount, along with other elements of the tax, is still being developed according to O’Brien. The memo provided by Carpenter described the following potential revenue of the tax:
“Examination of the establishment of a local gas tax is estimated to generate an additional $125,000 to $175,000 of annual revenue per $0.01 (per gallon) of assessed tax. This estimate is based on the unaudited distribution and sales numbers reported to the state on fuel sales in La Grande.”
Keep in mind that a gas tax is not the only solution proposed by the city, though it is being the most seriously considered. O’Brien noted that the council discussed the possibility of increasing the Street User Fees, which could be changed by the city without a public vote, though this appears to be less internally popular than the establishment of a potential gas tax. Unlike the tax, a fee increase would draw funding exclusively from La Grande residents’ rather than drawing revenue from non-residents stopping in the city. O’Brien further commented:
“If the council had the choice, we would just do the gas tax because that would be cheaper for the community, but we don’t have the ability to do that. The only thing we have the ability to do is increase the street user fee. We don’t feel like we’d be very good stewards to our community if we just made that decision unilaterally.”
As mentioned, the gas tax, being a new measure rather than a modification of an existing city fee, would have to be voted on by the La Grande community before implementation. Assuming the current pace of development, O’Brien estimates the gas tax would likely be part of the November general election.
When asked, O’Brien mentioned the city is also taking into consideration the state transit fees and gas tax increase, currently tied up in the Oregon Legislature. It was, according to O’Brien, discussed by councilors to include a way to sunset the local gas tax should the state level gas tax increase go through after local implementation. Other suggestions mentioned in the Public Work’s memo also suggested making the tax seasonal, or limiting it to specific fuel types.
Another concern brought up, which has the council divided, is whether it should be a temporary stopgap until other revenue sources can be established, or if it should be a permanent fixture of the city budget. As O’Brien explained:
“If it works, then in theory, people could say with confidence, ‘oh, we can see on the horizon that the paying gas tax is temporary, and that will go away, and this other thing will step into the gap instead.’”
Beyond the major headaches of overlapping with the state tax and planning to lift the local tax in the future, there are general concerns regarding public reception. In blunt terms, the city is aware of how unpopular any new taxes and fees are likely to be. Some discussions on recent social media posts from the city have already expressed apprehension of the new tax, and a desire to see alternative solutions.
As the tax proposal is further developed by staff, the city is planning outreach efforts to explain the nuances of the tax, assure residents that other avenues are being considered, and generally engage the public in the civic process.
On that note, O’Brien also discussed the longer-term plan to increase city revenue over the next several years. The goal, broadly, is to balance the city’s budget without putting a heavy burden on the public, explaining:
“What we’ve decided that we’re going to do, through this fiscal transformation initiative, is construct a better revenue-generating engine that doesn’t depend on taxes for the community, that will give us the ability to cover costs better with what we have. But our current structure, in the way that we’re doing business, is not moving fast enough to generate the kind of revenue that we need in order to cover those costs, if they’re ever fully realized.”
O’Brien continued:
“The intent is for us to do the best that we can with what we have, fix the problem with what we have, and then never have to reach a point in time where we have to, besides the gas tax, ask for any additional taxes to be paid in order to cover our costs.”
The city council will discuss proceeding with gas tax planning efforts and a potential inclusion in the 2026 general election during their next meeting this Wednesday, 6:00 p.m., March 4th. The agenda for this meeting can be found here: https://www.cityoflagrande.org/AgendaCenter/ViewFile/Agenda/_03042026-108
The memo from the previous work session can also be found here: https://www.cityoflagrande.org/AgendaCenter/ViewFile/Agenda/_02092026-104
