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THE CENTER SQUARE

Tennessee’s Department of Transportation met with Gov. Bill Lee’s budget team last week but its larger long-term plan is on schedule to be released in December, Commissioner Butch Eley said.

The December plan announcement for the state’s Transportation Modernization Act implementation will include a proposal to spend $3.3 billion in state funds for road work given to the department last year along with the proposal to implement toll lanes into highway plan.

The toll lane plan will allow the department to negotiate deals for private companies to add lanes to Tennessee highways and make those toll lanes, with the private company collecting tolls to recoup their portion of negotiated project costs.

Eley said the budget meeting was a huge change from a year before, when his department talked about how it was at a critical funding juncture.

“We were facing unprecedented congestion, we were facing a revenue stream or funding stream that is unsustainable and, frankly, it was taking us way too long to get projects completed,” Eley said.

The one-time state funding increase skewed the department’s budget from $6.1 billion in overall funding in fiscal year 2024 to a proposed $2.8 billion in fiscal 2025.

That includes a proposed $31.3 million in federal funding increase and a $3.3 billion drop in state funding along with $1.5 million less from local taxes.

Department leadership said that it also starts projects believing there is federal funding potential so that the project is eligible if funding becomes available.

“Should federal money become available, either in the form of a formula dollars or a grant, we’re ready to be able to put that on a project,” said TDOT Chief Engineer Will Reid. “We want to maximize what we get from the feds.”

Reid added that, while overall federal funding hasn’t significantly increased, the department is seeing double-digit increases in road-building materials, from guardrail components to asphalt, and large increases in labor costs as fewer individuals go into those trades for a career.

TDOT collected $1.1 billion in user fees including gas tax and vehicle registration fees in financial 2022 that dropped 8% to $1.0 billion in financial 2023 with a one-year suspension of passenger vehicle registration fees. That bill carrying that moratorium had estimated a $121.6 million total impact.

Eley said that the department would move as quickly as possible to start the toll lane program, hoping for a commercial close to the first deals by November 2026.

“We are going to be as aggressive as we can be and move as quickly as we can,” Eley said.