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DOT warns of shrinking road dollars, rising personnel costs and asks Legislature for bonding and targeted appropriations
Summary
The New Mexico Department of Transportation told the Legislative Finance committee the State Road Fund will face long‑term revenue pressures from fuel‑efficiency trends and personnel/benefit costs, and requested a FY27 capital package and bonding authority to protect federal grants and close project match gaps.
Secretary Ricky Serna and NMDOT staff told the Legislative Finance committee that the agency manages more than 2,500 employees, a roughly $1.3 billion annual budget and more than 1,400 active projects. DOT highlighted structural pressures on the State Road Fund: roughly half of the fund (~$256 million) is already consumed by personnel and benefits, and debt service runs around $110 million annually. DOT said the State Road Fund (roughly $530–$550 million a year) faces a medium‑term revenue squeeze as vehicles become more fuel efficient and gas‑tax receipts decline, and that the cost of construction increased more than 25% over the last five years.
To address the shortfall and protect federal grants (which carry match obligations), DOT submitted an FY27 list of capital and special appropriation requests totaling about $487 million, including roughly $420 million aimed at construction and maintenance on state roads. The agency also described a proposed bonding package (House Bill 145 in previous form) that would authorize up to $1.5 billion in transportation bonds; Serna said collapsing existing debt and new bond authority into a single program would provide predictability and allow DOT to close match gaps so the state can realize federal grant awards.
Committee members pressed DOT on projects carrying unspent balances from earlier appropriations, the need for reauthorization where contracts have not yet been let, and proposals to refinance earlier bonds into the new authority. DOT explained some appropriations went to design and that design/letting timelines — plus increased construction costs — cause multi‑year implementation. DOT also said it is tightening construction specifications (pavement mix design), adding constructability reviews at design milestones, and investigating procurement irregularities flagged by staff and outside auditors.
What comes next: DOT will provide letting dates and a more granular breakdown of previously appropriated but unspent project funds. The committee and DOT signaled interest in separating planning/design appropriations from construction appropriations to improve scoring and predictability for contractors and communities.
