Legislative fiscal staff and MDT warn IIJA boost and construction inflation are straining state match; committee adopts motor‑pool rates and 60‑day reserve

The Appropriations Committee, section C, heard a detailed overview of Montana Department of Transportation (MDT) funding pressures on March 1, where legislative fiscal staff and MDT leaders said a large federal funding increase is raising state matching obligations at a time construction costs are sharply higher. The committee voted to adopt the motor‑pool rates in Section R of House Bill 2 and to accept a 60‑day working capital reserve for MDT’s equipment program.

The Legislative Fiscal Division’s Alice Act said the department “does not have any general fund in its budget” and that most MDT activity runs on federal and state special revenues, with a rough 60/40 split across programs but a roughly 87% federal/13% state match on typical federally aided highway projects. “When the federal bump from IIJA arrived in 2022, it increased the need for state match,” Act told the committee, adding later that construction inflation has reduced purchasing power even as federal dollars rose.

Why it matters: Montana’s principal state match account (the highway state special revenue account, often called HESRA) is funded largely by a cents‑per‑gallon fuel tax that is not indexed to inflation. Fiscal staff showed that a historic federal funding increase under the Infrastructure Investment and Jobs Act (IIJA) and subsequent discretionary awards require more state matching dollars and have coincided with a construction‑cost surge, increasing…