DOT warns of highway‑fund strain as I‑93 debt service begins; toll credits and EV trends complicate options

Commissioner Bill Cass and senior DOT staff told Finance - Division II that the department faces structural constraints: slower federal and highway‑fund revenue growth, an elevated vacancy rate, and the transition from interest‑only payments to full debt service on the I‑93 financing that will redirect funds previously available for paving and bridge work.

Funding structure and how it affects decisions Cass walked the committee through DOT’s principal funding sources: federal funds (FHWA, FTA, FAA), the state Highway Fund (gas tax, vehicle registration and road toll), Turnpike Enterprise funds (toll plaza receipts used exclusively for the turnpike system), and a small portion of general funds that support non‑surface programs such as aeronautics and rail. He explained that federal highway funds are generally restricted to capital projects, cannot be used for operations or maintenance, and require a state match.

Turnpike toll credits and match mechanics DOT staff described the use of turnpike “toll credits” as a state‑level match technique: because the state has invested turnpike revenue in eligible projects, federal Highway Administration recognizes those credits and allows DOT to claim a larger federal share without using state cash. Staff cautioned that this approach reduces the need for state cash match but increases vulnerability to federal funding changes and can limit the apparent purchasing power of federal dollars for long‑term capital planning.

I‑93 debt service and rural paving tradeoffs Cass said a 4.2¢ portion of the gas tax enacted under earlier law was used to support the I‑93 project and that while the last decade the state used much of that money for rural paving and bridge repairs, the department now must start paying full debt service. He said the shift will reallocate roughly $20 million a year that had been available for pavement and bridge projects toward debt service, which has the effect of pushing some capital work further out in the 10‑year plan unless alternative revenues are found.

Vacancies, fleet and maintenance pressures The department reported a multi‑year vacancy problem that left budgeted positions unfilled: DOT has seen a 20–25% vacancy rate post‑COVID, with sustained shortages in highway maintainer roles (where CDL availability is an issue) and engineering positions. Cass said the department continues to prioritize life‑safety work and essential maintenance, deferring preventive maintenance when necessary, and noted that supply‑chain issues can also slow fleet replacement even when funding is available.

Electric vehicles and long‑term revenue trends DOT staff told the committee that long‑term revenue pressure is expected from increased fuel efficiency and rising numbers of electric vehicles. The agency noted a limited registration fee for EVs already in place (discussed in committee) generated only modest revenue, and asked the legislature and committee to consider longer‑term approaches to ensure the Highway Fund keeps pace with system needs.

Committee requests and next steps Members asked for DOT’s dedicated fund list with statutes, a breakdown of projects the authority estimates will be delayed because of the I‑93 debt‑service shift, and a short briefing on how toll‑collection changes (for example, conversion to all‑electronic tolling at older plazas) could affect revenue receipts. DOT committed to share the materials and the departmental 10‑year program data used to set priorities.

Quotes “We work hard every day to provide transportation excellence,” Commissioner Bill Cass said. “We have vacancies and inflationary cost impacts that affect our ability to fund preventive maintenance.”

Ending DOT will provide the committee with the requested spreadsheets, statutory references for dedicated funds, and a prioritized list of capital projects that may be delayed by the forthcoming reallocation of SB 367/I‑93‑related gas tax revenue to debt service.