NDOT asks IFC for $120.7M additional authority as construction inflation, unexpected federal grants raise costs
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Summary
NDOT told the Interim Finance Committee it needs roughly $120.7 million in additional budget authority to cover increased capital and operating costs driven by construction inflation and unexpected federal grants.
Felicia Denney, assistant director of administration at the Nevada Department of Transportation, told the Interim Finance Committee NDOT needs additional budget authority to cover higher-than-expected costs for federal and state highway projects. NDOT requested $110,000,000 in federal-aid reimbursement authority and $40,000,000 in state highway fund authority for capital outlays, $10,000,000 in state funds for operating increases (security, utilities and maintenance) and $705,000 to cover OCIO charged computer services.
Why it matters: NDOT officials said the Highway Construction Cost Index rose about 68% from Q4 2020 to Q4 2023 and that unanticipated discretionary federal grants and higher bid costs have increased both the state match and contractor payments. Without increased authority, NDOT warned it could be unable to make progress payments to contractors on ongoing federal projects.
Project and financial impacts: NDOT executives cited major projects that may be affected if authority is not increased, including additional phases of the North Valleys project and I-80 improvements, bridge replacements and several preservation projects statewide. Department staff said they are prioritizing federal projects and deferring some state-funded projects to preserve available state unrestricted balances.
Committee questions and outcomes: Assemblymember Chris Watts and others pressed NDOT about the consequences of a low unrestricted highway balance for bond rating and contractor payments. Denney said the most immediate consequence would be an inability to pay contractors for reimbursable federal projects; bond sales and the treasurer's office would be consulted on any future bond issuances. The committee approved the work programs (agenda items E89, E90 and E91) after the presentation.
Ending: NDOT said it will continue to manage restricted and unrestricted highway funds, prioritize federal-reimbursable projects and provide the committee more detail about delayed state projects and the department's strategy to restore unrestricted balances.
Sources: Felicia Denney and Sajid Solaria, NDOT project-delivery and administration leadership; committee members including Assemblymember Chris Watts.
