Legislature works to address $5 billion shortfall

Heading into the 2015 legislative session, officials with the Texas Department of Transportation said maintaining current congestion levels would require an additional $5 billion in funding annually. If approved by voters, SJR 5 would start redirecting $2.5 billion of general sales tax revenue to the highway fund starting on Sept. 1, 2017.

In 2019, a portion of motor vehicle sales tax would also start being redirected to the SHF. After the first $5 billion in tax revenue is collected, 35 percent of all additional car sales tax revenue would go to the SHF. That 35 percent is expected to translate to roughly $500 million to $600 million for TxDOT in 2020, according to Scott Haywood, president of Move Texas Forward, a nonprofit that seeks to educate Texans about infrastructure needs.

Representatives with Transportation Advocacy Group in the Cy-Fair area have expressed support for the measure as well.

“Prop. 1 was a good start, but it didn’t provide us with that long-term reliable source of transportation funding TxDOT was asking for,” said TAG Houston board member Jeff Collins. “Now we’re seeing legislation that has the money in it. We’re seeing a genuine effort to address the problem.”

Voters to decide on transportation funding in NovemberLocal needs

Officials with TxDOT started applying pressure to lawmakers to address the department’s funding shortfall leading into the 2013 legislative session. That November voters passed Prop. 1 with 80 percent approval, funding transportation with an additional $1.7 billion annually from the Rainy Day Fund.

Even with Prop. 1 approval, transportation funding still fell vastly short of what was needed to keep up with demand and population growth, said Veronica Beyer, director of media relations for TxDOT.

“As Texas grows by more than 1,000 people daily, we are seeing more congestion and therefore an increasing need to build, repair and maintain our roadways,” Beyer said. “Transportation is the backbone of economic prosperity, so we must do what we can to keep commerce and goods moving.”

Although no specific projects have been identified yet for Prop. 7, the distribution of Prop. 1 money provides some insight into the selection process. The Texas Transportation Commission, the governing body over TxDOT, decides which projects to fund based on conversations with local governments and metropolitan planning organizations. In February the TTC dedicated $278 million of the available $1.7 billion Prop. 1 funds to Greater Houston area projects.

TxDOT worked closely with the Houston-Galveston Area Council in determining which projects to fund, taking cues from H-GAC’s Transportation Improvement Program. In Cypress, Prop. 1 funds paid for the final two segments of the Hwy. 290 expansion project from Bauer Road to FM 2920, accelerating the process by two years, according to H-GAC Transportation Director Alan Clark.

Other projects in the Northwest Houston area on H-GAC’s TIP list—which could be considered for Prop. 7 funds—include pedestrian improvements along FM 1960 and traffic signal improvements along Spring Cypress Road, Cypresswood Road and North Eldridge Parkway.

Keith Vrana, chairman of the Cy-Fair Houston Chamber of Commerce Transportation Committee, said the effect good mobility has on the business climate in an area cannot be overstated.

“When you have congestion, that affects everything from the daily commute of your workforce to your ability to keep products moving on the roadways,” Vrana said. “An investment in mobility has benefits for all parts of the community.”

Other legislative solutions

Although SJR 5 could provide more transportation funding than any other legislation passed this session, legislators did find other revenue streams.

Both the House and the Senate found a combined $650 million a year in the next biennium for the SHF through the appropriations process, Haywood said. The additional money comes from funds previously diverted from the SHF to the Department of Public Safety’s budget.

“Both budgets make sure that all funding that goes to State Highway Fund will go to maintain roads to the state,” Haywood said. “They have definitely taken care of it under the current budget. Over the long term that’s another [issue].”

Despite pulling funds from the DPS budget, Haywood said it should not negatively affect other areas of the state’s budget.

“The good news for Texas is we’re in a great economic situation, so the Legislature is able to do things without pulling money away from anything else,” Haywood said. “[The Legislature] can still utilize that revenue, and it doesn’t impact that spending limit.”

Future funding

Andrea French, executive director for TAG Houston, said because the $5 billion needed annually only maintains current statewide congestion levels and does not do much to improve the level of service, future legislative sessions will have to find additional transportation funding options. She said the approved funding gets the state closer to solving its transportation funding shortfall, but does not solve the problem entirely.

“It’s great that we can look at existing revenue streams and transfer them to highway funding,” French said.  “But I think we still need to look at the philosophical notion that user fees are really important, and that we pay to use the roads because they are essentially a service that we are provided.”

French said the Legislature could explore increasing vehicle registration fees both at the state and county level as well as increasing or indexing the motor fuel tax to have it mirror the cost of inflation. Both options, however, require an increase in fees that could create a contentious political climate that will be challenging to work against.

“I know the gas tax is not popular, but something needs to be done with it— whether you get rid of it and replace it with something else or you increase it or you index it to inflation because we haven’t touched it since 1991,” she said. “It’s no longer a sustainable funding stream.”