Senator Robert Nichols

Chairman, Senate Transportation Committee






Nichols Highway Funding Initiative Approved


March 4, 2015 Update Post


The Texas Senate voted 28-2 to approve Senate Bill 5 and Senate Joint Resolution 5 and send the measures to the House of Representatives for consideration.


The final version of the proposed constitutional amendment legislation would allocate the first $2.5 billion in annual vehicle sales tax revenues to the General Revenue Fund. The next $2.5 billion would be deposited in the State Highway Fund. Any revenue over $5 billion would be split with 50% going to the highway fund.


A wide range of groups across Texas supported Senate passage of the measures.


Nichols reminded senators that transportation is a core function of government and that even if the measure is approved it will still not fill the state's funding needs.


February 4, 2015 Update Post


Senator Robert Nichols has filed Senate Bill 5 and Senate Joint Resolution 5 which would constitutionally dedicate a portion o the existing sales tax on new and used vehicles to the State Highway Fund.


"Without adequate and dependable resources, the Texas Department of Transportation (TxDOT) will continue to face challenges in constructing and maintaining Texas' highway infrastructure," said Nichols. "I appreciate the support of Lt. Governor Patrick on this bill and look forward to continuing our work towards providing adequate transportation infrastructure for Texans."


The legislation is co-authored by Senator Jane Nelson, chairman of the Senate Finance Committee which will consider the proposal.

Nichols believes there are five critical elements the Legislature should look for when identifying additional funding sources for transportation. These include ensuring the funding is (1) predictable, (2) constitutionally dedicated, (3) transportation related, (4) independent of fuel source, and (5) able to adjust to inflation. This state motor vehicles sales tax is a revenue stream which meets all of these qualities.


Nichols estimated that his measure would provide about $2 billion a year to transportation beginning in 2018. That figure is expected to grow to $3 billion over the next decade — the result of growth in the state’s population and vehicle sales plus inflation, which together will lead to Texans paying more sales tax on those purchases.


“The important thing is in time it grows and it grows at approximately 3.5 percent a year" providing a predictable and growing revenue source for highways, Nichols said. If approved, this proposal will give TxDOT an additional revenue stream to implement long-range transportation plans.

"This is an issue I advocated for during the campaign that received strong support from the voters," Lt. Governor Patrick said.

"Transportation infrastructure is a core function of government and its funding should be addressed. What could make more sense than to dedicate the tax on a vehicle, you currently pay, to the infrastructure on which it depends upon. Without roads you don't needs cars, and without cars you don't need roads," states Nichols.


If approved by lawmakers and sent to voters the proposed ballot language would be For or Against the proposition: "The constitutional amendment dedicating certain revenue derived from the tax imposed on the sale of a motor vehicle sold in this state to the state highway fund."


January 27, 2015 Post


Senate Transportation Committee Chairman Robert Nichols has begun laying out the details of a new transportation funding initiative – dedicating a portion of vehicle sales tax collections to road projects.  This would free up billions of dollars and create an additional predictable funding stream for projects statewide.

He made the remarks before hundreds of local officials and transportation advocates participating in the annual Texas Transportation Forum.

The proposal would ultimately require a constitutional amendment be put before the voters.  He expects to file the legislation soon.

All of the 6.25% sales tax on vehicles now goes into the state’s General Fund, not to transportation.  The tax is expected to bring in an estimated $4.3 billion in the current FY 2015, $4.6 billion in FY 2016 and $4.8 billion in FY 2017.  Those estimates come from the Comptroller’s latest Biennial Revenue Estimate.


Nichols proposal would permanently reserve $2.5 billion of the vehicle sales tax each year for the state’s General Fund.  All revenues above that amount would be dedicated to the State Highway Fund starting in 2018 if the constitutional amendment is approved by voters.   This would give budget writes time to adjust to the change.

Nichols said the proposed amendment would limit the use of this vehicle sales tax revenue “to the construction and maintenance of non-tolled roads and bridges, and to pay off general revenue transportation related debt.”  That is a reference to $5 billion in Proposition 12 debt that was issued to fund projects in recent years with the debt to be repaid from General Revenue.  Prop 12 was approved by the voters in 2007.  Debt service on those bonds is some $435 million a year which would be paid from the Highway Fund if the proposal is approved.  In 2018 that would mean about $1.3 billion a year in additional highway funding, a number that could grow to about $3 billion a year in additional funding after debt payments by 2028.

Chairman Nichols, a engineer and a former member of the Texas Transportation Commission, said that new funding sources for transportation need to be predictable, constitutionally dedicated, transportation related, independent of fuel source and about to automatically adjust to inflation.
He noted that vehicle sales taxes fit these tests and will grow at a rate similar to the growth rate in the population and in the cost of construction.


He talked about the state’s dependence on debt and one-time funding sources during the past 15 years.  The Legislature has set up mechanism that have resulted in $23 billion in new highway project debt since 2001.  He said there is no appetite among lawmakers for issuing additional debt for transportation.  Nor is there much evident support for increasing the state tax on gasoline and diesel, one of the two main sources of revenue for the State Highway Fund.

Nichols also raised the possibility of redirecting $878 million currently held in the Texas Emissions Reduction Plan (TERP). It is a General Revenue-dedicated account that provides grants to reduce emissions.  Revenues come from an assortment of transportation fees and come out of the State Highway Fund.  Interim committees have recommended that the transfers from the Highway Fund to TERP be discontinued.

Chart presented by Chairman Nichols to illustrate impact of his proposal to direct existing vehicle sates tax revenues to transportation