Appropriations panel outlines three‑bucket plan to reshape DOT funding, proposes bonding for Highway 85

The House Appropriations — Government Operations Division discussed a plan to reorganize Department of Transportation (DOT) funding during a committee meeting, with backers describing a three‑bucket approach, proposals to return some motor vehicle excise tax revenue to the general fund, and a proposal to bond roughly $155,000,000 for a Highway 85 project.

The discussion matters because committee sponsors said the reorganization would replace a contested “Prairie Dog” funding bucket with clearer, existing funds and create more certainty for counties, cities and townships about how DOT dollars are distributed.

Representative Brandenburg told the committee there have been ongoing meetings and that “a lot of people have been asking about what's going on with, you know, the funding that's gonna be going out.” Representative Bosch described the House plan as “a 3 bucket proposal,” saying it would move Prairie Dog money into the State Infrastructure Fund (SIF) and work off three principal buckets: the highway fund, SIF (sinking fund) and the highway distribution fund (sometimes called the flex fund).

Committee members said the plan would do several things: remove the Prairie Dog bucket and transfer those funds into SIF; use DOT’s existing programs and expertise to select projects; and give counties, cities and townships clearer expectations about which revenue streams will be available. Representative Bosch said the goal is to “create certainty for local political subs” and to simplify distribution rules that committee members said had become overly restrictive.

On revenue sources, sponsors said the package would restore a share of motor vehicle excise tax receipts to the general fund instead of leaving the excise entirely outside the general fund as the Senate had proposed. Representative Brandenburg said: “we are putting a % of the motor vehicle excise tax back into the general fund.” Representatives also discussed increasing legacy earnings from 7% to 8% as part of the revenue picture, and several members noted changes to the gas‑tax formula under consideration (proposals discussed included a 3¢ or 5¢ increase, and different allocations of new gas tax revenue to DOT, counties, cities, townships and transit).

Committee members and DOT staff discussed the likelihood of federal funding for a multi‑mile Highway 85 corridor. DOT director Ron Hanke told the committee that the current federal highway bill funds the next biennium “as long as they make no changes,” but that certain federal programs (for example, NEVI electric‑vehicle grants) were on hold. On Highway 85 specifically, Hanke said DOT had repeatedly been unsuccessful in winning federal grants for a particular 6‑mile segment when submitted as part of the larger corridor; he said cutting that segment made the remainder eligible and produced a $55,000,000 grant in an ad hoc round.

Representative Bosch told the committee that the House package will include bonding to cover $155,000,000 that had been held in SIF for Highway 85, saying, “the last pillar of the plan would be that we would bond for that Highway 85 project.” DOT staff described GARVEE (federal formula‑backed) bonding as one option; staff said GARVEE‑type bonds have lower rates in practice and that federal formula dollars can be used over time to repay a portion of that debt. Committee members asked for flexibility to choose the best bond structure and rates.

Committee members repeatedly asked for a clear, pictorial flowchart and a one‑page handout showing how funds move among buckets, which members said was necessary to educate caucuses and floor members before amendments and possible votes. Representative Bosch committed to producing a visual and written amendment package for the committee. Brady (committee staff) provided the rollup vote count for a prior gas tax bill the House passed (50‑8 to 35), and several members said that if gas tax revenue is not used, SIF or excise‑tax adjustments would be the primary available alternatives to preserve the plan’s funding math.

No formal motion or vote on the plan was recorded during the meeting. Committee members said the House version would carry the bonding proposal and that the issue will proceed to conference committee and the floor with additional explanatory materials and potential alternative language if parts (for example, a gas tax increase) meet resistance.

The committee emphasized the plan’s tradeoffs: using formula or federal dollars for Highway 85 would reduce funding for other projects; bonding would spread the Highway 85 cost over time but would require debt service choices; and any proposed gas tax change would affect rural residents and the state’s competitiveness with neighboring states, which several members debated.

The committee recessed after the DOT discussion and asked staff to circulate a pictorial and amendment text before bringing the package back for formal action.