Agency proposes three studies in T bill to reshape town-highway funding and payback rules

Jeremy Reed, chief engineer for the Agency of Transportation, told the Senate Transportation Committee on Thursday that the agency would propose language in the transportation bill (T bill) to require three separate studies and reports addressing town-highway needs and funding.

“The intent would be to look at the current status and devise statutory language that clarify and provide some specificity on what the payback provisions would be for municipalities when they did not continue to progress the project,” Reed said. He told the committee the agency would report back on that first study by Jan. 15, 2026.

The package Reed described is organized in three parts. The first would clarify municipal “payback” responsibilities for town projects that have stalled — a rule the agency currently ties to Federal Highway language and which, Reed said, may need updating after inflation and changes under the Infrastructure Investment and Jobs Act (IIJA). The agency plans to use a January 2026 report to recommend statutory language spelling out municipal obligations and any adjustments to payback timing or calculations.

The second piece would create an asset-management and funding study for town highways. Reed said the agency would first develop an inventory and condition snapshot of town assets — bridges, culverts, signals, signage, pavement and facilities — and then estimate long-term funding needs. Because the agency lacks statewide deterioration models for town roads, Reed said the study could use sampled inventories extrapolated statewide and likely will be more intensive; he proposed a Jan. 2027 report date for the funding projection portion, with an asset-inventory product possible sooner.

“This is a fairly intensive study,” Reed said of the funding projection, adding that an inventory and condition assessment could be completed earlier and that the prioritization work would be essential before any funding recommendations. Reed told senators he wanted “the need that’s out there to drive the funding stream.”

Committee members pressed for a prioritization process that would evaluate town roads on a regional or systemwide basis rather than strictly by each town’s grant eligibility. Senators noted examples of town roads that carry regional truck traffic or serve as important detours when state highways are closed; they urged the agency to build regional value and traffic impact into any prioritization metric.

The third report would review whether the agency’s municipal grants and the Municipal Assistance Bureau could be delivered more efficiently — for example, by folding some grant streams into recurring formula funds, simplifying applications, or combining programs to reduce administrative burdens for towns and for the state. Reed said the trade-off to formula funding would be reduced lump-sum awards for towns that save up for larger projects; the agency would study the pros and cons.

Reed and senators discussed sequencing: an initial condition inventory, a regional prioritization framework, and then a funding study that incorporates those priorities. Reed said the agency would work with regional planning commissions and expected the prioritization and funding design to take more than a single year.

Why it matters: towns report stalled construction on federally funded or matched projects after inflation raised costs, and current grant rules and payback language can leave municipalities uncertain about obligations and timing. Committee members said a clearer statutory framework and a data-driven prioritization process could direct limited state resources to town highways with the most regional impact.

Provenance: first testimony introducing the studies appears in Jeremy Reed’s remarks to the committee (transcript excerpt: “the agency would propose some language to the b bill, that would compel 3 studies…”) and the discussion and summary of the three study components and dates appear later in Reed’s remarks summarizing the payback, asset/funding, and delivery studies.