AOT presents $934 million FY27 budget; $10M purchase‑and‑use shift funds bridge and paving projects

The Agency of Transportation presented an FY27 all‑funds budget of $934,000,000 to the House Appropriations Committee and said the total is the largest in the agency's history. Candace Omquist, AOT chief financial officer, told the committee the increase — roughly $50 million over last year — is primarily due to the administration's purchase‑and‑use tax proposal, which shifts revenue to the transportation fund and enables $9.3 million of that sum to be matched with federal highway dollars.

"This is an all funds budget of $934,000,000," Omquist said, adding that the agency would use the additional monies for bridge, paving and maintenance projects. She said the full $10,000,000 infusion is included in the FY27 plan but only $9.3 million is matchable to federal funds; the remainder will fund maintenance and tree‑trimming work.

Omquist emphasized that federal money remains AOT's primary revenue source: "More than 50% of the budget is federal, and 85% of the federal is the Federal Highway Administration," she said. AOT outlined the federal mix to include the Federal Transit Administration, Federal Aviation Administration, Federal Railroad Administration and the National Highway Traffic Safety Administration.

Committee members questioned the long history behind the purchase‑and‑use tax flowing to the Education Fund. A member cited Act 60 (1998) and subsequent reallocations as background to the fund flows; Omquist and others described a sequence of transfers and policy changes that reduced transportation's historical revenue 'cushion.' One legislator characterized past interfund shifts as a "shell game," prompting a request for a staff briefing on historical transfers.

Omquist said the agency began the FY27 build with an estimated $33 million transportation‑fund shortfall, a gap composed of prior one‑time uses (about $12.5 million), reversion assumptions (about $5.4 million) and other pressures (roughly $7.5 million) tied to payroll, internal service charges and disaster backfill. To close that gap, AOT described $21 million in reductions and a $12 million operating‑statement revenue item built around implementing an FHWA‑approved indirect cost rate on July 1.

The agency also reviewed specific project funding tied to the $10,000,000 proposal and noted federal match rates vary by project type (typical state system projects are 80/20; interstate projects are 90/10). Omquist confirmed AOT monitors federal apportionments and uses standard advanced‑construction techniques to draw down federal funds that will be credited in future years.

AOT flagged a Central Garage Main Turnpike project that carries a total FY27 cost near $16,000,000. The governor's recommended language includes a $1.36 million transportation appropriation while AOT said the balance would flow through a FEMA interdepartmental fund code (21501) with federal FEMA awards and an approximately 10% state match requirement for FEMA fixed‑cost offers.

The presentation also noted technical budget language (finance and management’s section E923.1) that would allow direct appropriations from the transportation fund to the Department of Housing and Community Development for electric vehicle supply equipment projects rather than coordinating the funding via interdepartmental transfers.

The committee pressed AOT on reserve policy after Omquist said a January 2026 revenue consensus produced a $1.5 million near‑term transportation‑fund impact; AOT plans to temporarily use the transportation budget stabilization reserve in FY26 and fully replenish it to a 5% maximum in FY27.

The agency also confirmed personnel‑related reductions: a September reduction‑in‑force and further position eliminations account for an estimated $7.4 million in management savings, affecting 31 positions (19 filled, 12 vacant). AOT said notification and collective‑bargaining provisions are being followed.

The committee did not take formal votes during the presentation. Members asked AOT staff for a follow‑up packet with statutory citations and the governor's proposed budget language for review.