Committee questions DOT on declining fuel fund balance and options including toll increases and hedging

Committee members on May 15 pressed the Department of Transportation about transfers from the fuel fund and a concerning downward trend in the fund balance.

A committee member pointed to a spreadsheet showing a 2023 fund-balance figure read in the record as 113,000,000 and said the balance could trend toward about 35,000,000 in the next budget cycle if current trends continue. Wayne Gardner, financial administrator from the Department of Transportation, acknowledged concern and said the department has been looking at toll-rate increases to meet capital commitments on the turnpike system as expenses rise and revenue remains flat.

Danielle Shady, director of finance, said an anticipated lapse labeled in the discussion could offset part of the reduction and estimated a lapse around $50,000,000, which would mitigate but not fully cover the decline. She also cited a rougher-than-expected winter that led to larger winter-maintenance draws on the fund.

On electric vehicles, members asked what share of highway-fund revenue comes from EVs; Shady said the amount is probably small and that the department would verify the number. Committee members also asked about registration-fee revenue and noted registration fees had not been increased in many years.

Alan Hanscomb, administrator of the Bureau of Highway Maintenance and fuel distribution, described the department’s procurement position: the state paid a fixed wholesale rate up until 2022; after that the department moved to market-rate purchasing and has authority to hedge if warranted. Hanscomb said the department pays the going wholesale rate under current contracts and monitors market conditions.

A motion to adopt the DOT item (FIS 26101) was moved, seconded and adopted by the committee.

Why it matters: A declining fuel fund balance can affect project delivery and turnpike capital commitments; committee members pressed for options, including toll-rate increases, lapses, hedging, and further review of registration-fee income.

What’s next: DOT staff said they will return with more details on registration-fee revenue and continue monitoring fuel contracting and hedging options.