Sep. 17 -- Two of the four major sources of revenue for New Mexico's State Road Fund are projected to decrease dramatically at the same time transportation construction costs skyrocket.

"The combined effect is looking pretty dire for road construction going forward," Michael Morrison, chief economist for the state Department of Transportation, warned lawmakers Tuesday during a meeting of the Legislative Finance Committee in Albuquerque.

Road construction costs are expected to grow 138% between 2024 and 2050 while overall road fund revenues are projected to shrink by about 14%, he said.

Gasoline and diesel taxes, which generated nearly half of the $550 million the fund received in fiscal year 2023, are already on the decline, due to the fuel efficiency of vehicles, and the gas tax has not increased in nearly three decades.

The long-term outlook for the State Road Fund, generally used for road maintenance and to provide matching dollars for highway projects predominantly funded by the federal government, has prompted the department to consider various fees to create another revenue stream, Morrison said.

"There's ideas of additional registration fees on electric vehicles or other different types of charges, as well, as we're investigating the use of road user charges, which have been adopted in Hawaii, Oregon, Utah and Virginia," he said. "We're looking at those programs to see how they operate and evaluate whether or not they're successful or something that would be beneficial to New Mexico at this time."

Transportation Secretary Ricky Serna said in a statement after the meeting, "We either need to consider an increase to distributions or find new revenue sources, but doing less on our roadways is not the answer New Mexicans want or deserve."

He added, "If revenues to the State Road Fund remain flat, or decrease as projected, and construction costs increase, the result is a reduction to work that we can get done on New Mexico's roads."

Serna noted construction costs have risen by 20% in the past four years.

His agency is exploring ways to "leverage stronger partnerships with contractors and deploy creative alternative construction methods to reduce expenditures," he said in the statement, "but these measures will not likely offset the increased cost of maintaining roads."

Lawmakers on the Legislative Finance Committee also expressed a need to take action.

State Sen. Bobby Gonzales, a Ranchos de Taos Democrat who has pushed for an increase in the gasoline excise tax in the past, noted the Legislature doesn't have an appetite for such a hike.

"We have hit a roadblock when it comes to the [diesel tax] and to gas," he said. "We have tried many initiatives, and so if we're going to do something else, I guess we would have to look at some of the other components of a pie chart to be able to build on revenue."

New Mexico's gas tax of 17 cents a gallon is the fourth lowest in the nation and has not been revised for inflation since fiscal year 1996. The diesel tax of 21 cents a gallon is the ninth lowest in the nation and hasn't been adjusted for inflation in about two decades.

The Legislature approved a 6-cents-a-gallon repeal of the gas tax in 1995.

"We haven't recovered that at all," Gonzales said. "It's a lot of revenue that has not been there because [of the repeal]."

Gonzales expressed concerns about escalating construction costs amid declining revenues, saying the state's transportation network is critical to maintain.

"We have tried a 5 cents gas tax. We have tried a 4-cent. We even tried a 1-cent with a sunset in five years," he said. "Just for some reason or another, [the proposed gas increases are rejected]. But we're beyond that. The need is there."

Rep. Dayan Hochman-Vigil, D-Albuquerque, echoed Gonzales' concerns about dwindling revenues from the gas tax.

"All hope is not lost," said Hochman-Vigil, chairwoman of the House Transportation, Public Works and Capital Improvements Committee.

"We have presented the Legislature with multiple proposals that would allow us to make up for some of those revenues, whether it relates to excise tax percentages to registration fees for electric vehicles to surpluses on charging fees and times," she said. "There's lots and lots and lots of ideas out there that we will and should be considering."

A 2023 Legislative Finance Committee report on highway funding found growth in the State Road Fund has been slow, and the Department of Transportation has struggled to keep up with road maintenance.

"The department estimates the road fund would have to grow by $270 million to maintain roads in satisfactory condition," the report states.

The report noted adhering to maintenance schedules is particularly important because repair costs grow substantially as road conditions worsen.

"Spending more on preventive maintenance now will likely lead to significant savings over time," the report states.

Follow Daniel J. Chacón on Twitter @danieljchacon.