TRG | The Bottom Line – 8/15

TRG this week published our State Lettings and Budget Update, and the numbers for FY’25 (July FYE) came in strong, paving the way for solid visibility for the remainder of the calendar year and well beyond. TRG’s 15 core state lettings, or contract awards, totaled $68.3B in FY’25, up 14.0% YOY.  Q4’25 awards were up 7.8% YOY. Worth noting is that lettings are up 67% from FY’20, the year prior to passage of IIJA. In addition, several states (FL, NC, TN) have passed new legislation further boosting transportation funding. TRG spoke with DOT representatives,  sharing “backlogs are at record levels” and that “contractor payments were the highest ever last year.” We expect that momentum to continue in FY’26 as more federal and state dollars are put to work.
 
States budgets begun the process last fall, states have now passed and signed into law FY’26 budgets. Most states operate on a July-June fiscal year and are mandated by law to have a passed budget by the end of June. Included in the legislative process are state DOT budgets. Much like the federal highway bill, state DOT budgets provide another indication of future lettings/contract awards. As a reminder, state and local municipalities typically account for as much as two-thirds of all road/bridge work funding. FY’26 DOT budgets are up 5.0% YOY. As a single year’s DOT budget is expended over multiple years, we believe the snowballing effect of projects, thus expenditures, will continue in FY’26 and beyond.