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Rep. Joe Pickett provides insights on funding challenges during Funding 101 briefing.

TAoT's Jim Reed and Jennifer McEwan respond to questions from legislative staff and Members.

Transportation Funding 101 Well Attended

 

 

February 8, 2013

 

More than 100 representatives of the offices of Texas House Members and Senators attended the Transportation Funding 101 briefing provided by the Transportation Advocates of Texas (TAoT) at the Capitol on February 7th.

 

Jim Reed, TAoT board chair, outlined the problems being caused by the shrinking motor fuels tax and the dependence on debt that has been used to keep highway construction going over the past decade. TAoT board member Dr. Jennifer McEwan led the discussion of the multiple ideas that are sometimes mentioned as tools that can be used in addressing the state's very large highway funding problem.

 

$4 Billion Per Year Shortfall

 

Reed stressed that it is the Legislature's role to decide what alternatives are best to address the $3 billion to $4 billion annual shortfall in transportation funding. He said the solutions selected should be predictable, sustainable, transportation related and automatically able to grow with the needs of the state.

 

Reed asked Rep. Joe Pickett, a veteran transportation advocate, for his assessment of the current situation.

 

Rep. Pickett told the legislative staffers that the state needs to stop borrowing money for transportation and find a long-term solution. "Unfortunately 30 cents out of every dollar that we give to TxDOT now is borrowed," he said, arguing for a return to more of a pay-as-you-go system.

 

He pointed out that unlike almost all of the rest of state spending, TxDOT does not function on a two-year cycle. At the start of every budget cycle about 23 cents of every TxDOT dollar is already committed to pay for projects that are currently under construction. Another 38 cents goes to maintenance and 13 cents goes to project development. That leaves only 6 cents out of every dollar for new projects.

 

Rep. Pickett said that only $1.1 billion of the $20 billion appropriations request for TxDOT over the coming biennium is for new construction. "That's it for new capacity -- all the things your chamber of commerce wants in this budget -- $1.1 billion is all that is being considered. Debt service is double what we are proposing for new work. You need to get that fact out to people who still want us to have free roads."

 

Reed said the state is on the "road to a collision" because of booming population and a gas tax that has been fixed at 20 cents per gallon since 1991.

 

He stressed that safe and efficient highways are a core function of government. He said sources of additional funding should meet five principles:

1. Predictability - so it is possible to plan and program.

2. Constitutionally dedicated - so that users know transportation fees are going for their intended purpose.

3. That the sources are transportation related - meaning that the users of the system pay for it.

4. That they are independent of the fuel source used by the vehicle.

5. That they self adjust for inflation.

 

Reed pointed to a recent report from the Texas Comptroller's Office showing that annual revenue from the gasoline tax peaked in 2008 and is projected to decline by a third in real dollars over the next 20 years. Diesel fuel revenues dipped in 2009 but are projected to continue increasing until about 2025. Even though miles traveled will continue to increase, motor fuels tax revenues will continue to decline because of better fuel efficiency.

 

Dr. McEwan pointed out that an increase in the shrinking fuels tax or indexing of the tax will not produce the sustainable revenue that is needed over time.

 

She reviewed each of the funding options that is included for discussion in the recently published House Transportation Committee Interim Report.

 

 

TEXAS HIGHWAY FUNDING CLIFF - Funding for new highway construction projects is set to plunge after 2013. Awards in the current year are based on borrowing and one-time funding. All borrowing authority will have been exhausted.