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MDOT projects major capital increases, disputes OLA audit findings and requests positions to speed federal reimbursements
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Summary
DLS told the subcommittee MDOT's FY27 operating and capital budget is slightly over $7 billion and forecast capital spending to peak near $3.7 billion in FY28; MDOT disputes some OLA federal-fund findings, said it will seek reimbursement, and requested eight SHA positions to address federal-reimbursement documentation and processing delays.
The Department of Legislative Services presented a detailed review of the Maryland Department of Transportation's FY27 budget and six-year forecast and identified key issues lawmakers pressed MDOT to address.
DLS analyst Sam Quist said MDOT's combined operating and capital budget for FY27 is slightly over $7 billion, an increase of roughly $326.1 million (4.8%) from FY26, with the Transportation Trust Fund projected to close higher than earlier estimates. The six-year consolidated transportation program totals $22.1 billion through FY31 and shows a projected capital expenditures peak near $3.7 billion in FY28. Exhibit breakdowns show about 44% of capital spending devoted to system preservation, roughly 31% of first-year capital to the State Highway Administration (SHA), and substantial federal funding (federal sources account for a large share of capital funding).
Quist flagged Office of Legislative Audit findings regarding federal fund attainment and documentation in SHA and MTA closeout transactions. "DLS is requesting that MDOT provide the committees with an update on the actual amounts of federal funds that has [have] attained from the federal government since the end of fiscal 2025 as well as the status of the approval of funds that were not explicitly authorized," Quist said.
Acting Secretary Katie Thompson told the subcommittee MDOT does not agree with all OLA findings but acknowledged process failures and staffing shortfalls at SHA that slowed reimbursement requests. Thompson said MDOT has expanded the categories and phases of projects funded with federal dollars and that changes in federal reimbursement rules and more frequent federal funding uncertainties have increased MDOT's administrative workload. "We have no doubt, however, that we will obtain full federal reimbursement for the funds we've expended," Thompson said.
To address the backlog, MDOT requested eight new SHA positions in the FY27 operating budget to support federal billings and improve documentation. Legislators asked whether similar hiring might be needed in other modal administrations; MDOT said SHA has the largest volume of federal actions and is the main focus for now, though some needs exist elsewhere.
Members also questioned MDOT about the composition of proposed new positions tied to the Purple Line and the potential impact of maintaining current highway user revenue split rates rather than allowing a statutory shift next year. MDOT staff estimated roughly a $100 million effect if the current distribution were maintained and said the department is evaluating long-term solutions to TTF funding challenges.
DLS also recommended budget language requiring MDOT to notify budget committees about major capital-program changes; MDOT concurred with the recommendation. The committee did not take immediate action on MDOT staffing requests but signaled it would follow up with requests for specific federal funding reconciliation and corrective-action progress reports.
