Committee questions DOT budget plans for highway fund, state fleet and STIP projects

The Appropriations - Government Operations Division held an extended review of the Department of Transportation (DOT) budget, focusing on how highway fund, federal aid, special one‑time funds and state fleet authority are used to pay for projects, equipment and operations.

The committee pressed DOT officials on several budget lines, including a $4 million equipment request that DOT Director Ron Hankey said is for rotary blowers — not snowplows — to replace four of the agency's 19 blowers. “The $4,000,000 is for rotary blowers. It's not for snowplows,” Hankey said. He told senators the agency typically trades in large equipment where possible, but many of the existing machines are old and were purchased used.

Committee members also questioned a $17.5 million increase in the state fleet appropriation intended to cover higher vehicle purchase and operating costs, and to catch up on delayed purchases stemming from pandemic supply issues. Robin Reberg, deputy director for driver safety, described how fleet rates are set: “The fleet rates are derived from three components, operating, depreciation, and replacement rate.” Reberg said rates are developed by vehicle group, using historical data and multi‑year estimates for fuel, repair and vehicle prices.

Lawmakers sought clarity on the mix of funding sources. Hankey and DOT finance staff explained that most DOT operating costs are supported by the highway fund, which is principally fed by gas taxes and vehicle registration fees, while federal aid is largely dedicated to projects. DOT staff said federal funds typically cover engineering and construction through project numbers (often at 80/20 or 90/10 federal/state splits), but do not pay for day‑to‑day maintenance staff. “There is effectively no monies from federal dollars go to pay our state employees or operate the department,” a senator summarized after DOT confirmation.

Committee members also discussed special one‑time funds — referred to in the session as SIF funds — and the recently created legacy earnings fund. DOT staff said SIF entries in the worksheets represent mostly one‑time items identified at the bottom of their long sheet and that legacy earnings provided $60 million to the highway fund in the prior session; those state‑source injections helped avoid tapping flexible funds for operations this biennium.

Senators asked for and received an overview of the STIP (Strategic Transportation Improvement Program), which DOT staff described as a federally required, rolling four‑year list of projects. DOT said the first two years of the STIP are generally more stable while the latter two years are used for planning flexibility. Hankey explained that most of the capital line — roughly $1.7 billion shown in the presentation — is for projects (roads, bridges and shared funds with counties and cities), with about $30 million for buildings and equipment.

The committee also discussed House Bill 1402, which would require the state to offer used fleet vehicles to political subdivisions at a 30% discount. DOT staff cautioned that the state fleet operates as an internal service fund and that mandated discounts could reduce proceeds that offset fleet rates. Reberg warned that changing disposition rules could raise compliance issues with federal cost‑principles guidance: “We have to follow 2 CFR 200, which is a federal regulation on cost principles.”

No formal committee votes were recorded during the session. The chairman closed the meeting noting the committee would reconvene later to continue work on the broader SBAR budget.

The discussion included repeated requests for DOT staff to annotate the long worksheet with fund breakouts and to identify which items are one‑time SIF allocations versus base budget additions. Senators said the hearing helped their understanding of where highway fund revenues and other sources are being applied, particularly as vehicle costs and project scopes have increased.