Voters Will Decide Fate of $1.4 Billion A Year In
Potential Funding for Highway Projects

Select Committee Will Bring Back Funding Recommendations in 2014


August 22, 2013


With a major push from community leaders statewide and a wide array of transportation advocates, the Texas Legislature ended a third special session August 5th with passage of a measure estimated to increase transportation funding by as much as $1.4 billion annually if Texas voters approve it next year. And that yearly number is likely to increase in future years.

That amount, if approved, will provide about a quarter of the projected highway funding shortfall that faces Texas.  Additional incremental funding will need to be pursued when the Legislature meets in 2015.

Transportation was on the minds of many members of the House and Senate this year.  Lawmakers spent a good deal of time during the seven months they were in session talking about the need to address the impending major highway funding cliff.   During the regular session, however, they only managed to allocate an additional $850 million in one-time funding against a growing gap of more than $5 billion a year.  Little progress was made on providing a new permanent, reliable and growing funding stream for investment in Texas highways.

At the beginning of the three special sessions Senator Robert Nichols, chairman of the Senate Transportation Committee, stepped forward with the idea of capturing oil and natural gas production taxes before they go into the Economic Stabilization Fund (rainy day fund).  Rep. Joe Pickett picked up the idea in the House.  Both proved skillful in crafting the compromise proposals in SJR 1 that were ultimately adopted by a vote of 22 to 3 in the Senate and 106 to 21 in the House.

Transportation Advocates of Texas and other statewide organizations came together in the final days before the vote to offer lawmakers their full support in voting for the measure.  TAoT members and others argued that taking incremental steps toward a solution is a realistic approach and that the problem can be addressed in bite-size pieces from several revenue sources.


Advocates argued that members should not pass up the opportunity to make real progress on the highway funding gap. Passage of the Amendment will result in projects being put in motion that would otherwise be deferred as Texas falls further behind.


When voters go to the polls in the statewide General Election in November 2014 they will be asked to vote for or against the following:  "The constitutional amendment providing for the use and dedication of certain money transferred to the state highway fund to assist in the completion of transportation construction, maintenance, and rehabilitation projects, not to include toll roads."


The amendment asks voter permission to take half the taxes  on oil and natural gas production that now go to the Economic Stabilization Fund and place the amount in the State Highway Fund. Oil production in Texas is growing dramatically and huge natural gas fields have been discovered and will be developed in the years ahead as natural gas demand grows and prices improve. The passage of the Amendment will mean more funding for highways and strong revenues continuing to flow to the Economic Stabilization Fund.


The House adopted two amendments during their last day of debate on the constitutional amendment. One authored by Rep. Joe Deshotel  gives TxDOT the option to award or loan money from the Texas Mobility Fund for projects at the dozen Texas seaports. The Mobility Fund draws more than $380 million a year in revenues from vehicle inspection fees, drivers license fees, record fees and motor carrier penalties.


The second House amendment authored by Rep. George Lavender would have allocated more than $600 million in unspent funds from this year’s surplus revenues to transportation.  It was defeated in the Senate despite the support of many transportation advocates.


Lawmakers passed HB 1, the companion enabling legislation, which creates a standing panel of House and Senate budget writers to protect the balance in the Economic Stabilization Fund.  Members would weigh the history of fund balances and transfers, along with funding demands including highway congestion.  The law also requires TxDOT to identify and implement $100 million in savings and efficiencies and us the money to pay down bond debt in FY 2015.  Finally it creates special House and Senate study committees that can meet jointly and will write a single report for the 2015 Legislature on ways to finance highways needs in the long term.



Creation of the select committee provides an opportunity to keep the spotlight on transportation funding during the interim.  Their report is due Nov. 1, 2014,  just before the constitutional amendment election.  The report should provide the next Legislature with a clear, updated look at highway underfunding and possibilities for bridging that gap.  It will look at the future reliability of all current TxDOT funding sources.  It will also look at debt financing which has been the state’s default method for the past decade.  It will present revenue ideas used by other states and other nations. The objective is to help the 2015 Legislature find a sustainable way of paying the cost of modern transportation.



The editorial pages of the state’s major newspapers applauded passage of SJR 1 and HB 1 but gave the lawmakers poor marks on taking care of the real problem.  Here are a few samples:


Dallas Morning News:  “Ultimately, the gravity of the highway funding deficit had sunk in to enough lawmakers. On hand to root on final passage was a chorus of business voices from across the state. They were singing a familiar tune that tone-deaf lawmakers are prone to ignore: The Texas economic juggernaut will hit the wall if businesses don’t have the roads to get products to market or workers to their jobs.”  And this, “That masterful job of putting a billion-dollar spending plan to voters will, at best, scrounge up a mere down payment on Texas’ highway needs.”


Houston Chronicle:  “Texas lawmakers headed home after passing a transportation bill Monday night, headed home on highways that still will need more resources even if voters approve a plan that would divert money from the rainy day fund into transportation projects. The proposal is better than nothing but far from ideal, particularly if Texans decide that the state has solved its transportation problems with this jerry-rigged Band-Aid of a bill.” And concluded with this, “The 20-cents-a-gallon gas tax hasn't changed since 1991. An effort to increase vehicle-registration fees died during the legislative session. Meanwhile, the nation's second-largest state added 5.21 million residents from 2000 to 2012. Traffic congestion is getting worse by the day and roads are crumbling, but anything that smacks of a tax increase is anathema in this state. That's not leadership.


Austin American-Statesman: “Relief that legislators finally passed something shouldn’t obscure the basic reality that the proposed constitutional amendment would provide only a quarter of the money TxDOT officials sought to keep up with the demands of the state’s growing transportation needs.

“If the constitutional amendment is approved in 2014, supporters should make clear to voters that a positive vote won’t solve a growing state’s transportation problems.


“Leaving the impression that problems are solved will only make securing more highway funding all the more difficult.”


Fort Worth Star-Telegram: “Before they left town, legislators also ordered the Transportation Department to take $100 million out of its budget and use it to pay down debt built up in recent years when the Legislature failed to appropriate enough money for road and bridge needs. Of course, that’s a card they could have played earlier this year when they were putting together the state budget. Maybe it’s just as well, considering that doing it now may have persuaded some lawmakers to vote for the transportation funding package.”