Oregon SB 1585 Lowers Grant Match Requirements for Small Cities

Governor Tina Kotek signed Senate Bill 1585 into law in April 2026. The measure reduces the local cash match required from small incorporated cities when applying for specific state infrastructure grants. The law takes effect on June 5, 2026.

Under the new statute, cities with populations of 20,000 or less may be required to contribute between 3% and 12% of a project’s total cost, depending on population size and project scope. This replaces previous matching requirements that ranged from 20% to 40% for certain programs. The bill also allows these cities to use grant funds for pre-construction activities, such as engineering and planning.

At a glance

  • Bill Number: SB 1585
  • Status: Passed and signed into law; effective June 5, 2026.
  • Primary Change: Reduces local cash match requirements for small incorporated cities (population ≤ 20,000) for specific state grants.
  • New Match Rates: Between 3% and 12%, based on population and project cost.
  • Affected Programs: School safety transportation, Connect Oregon, Multimodal Active Transportation, Levee Project Grants, and Water Resources feasibility studies.
  • Additional Provision: Allows grant funds to be used for all project phases, including planning and engineering.

How the match rates change

Senate Bill 1585 amends several existing statutes to establish a tiered matching fund requirement for small cities. The reduced match rates apply to incorporated cities with a population not greater than 20,000, as determined by the most recent federal decennial census. The specific match percentage depends on the city’s population bracket and, in some cases, the total cost of the project.

For cities with a population of 5,000 or less, the required cash match is capped at:

  • 3% for projects or grants costing $100,000 or less.
  • 5% for projects or grants costing more than $100,000.

For cities with populations between 5,001 and 7,500, the match is capped at 7%. For those between 7,501 and 10,000, the cap is 9%. For cities with populations between 10,001 and 20,000, the cap is 12% Enrolled Bill Text, Sections 1-9.

The bill applies these new rates to the following grant programs:

  1. School Safety Improvement Projects: Administered by the Oregon Transportation Commission, these grants support projects like sidewalk improvements and pedestrian crossings near schools. The previous requirement was a cash match of at least 40% Enrolled Bill Text, Section 1.
  2. Connect Oregon Transportation Projects: These grants fund various transportation initiatives. The previous match requirement was 30% for most public bodies and 50% for Class I railroads Enrolled Bill Text, Section 2.
  3. Multimodal Active Transportation Program: This program supports bicycle and pedestrian projects. The previous match requirement was 30% Enrolled Bill Text, Section 3.
  4. Levee Project Grants: Administered by the Oregon Infrastructure Finance Authority, these grants support flood control infrastructure. The previous requirement was a match of at least 20% Enrolled Bill Text, Section 4.
  5. Water Resources Feasibility Studies: These grants fund studies on water conservation, storage, and restoration. The previous requirement was a match of at least 25% Enrolled Bill Text, Sections 8 and 9.

In addition to lowering the cash match, the bill explicitly allows small cities to use grant award moneys for all phases of a funded project. This includes engineering, planning, and support activities, not just physical construction. This change removes previous restrictions that limited grant usage to construction-only phases for certain programs Enrolled Bill Text, Sections 1-4, 7, 9.

Legislative history and support

SB 1585 received strong bipartisan support in both chambers of the Oregon Legislature. In the Senate, the bill passed on February 19, 2026, with a vote of 25 yeas to 3 nays. Senators Campos, Gelser Blouin, and Pham voted against the measure Senate Roll Call.

In the House, the bill passed on March 6, 2026, with a vote of 46 yeas to 5 nays. Representatives Breese-Iverson, Grayber, Marsh, Reschke, and Wallan voted against the measure House Roll Call. The bill was sponsored by a large coalition of legislators from both parties.

Fiscal impact and implementation

The supplied record does not include the Fiscal Impact Statement or Revenue Impact Statement referenced in the legislative supplements. Therefore, specific dollar amounts regarding state cost increases or revenue losses cannot be confirmed from the enrolled bill text alone. Reducing the local match requirement inherently shifts a larger portion of the financial burden to the state, which may affect the total number of projects funded if grant pools remain static.

State agencies responsible for administering these grants, including the Oregon Transportation Commission, the Department of Transportation, the Oregon Infrastructure Finance Authority, and the Water Resources Department, will need to adjust their application processes to accommodate the new match rates. The law takes effect on June 5, 2026, which is the 91st day following the adjournment of the 2026 legislative session Legislative History.

Keep exploring Oregon civic power

Explore current Oregon voter initiatives and community proposals. Browse the complete Oregon civic reporting library.

Related Oregon reading

Sources