Ricky Serna, secretary of the New Mexico Department of Transportation, and the department's chief economist delivered a warning to the Transportation Infrastructure Revenue Subcommittee: the State Road Fund’s ability to pay for construction is eroding as costs rise and projected revenues fall.

The department summarized 2025 legislative outcomes and the agency’s fiscal outlook, reporting that a major bonding bill, House Bill 145 — which would have given the State Transportation Commission authority to issue roughly $1.5 billion in bonds for major construction — advanced through several committees but did not reach final action before the session ended. Secretary Serna said the administration negotiated changes that would have paired bonding authority with recurring revenue increases intended to cover debt service, including higher vehicle registration fees, additional weight-distance revenue and an electric-vehicle surcharge. “We conjured up a pretty good strategy for generating about $72,000,000 in new revenue for the Department of Transportation,” Serna said.

Why it matters: NMDOT said the combination of persistently higher construction unit costs and a forecasted decline in certain revenue streams will reduce how much roadwork the state can afford. Chief economist Michael Morrison told the committee that, on a nominal forecast, the State Road Fund could decline about 15 percent by 2050; when adjusted for inflation against projected construction-cost inflation, the department estimates roughly a 51 percent shrinkage in spending power. “We are looking at about a 51% shrinkage in the spending power of our State Road Fund,” Morrison said.

Key details reported to the committee:
- House Bill 145: advanced with amendments that would have included guardrails for project prioritization and new recurring revenue to support debt service, but the bill did not get heard on the final day of the session. Serna described the bill as a governor-sponsored measure that had unanimous committee support in several houses of the legislature before stalling on the floor.
- Senate Bill 241: an agency bill introduced to authorize NMDOT to place automated speed-enforcement cameras on DOT-owned roads was discussed; Serna said the department revised the proposal after committee feedback and was exploring a Washington-state model for implementation.
- Federal grant risk: Serna said the department faces a timing risk on at least one large federal grant tied to the Border Connector project and that, without state action by Sept. 30, the agency “may be exposed to return the $45,000,000 in federal awards that we received.”
- Legislative appropriations and one-time funding: the governor’s executive recommendation included roughly $150 million for construction tied to federal awards, $150 million for maintenance (about $10 million per NMDOT district), a $40 million increase to the Transportation Project Fund for local projects, $50 million for the Wildlife Corridors Fund, and $12 million for equipment (the department had requested $20 million but received $12 million). Serna also noted $8 million for beautification and litter pickup and $16.5 million for rural air service.
- Revenue mix shifts: Morrison said commercial vehicle-related revenue (weight-distance and special fuels/diesel taxes) has grown relative to gasoline tax and vehicle-registration receipts. The department reported the gasoline excise has not been adjusted in decades and is now a much smaller share of purchasing power.
- Long-term construction-cost outlook: NMDOT cited the Federal Highway Administration’s construction-cost index, which it said has risen from roughly $1 million a mile in 2003 to about $3.18 million a mile in 2024 and is projected to reach more than $8.3 million a mile by 2050 — a cumulative increase NMDOT described as roughly 160 percent.

What lawmakers asked and what NMDOT said:
- Representative Borrego raised alarm at the lack of construction funding in 2025; Serna replied that NMDOT does not start construction phases unless funding is secured and that projects can sit “on the shelf,” which increases their cost over time.
- Representative Zamora asked whether publicly supported EV chargers funded by NMDOT are free to users. Serna explained that the department’s grants and public–private partnership model generally allow operators to recoup electricity and maintenance costs; “the users will be paying for electricity and the cost of operations and maintenance,” he said. Serna added that grant agreements typically allow partner operators to collect fees for five years.
- On tariffs and national economic policy, Morrison presented scenarios showing import declines under varying tariff rates; he said tariff-driven reductions in freight volumes could lower weight-distance and diesel-tax collections and that forecasting uncertainty has increased as federal trade policy shifts.

Department context and next steps: NMDOT said it is pursuing updated revenue forecasts with outside vendors and building contingency estimates into project budgets. The department urged the subcommittee to consider revenue mechanisms that grow with cost or inflation rather than flat-dollar appropriations. Serna and Morrison recommended continuing work through the interim to refine forecasts and to prepare policy options for the next session.

Ending: With no quorum present at the meeting start, the subcommittee could not take formal votes. Members asked NMDOT to return with updated state-road-fund forecasts, a clearer list of projects at risk of losing federal matching funds, and policy options for durable revenue, including registration-fee changes and possible EV surcharges.