House Transportation committee discusses single inflator, $7.2 million minimum for town highway aid

On March 12 the House Transportation Committee reviewed draft Section 11 of the transportation bill, which proposes setting a $7.2 million minimum state share for town highway aid and changing the annual inflator so one calculation applies to three town-highway appropriations instead of separate calculations.

The change discussed would require the Agency of Transportation (AOT) to base the inflator on the percentage change in the agency's total appropriations funded by Transportation Fund revenues, excluding the three town-highway appropriations, and then apply that single percentage to the combined minimum estimated state share for the three town-highway subsections beginning with state fiscal year 2027 (the fiscal year starting July 1, 2026). A staff member explained, "the inflator is the increase in the transportation fund minus the total of those 3 sections," and said the draft language would "lock them together" so only one inflator is calculated for the three programs.

Committee members sought clarification about operational effects. Representative Keyser asked whether the $7.2 figure is the permanent base and how future one-time boosts or additional appropriations would interact with the minimum; a committee staff member and another staff participant said the bill as drafted keeps the $7.2 million minimum as the base and then compounds the inflator each year starting in FY2027. Committee members also discussed past practice of using a "notwithstanding" provision to prevent a single-year boost from permanently inflating a formula and noted the committee can similarly exclude one-time appropriations from future-year calculations.

Members pressed on how the inflator is chosen each year. The draft ties the inflator to whichever is smaller: the percentage increase in Transportation Fund appropriations to AOT or the Consumer Price Index (CPI). A staff member noted that using the Transportation Fund figure helps avoid a situation where CPI-driven increases would outpace available Transportation Fund revenues and thereby "gobble up larger and larger pieces of scarce T fund dollars." Committee discussion emphasized that the combined-inflator approach reduces the administrative burden (fewer separate calculations) and avoids mismatched year-to-year changes across the three town-highway programs.

Committee members raised scenarios where one-year increases could push program totals above the base, and how the language could be amended to "notwithstanding" or otherwise exclude atypical reversions or federal inflows. Staff said the committee can write exceptions to bring program totals back into alignment when needed; as an example they referenced prior pandemic-era adjustments to unemployment insurance calculations used to avoid rate shocks.

No formal motion or vote was recorded on Section 11 during the session. Committee staff said they will update the inflator language across the related provisions (general town highway aid, town-highway structures and bridges, and class 2 town-highway program) and circulate revised draft language to members for review.

The committee continued to other sections of the draft transportation bill after the discussion, and members agreed to receive updated language and additional materials before the next meeting.