Senate Transportation hears FY26 budget plan that relies on JTOC transfer to close gap

Rich Resman, chair of the Senate Transportation committee, convened a presentation on the Agency of Transportation’s proposed FY26 budget on Tuesday, Feb. 4, where Candace Alquist, the agency’s chief financial officer, outlined how the administration would close a projected operating gap.

Alquist said the administration packaged a mix of one‑time and ongoing measures to balance the Transportation Fund for FY26, including using the JTOC appropriation historically directed to the State Police as an ongoing revenue source. “I was asked to come in and talk about the FY '26 budget,” Alquist said. She told senators the agency had identified $61,500,000 in solutions for FY26 by combining base reductions, forecast upgrades and one‑time transfers.

The nut graf: the proposal would substitute the roughly $20,250,000 JTOC transfer — a longstanding statutory transfer that has historically funded State Police highway patrol costs — as an ongoing revenue source for the transportation fund in FY26, while also relying on several one‑time items to smooth the budget in the near term.

Key numbers and near‑term impacts

Alquist identified three one‑time items that affected the FY25 closeout and the starting point for FY26: an expected Federal Highway Administration (FHWA) administrative refund originally projected at $8,500,000 (now under negotiation and reduced in current forecasts), $12,500,000 of reversions the agency had to identify at FY24 closeout, and a $25,000,000 one‑time transfer from the Cash Fund for Capital and Essential Investments included in last year’s budget bill. She said negotiations with FHWA are ongoing and added, “I am hopeful that we are going to receive that refund in this fiscal year.”

To present a balanced FY26 budget the administration combined $14,000,000 in base reductions, a $10,300,000 revenue upgrade from the January 2025 consensus forecast, a proposal to use the JTOC appropriation (about $20,250,000) as an ongoing revenue source, and one‑time uses of reserved cash fund balances. Alquist said the agency is proposing $5,500,000 in ongoing reductions plus one‑time reversions (a smaller $4,500,000 reversion in FY26 instead of the larger $12,500,000 used at FY24 closeout) to reduce reliance on large reversions going forward.

Impacts to paving and construction work

Agency staff warned that if the committee or legislature does not approve the use of the JTOC transfer, the Department would need to postpone or negotiate delays for paving projects scheduled this spring. Jeremy (presenter name used in the transcript) presented a scenario showing that cutting $12,500,000 from the Transportation Fund (part of the $20,250,000 JTOC total) would principally target paving: roughly $44,000,000 of projects would be postponed or delayed, shrinking the paving program from about $102,000,000 to roughly $68–69,000,000 — about a 30–50% reduction compared with recent years. Staff said many projects not yet under contract would be the first impacted and that several contracts expected to be executed by March would be subject to delay negotiations with contractors.

Longer‑term concerns raised by senators

Several senators pressed for longer‑term revenue solutions rather than the administration’s one‑year mix of transfers and reversions. One senator described the proposal as providing “some Band‑Aid capacity in a one year period” and urged consideration of sustainable revenue options such as indexing taxes or other measures from the recent CDM Smith funding study; Alquist responded that those other revenue options were not included in the FY26 Governor’s recommendation and would be matters for future budget cycles.

Staff commitments and next steps

Committee members asked the agency for multi‑year projections. Alquist and staff agreed to provide clearer forecasts for the FY27 and FY28 budget impacts showing the ongoing hole that would remain even if the JTOC appropriation were available in FY26. The agency told senators it had already committed to finding roughly $1,100,000 in reversions for FY25 and that it would pursue $4,500,000 in reversions for FY26 as part of the mix. No formal committee vote or binding legislative decision occurred during the presentation; senators requested additional fiscal modeling and said they would continue deliberations as the session advances.

Ending

Senate Transportation members closed the session asking the agency for more detailed projections and timelines on contracts that could face delay if the JTOC appropriation is not available. The agency emphasized that the FY26 plan is a short‑term package that leaves structural revenue questions for subsequent budget discussions.