Houston Strategies

Another excellent analytical guest post from Oscar Slotboom, author of Houston Freeways. Some fairly big changes for TXDoT plans in Houston.

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The release of the new TxDOT Unified Transportation Plan (UTP) is the biggest annual event for TxDOT project funding. The UTP assigns funding to projects for construction in the next 10 years, determining which projects will be built and when they will be built. On July 3 TxDOT released the draft 2027 Unified Transportation Program.

Due to tight funding and project cost increases, TxDOT has focused Houston funding on three high-priority projects – NHHIP, the I-10 San Jacinto River bridge and SH 35 – and delayed, downsized or entirely removed other planned projects.

UTP funding declines

This chart (annotated with updates) included in a presentation at the January TxDOT Commission meeting shows the historical trend of UTP funding. Funding for 10-year periods peaked in 2025 at $104 billion, dropping to $101.6 billion in 2026 and $95.0 billion in 2027. Funding reduction is mainly due to reduced forecast federal reimbursements (page 4).

However, this small reduction in 10-year funding causes a much larger decrease in the new funding available for projects.

A simplified explanation of new funding starts with the 2026 overall funding ($101.6 billion) and subtracts the new contracts awarded, around $10.7 billion. This leaves $90.9 billion in funds previously committed to projects. New funding available is the new 10-year revenue forecast ($95 billion) minus the previously committed funds ($90.9 billion), which is $4.1 billion. This is a simplified explanation, and the actual value of new funding for 2027 with all accounting considerations is $4.97 billion. The harsh reality is that a small percentage decline in the estimated 10-year funding results in a much larger percentage decline in available new funding.

We can see in this chart that new funding available statewide has plummeted from $14.54 billion in 2025 to $4.97 billion in 2027. (See presentations for 2025, 2026 and 2027.) New available funding is not specifically reported prior to 2025; however, 2027 is the lowest value in many years, probably since at least 2023.

NHHIP

Of course, Houston has big funding needs with NHHIP. Committed funding for NHHIP projects (page 71) shows a slight decrease, from $5.174 billion in 2026 to $5.023 billion in 2027. However, this is mainly due to administrative shifting of funds between projects and scope changes for individual projects. Project 3C-2, scheduled to receive bids in March 2028, sustained a cost increase from $1.74 billion to $2.225 billion, and received extra funding to remain 100% funded. Project 3C-1 has a new $170 million drainage project which is 100% funded. Project 3C-4 was previously listed at $1.165 billion but is now listed as 3C-4A at $723 million, suggesting there may be a project split.

Project 3B-1, a drainage project, was awarded in June 2024 with a contract amount of $122 million and completion scheduled for 2027. Project 3-B2 was awarded in September 2024 with a contract amount of $696 million and completion scheduled for 2033. So far, the only visible progress on 3-B2 is the demolition of the Alabama Street bridge.

Here is a summary of all sections NHHIP and their funding status. Projects not yet included in the UTP (yellow background) and have no funding. These projects will need to be funded in future UTPs before construction can start. Start dates are subject to change and are taken from the NHHIP schedule and TxDOT project dashboard.

* For projects not in the UTP, estimates from the NHHIP site are used

** See explanation below.

For section 3C-4A, it is possible the cost reduction was achieved by the design change, which places all lanes over the "Be Someone" railroad bridge and eliminates the need to build a new, costly railroad bridge. It is unclear if there will be a separate 3C-4B project, which would mean section 3C-4 is not actually 100% funded.

Other Houston Projects

The Interstate 10 East Freeway San Jacinto River bridge is a high priority project which has sustained very large cost increases since its first inclusion in the UTP in 2023. In 2023 the cost was listed at $340 million, rising to $556 million in 2024, $810 million in 2026 and now $1.065 billion in 2027. The project remains 100% funded, with $256 million new funding in 2027. The project is not currently listed in TxDOT's letting schedule through 2029. This project goes through the San Jacinto River waste pits superfund site. Clean up of the south part of the site was completed in 2024, and in May the EPA ordered remediation to begin on the north part of the site. It is unclear if the remediation work will affect the construction schedule.

Construction of the new SH 35 Freeway adjacent to the University of Houston is currently in progress, and future projects will connect the freeway to Loop 610, including four connection ramps. The project received $30 million in new funding to remain 100% funded. However, this project has been delayed and will proceed to construction between 2031 and 2036.

Interstate 10 between Katy and Brookshire will be expanded to 8 main lanes and 2 HOV lanes, similar to the design through Katy. However, this project has been shortened in the 2027 UTP with a $278 million reduction in funding. In 2026 the project extended from Mason Road in Katy to FM 359 in Brookshire. In the 2027 UTP the project is from Mason Road to Pederson Road (Texas Heritage Parkway), a length reduction of around 4 miles.

Widening Interstate 45 on Galveston Island between the causeway and 61st Street has been delayed. The project was estimated at $126 million in 2026 and scheduled to start before 2029, but the cost has increased to $191 million in 2027 with no increase in funding, so it is now 66% funded and will need additional funding in a future UTP. Construction is sheduled to start between 2031 and 2036.

Casualties

Two previously funded projects are entirely removed from the 2027 UTP with their committed funding presumably transferred to higher priority projects.

The big news is the removal of all funding for the Inner Katy managed lanes. This project will add managed lanes in the gap between the existing managed lanes outside Loop 610 and the planned managed lanes on the NHHIP section of Interstate 10. The 2025 UTP positioned this project to be built concurrently or even before the Interstate 10 projects of NHHIP, with $987 million in funding covering 84% of the $1.17 billion project cost. A public meeting scheduled in May to present a new alternative was abruptly canceled nearly immediately after the meeting was announced. The Inner Katy project is entirely removed from the 2027 UTP. The absence of managed lanes on the Inner Katy will be a bottleneck between the existing and planned managed lanes, but this is unfortunately a consequence of financial and political reality.

A project to expand the non-freeway section of SH 249 inside Beltway 8 had $146 million funding in the 2026 UTP, 100% of project cost. It has been removed from the 2027 UTP.

These maps from the 2025 and 2027 UTP show the removal of the Inner Katy and SH 249 projects.

Conclusion

With minimal new funding available compared to recent years and rising costs on planned projects, TxDOT has focused available funds on the highest priority projects: NHHIP, the I-10 San Jacinto River bridge and SH 35. For NHHIP, funds have been shifted between projects to cover cost increases for upcoming projects. To cover cost increases on other priorities, low-priority projects have been delayed, downsized or entirely eliminated from the UTP, notably the Inner Katy managed lanes being entirely removed.