House committee hears study showing long-term gap in state transportation funding

The House Transportation Committee heard a presentation on Jan. 24 summarizing a statewide transportation funding study that estimates a roughly $317 million gap beginning in fiscal 2026 unless the state changes how it raises or spends transportation revenue.

Logan Moberry, fiscal analyst with the Joint Fiscal Office, told the committee the study’s gap estimate “is important to note” but cautioned it should be treated as a benchmark, not a requirement to raise that entire amount. “I think it's probably a little unrealistic to expect to make an additional $316,000,000 in T Fund revenues. This is just sort of to give you a guide,” Moberry said.

The study and accompanying charts presented to the committee break down historical revenues (gas, diesel, purchase-and-use, vehicle fees, other sources) and project five-year declines in some streams once inflation is considered. Moberry showed a chart converting Transportation Fund receipts to 2013 dollars and said by FY29 the fund’s purchasing power is projected to be below 2013 levels.

Committee members focused on two near-term policy questions: whether revenue options should remain tied to transportation-specific tax bases (the user-fee principle), and how to treat existing revenue streams such as the purchase-and-use tax. Representative Thompson asked whether statute directs the committee to favor transportation-related tax bases; Moberry replied the state has traditionally followed a “user pays” model for transportation funding and there is no clear statutory restriction that prevents considering non-transportation sources.

Representative McCoy pressed on the current allocation of purchase-and-use tax revenue, noting that two-thirds of the tax is retained by the state and one-third is directed elsewhere. “A third goes to education,” McCoy said, and he raised an ongoing annual $20 million payment that he said has been moved around in recent years. McCoy argued the committee should consider keeping more purchase-and-use revenue in the Transportation Fund.

Several members raised equity and inflation concerns. Representative Fauch said many of the candidate revenue streams are regressive and urged the committee to “put that lens on any potential options.” Representative Corcoran and other members suggested prioritizing maintaining current purchasing power rather than attempting to close the full $300 million benchmark immediately; Corcoran said restoring purchasing power to 2013 levels might require on the order of tens of millions of dollars annually rather than hundreds of millions.

Moberry and other witnesses emphasized that no single new fee or tax is likely to close the projected shortfall. The study’s analysis presented a range of potential new or modified revenue sources—electric-vehicle fees, delivery or retail fees, tire registration, mileage-based charges—and concluded that even combined they would likely fall short of the $300 million benchmark in early years.

Committee leadership laid out a timeline for the coming months: the committee will review the governor’s budget documents, consider the Transportation (T) bill with policy and revenue elements to meet the crossover deadline, and later take up DMV-related legislation. The committee chair said members will also pursue two priority strands through May: long-term transportation revenue strategy and additional support for towns dealing with road and culvert damage from storms.

The presentation and discussion made clear the committee will examine a portfolio of revenue and policy options, weigh equity and inflation impacts, and coordinate that work with the budget and the T-bill timeline.