TDOT warns of post‑2029 'funding cliff'; TACIR transport study to map revenue options
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Summary
TDOT and county and industry representatives told TACIR that flat fuel‑tax revenues and rising construction costs will create a funding cliff after 2029; the commission's study will analyze long‑term revenue options including indexing fuel taxes, EV fees, delivery taxes and other user charges.
Tennessee Department of Transportation Commissioner Will Reid told the Tennessee Advisory Commission on Intergovernmental Relations that the state faces a long‑term structural funding shortfall for highways and bridges once one‑time infusions used to accelerate projects are exhausted.
"Our revenue is flat," Reid said, summarizing the department’s view that federal and state fuel‑tax receipts have not kept pace with inflation and rising construction prices. He said the Transportation Modernization Act and recent one‑time infusions enabled acceleration of many projects but warned: "After 2029, we are facing a cliff. Spending levels will fall back to 2018 spending levels in Tennessee."
Panelists from county highway officials, road builders and the business community — including Brett Howell, Kent Starwalt and RJ Gibson — echoed the need for recurring, sustainable revenue and suggested a menu of options: indexing the gas and diesel user fees to inflation, targeted fees on deliveries or ride‑hail trips, EV charging station fees, expanded vehicle registration adjustments, and carefully structured bonds if paired with a dedicated revenue stream. Kent Starwalt suggested indexing would have yielded hundreds of millions of dollars over recent years and that 26 states plus DC have adopted some form of indexing.
County officials emphasized local bridge and maintenance needs, noting that counties manage over 60,000 miles of roads and nearly 9,700 bridges and that a single large bridge repair can far exceed local budgets. Panelists also discussed workforce and material‑cost pressures (steel, guardrail, labor) that have dramatically increased project budgets.
The commission staff will proceed with the statutory study (Public Chapter 438, Acts of 2025), including modeling revenue options and their distributional impacts and a University of Tennessee contract to estimate freight and congestion economic effects; a draft report is due to the commission in 2026 with a final report by Sept. 30, 2026.
Next steps: TACIR staff will collect and model revenue scenarios and stakeholder impacts as part of the study required by Public Chapter 438 and will present interim drafts for commission review.
