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DOT warns of long-term State Road Fund decline, seeks budget authority for federal matching and staff pay equity
Summary
Secretary Serna told the House Transportation, Public Works & Capital Improvements Committee that State Road Fund revenue will fall roughly 20% between 2030 and 2050 while construction costs are projected to rise sharply, and he asked lawmakers to preserve fund balance to match federal grants and to fund staff pay-equity measures.
Secretary Serna, Cabinet Secretary for the Department of Transportation, told the House Transportation, Public Works & Capital Improvements Committee on the department’s budget and long-run revenue outlook, saying the department expects State Road Fund revenues to fall while costs rise.
“The gasoline tax for the state of New Mexico is 17¢ per gallon,” Secretary Serna said, and added that the State Road Fund receives about “76% or about 13¢ of that 17¢.” He told the committee the State Road Fund generates roughly $550 million a year from the principal fuel- and vehicle-related distributions and that the department’s four largest revenue sources account for nearly 85% of the fund.
The Nut Graf: The department presented a multi-decade forecast showing a roughly 6% revenue increase near 2030 followed by an estimated 20% decline in State Road Fund revenue between 2030 and 2050, driven largely by vehicle fuel-efficiency and electric-vehicle adoption. At the same time, the department said road construction costs are projected to grow roughly 160% from 2023 to 2050, creating a growing gap between revenues and project costs and pressuring operational capacity.
Secretary Serna outlined how DOT’s budget is structured and why fund balance matters. Unlike many agencies, he said, DOT receives no recurring general fund and relies primarily on federal apportionments and state tax distributions. He noted the department typically maintains a fund balance of about $30 million to provide matching capacity for federal grants: “If you take $30,000,000 as representing 20% match of federal awards, that gives us the capacity to very quickly match up to a $150,000,000 of federal grant awards,” Serna said. He reported the department has been awarded over $2.2 billion in federal awards in recent months and that roughly $340 million in federal grants remain unexecuted pending federal actions.
Joseph Simon, analyst for the Legislative Finance Committee, told members the LFC recommendation includes a $53 million use of uncommitted road fund balance. Simon said LFC and DOT still need to finalize personnel cost estimates in the ongoing TECH (DOT–LFC–DFA) discussions.
Committee members pressed on specific items. Representative Lundstrom asked whether the LFC recommendation was budgeting cash balances; Simon confirmed the $53 million was included. Lundstrom also asked how much of the State Road Fund is used for federal match; the secretary said total State Road Fund revenues are about $556 million and that about $90 million of that is currently used for federal matching apportionments, with additional match needs arising when new federal grants are awarded.
On personnel, Serna said DOT’s vacancy rate is about 15% and that the department has recently raised starting pay for patrol/basic positions to at least $20 an hour and added pay increases for licensed engineers. Serna said the department plans to seek funding to address gender pay disparities and a roughly $7 million project to align placement and pay based on years of experience within DOT.
The secretary also previewed a bonding proposal: House Bill 145 would grant the State Transportation Commission authority to issue up to $1.5 billion in bonds, he said, and DOT seeks to ensure revenue to service that debt to accelerate projects. Serna said that if the bond bill does not pass, the FY26 operating request will focus on filling vacancies and addressing staff parity.
Members requested a side-by-side comparison of executive, DOT and LFC special appropriation recommendations when the committee considers the budget again. Representative Buegel asked how the department apportions funds among districts; the secretary described long-standing federal-share formulas for federally funded construction and said the State Road Fund supports operations, maintenance and some construction.
Ending: Committee members had no further questions and the department said it would return to the committee for a vote on Thursday. DOT invited members to a press conference and to visit departmental exhibits downstairs.
