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DOT says rising costs and flat fuel revenue mean fewer road projects unless new funding found
Summary
New Mexico Department of Transportation officials told the Tax, Business and Transportation Committee that construction costs have risen while state road-fund revenues have remained largely flat, producing a forecast of reduced project delivery unless the state changes revenue sources or funding mechanisms.
Ricky Serna, cabinet secretary for the New Mexico Department of Transportation, told the Tax, Business and Transportation Committee on Feb. 1 that the agency is delivering significantly fewer projects now than it did in 2020 because construction costs have risen while revenue has not.
The department cited a recent national trip report showing New Mexico needs about $3.6 billion annually for deteriorated roads and about $5.6 billion in unfunded transportation projects. Denise Peralta, DOT executive director of asset management, told the committee, “every project that we do from planning to design to construction is data driven,” and listed safety, condition, mobility, freight and economic development as the criteria used to select projects.
The numbers matter because, DOT officials said, the agency’s overall annual budget is roughly $1.2 billion, made up of federal apportionments and state tax distributions. Mallory Montanatos, DOT administrative services director, told the committee the state’s portion of DOT revenue was about $524.6 million in 2024, with gasoline tax projected to generate about $111 million and special fuel about $129 million.
Why this matters: vehicle efficiency and electrification are expected to reduce fuel-tax receipts over time. Serna described projections showing state road-fund revenues “will decrease by about 20%” between 2030 and 2050 while construction costs have climbed, leaving the department able to perform roughly “20% less work today than we were in 2020.” That decline, officials said, is producing longer waits for repairs and limits on new construction.
Officials outlined program-level and condition metrics for bridges and pavements. Peralta displayed bridge-deck condition trends and said the department’s FY24 forecast shows an increasing share of deck area in poor condition if current funding holds, a trend mirrored in pavement-condition forecasts included in the trip report. The trip report figures cited by Peralta were described as coming from a nonprofit that compiles economic and technical data on surface-transportation needs.
Committee members pressed DOT staff about options to shore up revenues. Serna described a department task force on sustainable transportation, infrastructure and revenue that examined other states’ approaches. He cited Utah and Oregon as leaders on road-user charging and named Colorado and Minnesota as examples that have used surcharges and other mechanisms to support bond repayment. On the mechanics, Serna said the road-user-charge concept “is fundamentally charging you a per mile fee based on your vehicle weight and how often you drive it.”
The committee discussion included questions about the timeline and likely revenue impacts of electrification and higher fuel efficiency. DOT staff also discussed contractor scheduling, specification reviews and other efficiency measures intended to stretch available funds, but emphasized those are partial offsets to the projected revenue shortfall.
Committee chair and members thanked DOT staff and asked follow-up questions; no committee votes or formal actions were taken during the presentation.
The department said it will return to the committee during the bill-heavy weeks that begin next Tuesday to present bills and fiscal proposals tied to these funding challenges.
