DOT warns of long-term revenue shortfall, proposes bonding and tax-shift options; committee presses on EVs, cameras and local roads

Secretary Ricky Serta and Department of Transportation staff briefed the Senate Finance Committee on the agency’s operating and capital needs, warning of a multi-billion-dollar gap between road and bridge needs and projected revenues and outlining three legislative priorities: a proposed $1.5 billion transportation bond authority, automated speed-enforcement cameras in construction zones, and a statutory shift of some motor vehicle excise tax distributions into transportation funds.

Joseph Simon, the LFC analyst assigned to DOT, told senators House Bill 3 sets a FY26 DOT budget totaling about $1.3 billion, including roughly $249.5 million for personnel and $574 million shown for road construction and local road projects in the Transportation Project Fund and Local Government Road Fund. Secretary Serta said the Associated Contractors of New Mexico’s annual “trip” report estimates a $5.6 billion unfunded gap in transportation projects and quantified annual costs to New Mexico drivers of about $3.6 billion, including vehicle operating and safety costs.

Secretary Serta said the State Road Fund is roughly split between federal apportionments and state road fund revenues and that fuel-efficiency trends — including non-plug-in improvements — will reduce state road fund receipts over time. He said gasoline tax is 17 cents per gallon and that 76.27% of gasoline tax receipts (about 13 cents of the 17 cents) flows to the state road fund under current distributions. Serta reported DOT modeling that shows state road fund revenues declining about 15% by 2050 while construction costs are projected to rise roughly 160% between 2023 and 2050.

Serta outlined three legislative priorities on the agency’s agenda:

- House Bill 145 (sponsored in part by members listed in the presentation) would authorize the State Transportation Commission to issue up to $1.5 billion in transportation bonds, with debt service paid from state road fund revenues and unobligated federal receipts; DOT staff said the bill was scheduled for further House Transportation hearings.

- Senate Bill 241 would permit automated speed-enforcement cameras in construction zones. Under the bill language described by Serta, DOT would identify eligible construction projects, work with contractors on camera placement and calibration, and use DPS to issue citations.

- Senate Bill 289 would redirect some motor vehicle excise tax distributions from the general fund into the state road fund and the Transportation Project Fund (TPF), which DOT staff described as the revenue feed to support debt service on proposed bonds and increase recurring funding available to local governments.

Serta said several one-time appropriations and capital requests accompany the executive recommendation, including about $322 million in one-time general fund requests in the executive rec (LFC recommended about $350 million in one-time appropriations in committee discussions) and $62 million in capital outlay requests for agency equipment and EV infrastructure. DOT noted prior one-time appropriations since 2019 total about $1.8 billion, and the agency said it received about $320 million in severance tax bonds last year.

Committee members pressed DOT staff about approaches to replace fuel-tax revenue as vehicles become more fuel efficient or electric. Senators asked about registration surcharges for electric vehicles, road-user charges tied to miles driven, and possible weight-based fees for heavy vehicles. Secretary Serta said states are exploring “road-user charge” models that account for miles driven and vehicle weight and noted that a straight registration surcharge (for example $120/year) could be used, but it may over- or under-charge individual drivers relative to actual road use.

On electric vehicle charging infrastructure, DOT said it has combined funding: recent capital outlay appropriations ($15 million in 2024), $63 million in a competitive grant targeting southern corridors (I-10), $10 million from ARPA and NEVI formula funds; with those sources DOT said it could deploy a statewide first-phase network of ports in the near term, subject to federal NEVI timing and potential changes.

On local roads and the Transportation Project Fund, DOT staff said an additional $100 million to TPF would be meaningful for local and collector street projects; combined with the Local Government Road Fund, this could bring local government support to nearly $200 million. DOT emphasized the need to balance one-time project funding with building agency capacity and managing inflation-driven cost escalation for projects brought to construction.

Senators also asked about safety for workers in construction zones; Secretary Serta described a process to evaluate corridor crash and risk data before approving automated enforcement and emphasized working with counties and cities that request camera authority on state roads. Lawmakers also discussed rural air service grants and the department’s budget-adjustment language to allow transfers for personnel and matching of federal grants.

Committee questions covered a range of specifics: bond debt-service math and timeline for capacity-building, the projected recurring revenue increase to TPF (said to be about $18 million in the testimony), pavement condition statistics (33% of local roads in poor condition) and bridge condition progress. DOT officials said the agency is evaluating alternative project-delivery models — design-build, construction manager/general contractor (CMGC) and public-private partnerships — to accelerate delivery and limit cost escalation.

No formal votes were taken during the hearing. DOT made multiple follow-up offers to provide detailed cost estimates for items senators requested, including the potential subsidy needed to add commercial air service routes and more detailed diagrams of debt-service and bonding scenarios.