NDOT warns of shrinking highway fund, trims preservation work and eyes bonds to keep projects moving

Nevada Department of Transportation Director Tracy Larkin Thomason told the Assembly Committee on Ways and Means and the Senate Committee on Finance subcommittee that NDOT faces a tightening highway fund balance that is forcing the agency to defer preservation projects and consider issuing bonds to advance major work.

Larkin said the department is "looking at the project statewide" and preparing contingency plans if federal grants or other expected revenues do not materialize. The agency stressed it is prioritizing payroll and emergency work while trimming discretionary state-funded preservation projects.

The warning came as NDOT outlined several large projects — including I‑15 South feasibility work around Las Vegas, I‑80 widening and the U.S. 395 North Valleys improvements — and described how higher material and labor costs have driven construction inflation. The department said national roadway construction costs rose sharply since late 2020 and that Nevada has tracked similar increases; Larkin noted material costs for concrete, asphalt and steel plus labor have pushed construction costs up substantially.

Why it matters: NDOT officials told legislators that a lower unrestricted highway fund balance limits the department’s ability to match federal grants, respond to emergencies and maintain routine preservation work such as patching, striping and culvert cleaning. Lawmakers pressed NDOT on cash‑flow scenarios for the 2025–27 biennium and on whether existing bond capacity and fuel‑indexed revenues could be used without harming the state’s fiscal standing.

Key details: NDOT said it has reduced the size of its state‑funded preservation program and is deferring projects to manage cash flow. The agency noted several federally supported projects that remain under review and carry match obligations: for example, the U.S. 395 Phase 2 work includes an $89 million grant that requires roughly a 21% state match; the I‑80 Vista–USA Parkway widening was described as having received roughly $275 million in federal grants toward an estimated $600 million project and will require substantial state match funding.

Officials emphasized the department’s preference to maximize federal reimbursement programs — which often require smaller state matches for federal lands — but added that some grants impose larger match requirements that strain state highway dollars. Larkin said NDOT is preparing "worst‑case scenario" plans and will consider bond sales to hedge against inflation and keep projects moving, but that bonding is not an unlimited solution.

Lawmakers asked whether bonding would be sustainable given flat fuel‑tax revenues; NDOT finance staff said bonding can accelerate projects when interest rates and market conditions make it advantageous, but cautioned the department and the treasurer’s office evaluate feasibility before any sale and that long‑term reliance on bonds is not sustainable.

How decisions are being made: NDOT said it applies a performance‑based prioritization (the One Nevada plan) that weighs safety, preservation, geographic distribution and federal funding opportunities when assigning scarce state dollars. Officials also said they continue to coordinate with the governor’s office and federal contacts about grants that are awarded but not yet obligated.

What’s next: Legislators asked NDOT to continue working with fiscal staff to keep highway fund projections current and to provide more granular cash‑flow scenarios as IFC and other committees consider specific project work programs. Several lawmakers pressed the department to provide timely updates if federal obligations or bond plans change.

Ending: NDOT said projects already under construction are a priority to finish, but work not yet advertised — including phases that rely on unconfirmed federal grants — may be delayed if matching state funds are not assured.