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Bill Summary · HB 3

Summary — HB 3: Department of Transportation Act of 2025 (NMDOT FY26 Appropriations)

Status: Passed House Transportation committee; incorporated into House Appropriations/General Appropriation Act. Introduced 2025; provides FY2026 operating appropriations for the New Mexico Department of Transportation (NMDOT).

Main purpose

Provide the FY26 operating budget and related appropriation authorities for NMDOT, set program-level performance measures and targets, and authorize limited intra‑ and inter‑program budget adjustments to meet federal match, debt service, litigation, intergovernmental, construction and maintenance needs.

Key provisions and changes

  • Appropriates roughly $1.303 billion total for NMDOT FY26 operations:
    • ~$591.9 million — State Road Fund
    • ~$121.9 million — other restricted state funds
    • ~$10.3 million — weight‑distance / permit identification fund (interagency)
    • ~$579.5 million — federal funds
  • Major program appropriations (selected):
    • Project Design & Construction (planning, design, ROW, construction, local grants, debt service). Includes a $28.0 million Local Government Road Fund line and substantial debt service authority (~$53.8M in committee report figures).
    • Highway Operations (maintenance, snow removal, bridge maintenance, equipment purchases; roadway maintenance supplies).
    • Program Support (administration, finance, HR, project management).
    • Modal (transit, rail, aviation, traffic safety) — includes transit grants and $10.5M from the weight‑distance tax identification permit fund for modal activities.
  • Establishes program performance measures and targets (examples):
    • 75% of projects let to bid as scheduled; 88% projects completed on schedule.
    • ≤3% final cost‑over‑bid (less gross receipts tax).
    • 91% interstate lane miles rated fair or better; 95% bridges fair or better (by deck area).
    • Targets for traffic safety: 400 total traffic fatalities; 140 alcohol‑related fatalities.
  • Budget adjustment authorities (added in committee amendment):
    • FY25: NMDOT may request up to $35 million from other state funds to meet federal matching requirements, debt service and related costs, intergovernmental agreement obligations, lawsuits, and construction/maintenance needs.
    • FY26: May request transfers up to $10 million within or between major programs for engineering, construction, maintenance and grants; may transfer up to $12 million into personnel services; may request up to $85 million from other state funds/fund balances for federal match, debt service, intergovernmental agreements, litigation, and construction/maintenance costs.

Fiscal and policy implications

  • Funding mix relies heavily on the State Road Fund (fuel taxes, trucking fees, vehicle taxes/registrations) and federal awards. LFC notes FY26 road fund forecast showed modest growth but long‑term pressure due to improving vehicle fuel economy and potential decline in gasoline tax revenue.
  • Debt service: NMDOT forecasts ~$111M/year through FY30; expected drop FY31–FY32 as obligations retire.
  • LFC/agency analyses flag rising construction bid costs (≈20% increase since 2020) and slower long‑term revenue growth, creating fiscal risk to delivering projects at planned scope and schedule.

Who is affected

  • NMDOT operations and staff, contractors and engineering firms, local governments (local road fund recipients), transit and modal program grantees, and New Mexico road users (through road condition and safety outcomes). Fiscal impacts are statewide via state fund allocations and federal fund use.

Timeline / procedural notes

  • Appropriations are for Fiscal Year 2026. The bill (and committee amendment) was consolidated with the General Appropriation Act (House Bills 2 & 3) and contains language authorizing mid‑year transfers and requests for supplemental funding to address federal match, debt service, litigation, and project cost pressures.

Notable risks / considerations

  • Long‑term sustainability of the State Road Fund given fuel‑tax base erosion and rising construction costs.
  • Reliance on ability to secure federal funds and meet matching requirements (the bill grants authority to request additional state fund transfers for matching).
  • Performance targets intended to improve transparency and accountability, but meeting them depends on funding stability and construction market conditions.

Compiled from official sources — confirm details with the bill’s official record.

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