KDOT: Rising construction costs and project timing shrink how much the state can deliver under 10-year Ike program

Secretary Calvin Reid told the Senate Ways and Means Committee that higher construction costs and the timing of project lettings are reducing how much the Ike Transportation Program can deliver, even though revenue to the State Highway Fund has generally exceeded the program’s original forecasts.

Reid said the program was originally estimated at $9.9 billion and noted, “we are costs are about 40% more now than what we would have estimated that they were going to be at this time in 2020.” He told senators that construction cost trends — including a roughly 60% increase in construction-related costs observed across the first four years of the program and an average 40% increase relative to 2020 estimates — are the main driver behind the reduced purchasing power of available revenue.

The discrepancy between years is also driven by project timing. Kyle Anderson, KLRDF fiscal analyst, summarized the budget lines shown in the committee packet: “The 2025 agency adjusted budget request is for $2,560,000,000. The legislative budget committee cut out about $6,000,000 of that. The agency's request for 2026 is $1,680,000,000 and the legislative budget committee cut about $8,000,000 from that.” Anderson said the House and the governor restored several positions the LBC had removed, bringing the 2025 total back to the agency’s original $2.56 billion request.

Why it matters: the Ike program is a 10-year, statewide package intended to fund highways, bridges, multimodal projects and community assistance. Reid said program revenues through fiscal 2024 were roughly 18% higher than projected in 2020 — in part because sales-tax–related receipts and federal reimbursements exceeded expectations — but that those gains do not fully offset construction cost inflation.

Reid explained the interaction of revenues, transfers and bonding with program delivery. He told the committee the department began bonding in fiscal 2025 with a $200 million issue and plans to call for $400 million in bonds in fiscal 2026. “Overall in the program, we had originally estimated to have $1,200,000,000 worth of bonding to be able to successfully complete the program,” Reid said, adding that KDOT seeks to minimize bonding to limit long-term impacts on future programs.

On revenue and cost drivers, Reid said federal grant opportunities and the federal Infrastructure Investment and Jobs Act (IIJA) reimbursements have increased federal fund inflows (he cited roughly $415 million above initial expectations through fiscal 2024). But he cautioned that federal and global policy choices could reverse gains: “We don't know what the current administration is going to do with tariffs, and that could potentially have a huge impact on the cost for us to deliver a project,” he said.

Staffing and operations: Reid asked the committee to maintain the agency operations appropriation shown in HB 2007 and to preserve FTE authority recommended in that bill. He framed the request around snow-and-ice costs and long-term staffing needs for maintenance and construction inspection. Reid said the agency’s operations appropriation shown in HB 2007 should be maintained (he referenced $344,000,000 in one portion of his remarks and $348,000,000 elsewhere in the presentation), and he asked that the committee allow KDOT to hold the FTE ceilings included in the bill so local maintenance shops and inspection offices can fill vacancies.

On FTEs, Reid said the agency has grown closer to its approved complement: “By the beginning of fiscal year 'twenty 5, we were within about 1% of headcount of our approved FTE,” he said, but noted gaps remain in hard-to-staff locations and in construction inspection roles.

Committee questions and clarifications: Senator Owens asked why the 2026 request was roughly $1 billion lower than 2025; Reid explained that large construction lettings were concentrated in fiscal 2025, so budgeted construction spending appears lower in subsequent years when fewer projects are let. Senator Patty asked whether cost increases are likely to continue; Reid said some price normalization has appeared but warned that tariffs and workforce shortages could push costs higher and reduce the program’s margin for error. Senator Klusz asked about a 2019 maintenance staffing study; Reid said KDOT is currently at about 75% of the recommended staffing level from that study and can provide an updated regional breakdown on request.

What did not change today: the presentation was informational. The committee did not take any formal action on KDOT’s appropriation during the session covered by this transcript.

Provenance: first related remarks began when Kyle Anderson opened the Department of Transportation budget presentation and summarized the packet; the related discussion concluded with the chairman thanking Secretary Calvin Reid for his testimony.