Senate Transportation reviews pilot fund projections, backs draft to send excess local option tax revenue to municipal roads fund

The Senate Transportation Committee met April 8 to review Joint Fiscal Office projections for the pilot special fund and consider draft statutory language that would divert a portion of excess local option tax revenue into a new municipal transportation fund.

Ted of the Joint Fiscal Office presented a one‑page overview showing the pilot special fund ended fiscal year 2025 with just north of $15 million. He told the committee the general pilot payment itself is approximately $11.3 million, and that FY26 appropriations total about $18.8 million while expected expenditures are roughly $16.7 million; under those assumptions the projected fund balance at the end of FY27 would be about $13.2 million.

The draft amendment discussed by the committee would add a subsection to the pilot special fund statute so that, after the statutory payments required by existing law (pilot payments, correctional facility payments and the municipal grand‑list stabilization payments) are made, three‑quarters of any remaining local option tax revenue would be transferred to a newly established Local Option Municipal Transportation Special Fund within the Agency of Transportation. The new fund would accept transfers from the pilot special fund, gifts and grants, and the secretary of transportation would be authorized to accept donations. The draft also restricts appropriations from the new fund so they may not exceed 95% of anticipated receipts in a given fiscal year, intended to preserve a small balance without separate legislative action.

Jamie Leonard of the Office of Legislative Council, who presented the draft, confirmed that municipal grand‑list stabilization and the statutorily authorized pilot and correctional facility payments would be paid before any transfer. Committee members asked whether one‑time appropriations currently funded in FY26–27 (such as reappraisal/listing payments) should remain ahead of the transfer; Leonard said the draft as written prioritizes the statutory payments but can be adjusted to reflect other policy choices.

Members discussed implementation timing and a related, separate proposal to transfer $3 million from the pilot fund to the Agency of Transportation in FY2027 to provide additional general state aid for town highways. Several senators expressed support for sending revenues generated by municipalities back to towns and suggested starting transfers in FY2028 rather than FY2027, while others were comfortable starting earlier given the fund balance. The chair said effective‑date language (July 1) would be added to the draft.

The committee directed staff to refine the statutory language to clarify calculation of “excess” revenue and priority of existing appropriations, and to circulate an updated draft reflecting members’ preferences. The item will be carried forward in the T bill drafting process and revisited after staff consults with the Department of Taxes and other stakeholders.

The committee did not take a formal vote on the statutory language at this meeting; next steps are additional drafting, consultation with affected agencies, and further committee review.