Prop 1 Highway Funding Authority Extended to 2034

Governor Greg Abbott has signed SB 962 into law extending until 2034 the funding for Texas highways authorized when voters approved Proposition 1 in 2014.  Both the Texas Senate and House approved the extension by near unanimous votes in the 2019 legislative session.


The House voted 140-1 in May to approve SB 962 and the Senate earlier approved the bill unanimously.  The bill was sponsored by Senator Robert Nichols, chairman of the Senate Transportation Committee, and Representative John Zerwas, chairman of the House Appropriations Committee.

Organizations partnering with the Transportation Advocates of Texas joined in urging lawmakers to approve the 10-year extension that will keep funds flowing to needed projects in every part of the state.

Over the past four years a total of $5.4 billion authorized by Prop 1 has gone to upgrade and expand highway capacity in Texas.  The Comptroller estimates Prop 1 will provide $1.4 billion in FY 2020 and $1.5 billion in FY 2021 for highways.

Those funds come from a portion of existing oil and natural gas production taxes and have been a significant step forward in filling the state’s highway funding gap.  Prop 1 directs that oil and gas production taxes above a certain level are split with half going to the state’s Rainy Day Fund and half to the State Highway Fund.  In a typical year approximately 29% of total “severance taxes” flow to the State Highway Fund because of Prop 1.

When lawmakers set up Prop 1 they included a potential termination date that would cut off those funds unless extended.  Senator Nichols authored and championed the bill which extends the termination date until 2034.  This extension provides a level of funding certainty needed to keep highway improvement projects moving down the long conveyor belt of planning, environmental clearance, funding, construction and completion.


The Legislature also passed SB 69 by Senator Jane Nelson, chairman of the Senate Finance Committee, It eliminates additional funding uncertainty related to Prop 1 funds by defining that oil and gas production taxes can flow to the highway fund as long as the Rainy-Day Fund will have a balance equal to 7% of state General Revenue-related appropriations.  Under previous law the trigger point for transferring the funds to TxDOT was determined every two years by a Sufficient Balance Committee made up of elected officials.