Committee Looks at Highway Funding Hole

July 10, 2012

 

The Texas House Transportation Subcommittee on Transportation Funding held a joint hearing with a House Appropriations Subcommittee on July 9th. They got at earful about the need for new, sustainable funding for highway projects.

 

Gordon Dickson of the Fort Worth Star Telegram filed this report on the hearing:

 

With billions of dollars worth of road work under way in Texas, it may be hard for drivers to believe that the state is running out of highway money.


But in just a few years, Texas will likely max out its debt limit for transportation projects, and by the end of 2014, it may have barely enough funding to maintain existing roads, officials said Monday.
"People don't believe there's a crisis, because there are plenty of orange barrels," state Rep. Joe Pickett, D-El Paso, said during a live broadcast of a House subcommittee hearing on transportation funding. "So how long before the crisis? How long before that borrowed money dissipates and we don't have any more money to build?"


Elected leaders have authorized the Texas Department of Transportation to issue $17.3 billion in bonds for transportation projects. About $31.1 billion will be needed to repay that money over 25 to 30 years, said James Bass, the agency's chief financial officer.


The agency's budget of $10.5 billion for the current fiscal year and $9.3 billion for next year are record highs. But Pickett said those figures don't paint an accurate picture of the state's future road funding. Instead, nearly $6.7 billion of that two-year total is proceeds from bonds and other one-time sources that won't be around later, he said.


The state's main source of highway funding, the 20-cent-per-gallon motor fuel tax, is generating only about $2.6 billion a year -- far less than adequate for a state that, by one estimate, needs $14 billion a year to keep up with growth in population and jobs.


Bass said the state will likely enter into an "era of uncertainty" about highway funding in 2015.
Lawmakers are looking at several options for increasing mobility and road maintenance funding during the next session of the Legislature, which starts in January.


One option is to raise vehicle registration fees by $50 a year. The Texas Association of Business would support such an increase, President Bill Hammond said.

 

Another option would be to end the diversion of transportation funds to other state agencies, such as the Department of Public Safety. But that would leave holes in those agencies' budgets, creating more problems for lawmakers to fix. - Star Telegram.

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Bass noted that the 20-cent state gas tax has been static since 1991, and a nickel of that already goes to education. It also buys less today because the tax hasn't been indexed to inflation. People also are driving more fuel-efficient cars, so less money is collected. Bumping up the gas tax by 1 cent would generate $110 million per year for the state highway fund, Bass said.

 

Raising the state vehicle registration fee by $50 could yield about $1.1 billion in added annual revenue, according to state Rep. Drew Darby of San Angelo, chairman of the appropriations subcommittee. Darby believes there may be an appetite to increase the vehicle registration fees.

 

Highway contractors testifying before the committee said they had been forced to reduce their workforce by one third and that more personnel will have to be let go as highway project funding winds down.

 

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