Electrics Are Coming - Will They Pay A Fair Share?

Auto manufacturers are projecting that in a few years 40% of the vehicles they build will be electric powered.

Advocates Keep Focus on Highway Funding Gap

 

Texas growth is unrelenting. Highways and bridges continue to age.   Traditional and voter approved funding sources are being put to work on highways at a rate of $7 billion a year.  Gas taxes are still the same as when Ann Richards was governor. And Texas still has a significant highway funding gap.


During the 2019 session of the Texas Legislature, the Transportation Advocates of Texas (TAoT) and our partners again worked to maintain existing funding sources and find ways to do more to meet transportation needs.


In the end, state lawmakers made progress in solidifying funding gains put in place in recent years and removed some uncertainty from Prop 1 revenues.


LEGISLATIVE REVIEW


Prop 1 Extended - Prop 1 dedicates a portion of oil and natural gas production taxes to the State Highway Fund. Transportation advocates won near unanimous support for SB 962 which extends Prop 1 funding expiration from 2024 to 2034.  It provides greater funding certainty for both TxDOT and MPOs which must plan and program project funding years into the future.  TAoT’s former board chair Jim Reed provided invited testimony in support.


Greater Funding Certainty - SB 69 eliminates additional uncertainty related to Prop 1.  It establishes a new Prop 1 “sufficient balance” standard  by eliminating a committee decision approach and directing that oil and gas taxes flow to the Highway Fund as long as the Rainy-Day Fund will have a balance equal to 7% of General Revenue.


More Funding in FY 2020-2021 Budget
- Lawmakers appropriated $30.8 billion for transportation over two years, about one-third more than the budget passed in 2015 before Prop 1 and Prop 7 started adding to highway funding.  88% of the anticipated total FY 2020-2021 goes to highways.  The budget continues the policy adopted in 2015 of not diverting funds from the Highway Fund to non-transportation programs.  The budget does extend the Texas Emissions Reduction Plan which results in more than $150 million a year in non-dedicated funds being transferred to air quality attainment programs.  Revenue to TxDOT would have been higher in the next two years but vehicle sales tax revenues are not expected to be high enough to trigger the second part of Prop 7 funding yet.  Once vehicle sales tax revenues hits $5 billion a year the Highway Fund will get 35% of any revenue above $5 billion collected.


Tolling and Managed Lanes - Several bills aimed at tolling, managed lanes and innovative financing tools did not pass.  The state faces several mega-projects that will be difficult to accomplish without such tools in the financing mix. Other failed bills would have removed tolls once bonds are paid off on toll lane construction.  Over time this would shift the cost of maintenance and reconstruction to TxDOT and pull limited funds away from needed new capacity projects.


No to Adjusting Shrinking Gas Tax - The buying power of the state’s 20-cent per gallon tax on gasoline and diesel continues to evaporate.  Several bills were presented to raise or index the Texas motor fuels tax rate which has not been raised since 1991.  None of those bills made it out of committee.


ON THE HORIZON
Population growth and expansion of the many activities the Legislature must fund is putting ever increasing pressure on the state budget.  TAoT will be urging lawmakers to continue to protect highway funding as they grapple with these issues.


Auto manufacturers are projecting that in a few years 40% of the vehicles they build will be electric powered.  Those drivers won’t be buying gasoline or paying state and federal gas taxes that are an essential part of traditional highway funding.  Sooner rather than later legislators will need to identify a mechanism for those vehicle owners to pay their share of road construction and maintenance costs.  That should be on the agenda when the Legislature gathers in 2021.


For several legislative sessions the Transportation Advocates of Texas coalition has fought to establish funding that is now showing up in the state budget and in TxDOT’s 10-year $77 billion Unified Transportation Program. The mission on the horizon is protecting that funding and helping find additional revenue sources.


10/30/19