State discusses how to tackle transportation funding -

Officials in the state of New Mexico are working through how best to address unfunded transportation needs that total $5.6 billion.

The Legislature’s Transportation Infrastructure Revenue Subcommittee met recently to discuss the issue with officials from the New Mexico Department of Transportation.

At the Silver City meeting, transportation officials told legislators it may be necessary to increase or create new taxes to get needed road work done.

Revenue sources

The New Mexico DOT receives money from two main sources: the federal government and the state road fund.

In fiscal year 2025, the agency received about $558 million in federal funding. About $537 million in funding came from several state tax programs.

These programs include those for gas tax, diesel tax, weight-distance tax and vehicle registration.

The biggest portion of state tax revenue came from the diesel tax – $134.4 million. The gas tax brought in $112.8 million. The third-largest chunk of revenue came from the weight-distance tax – $108.3 million.

No simple fix

Transportation Secretary Ricky Serna told the committee the funding problem continues to worsen due to inflation. Serna said there is no simple fix to address the issue. He advocated for a combination of changes.

Possible options discussed include changing how the state distributes vehicle sales tax, raising existing transportation taxes and fees or creating new taxes and fees.

Fuel tax discussion

The state collects a 17-cent gas tax. The diesel excise rate is 21 cents.

The gas tax has remained unchanged since 1996. At that time, the excise rate dropped 3 cents from 20 cents.

The diesel tax has remained the same since 2004. At that time, the rate increased 3 cents from 18 cents.

DOT Chief Economist Michael Morrison told lawmakers the state earns the fourth-lowest amount nationally from its gas tax. Its diesel tax rate is the ninth-lowest nationwide.

Serna said the state’s ranking has continued to lower.

“We are basically holding firm while other states are moving the needle to keep up with inflation,” Serna said.

If the gas tax were tied to inflation since it was last changed, Morrison said it would be about 35 cents per gallon today. The diesel tax would be about 36 cents per gallon.

A penny increase to the gas tax rate is estimated to raise $6.8 million annually in new transportation revenue. An additional 1 cent collected from the diesel tax would raise $6.6 million yearly.

Committee members differ on what to do

Rep. Cynthia Borrego, D-Albuquerque, said she is hesitant to increase fuel tax rates to address the funding shortfall. She said there are a lot of creative ways the Legislature could address the issue.

“I don’t think any of us want another gasoline tax,” Borrego said.

Sen. Antonio “Moe” Maestas, D-Albuquerque, quickly countered Borrego on her claim.

He said legislators must find the political will to increase fuel taxes to build roads.

“It’s been a failure of government not to incrementally increase the gas tax over the past 30 years,” Maestas said. “Paying an extra 5 cents a gallon sucks, but paying $1,200 for four brand new tires sucks worse.”