Lawmakers steering toward new money for transportation

Texas is known for its wide open roads, long stretches of smooth pavement, international commerce, sprawling cities and hundreds of miles of nothing to do but drive.

But at the heart of every thriving big city there is a traffic jam, and out in the state's more rural areas, potholes dot the county roads that run through the oil and gas shales.

Texas has, therefore, long been a battleground for issues over transportation, but this legislative session, two little words are causing a stir in the halls of the Capitol: new money.

Lawmakers and transportation experts say there are opportunities for a cash infusion into the state's overburdened transportation system, funds necessary for ongoing projects and maintenance.

On one end of the spectrum are the three ways Texas typically raises money for highways on an annual basis: fees or taxes, loans, and tolls. On the other end is the Economic Stabilization Fund, otherwise known as the rainy day fund, which is available for one-time projects but not for annual funding.

Gov. Rick Perry has proposed that the Legislature spend $1.7 billion of the state's rainy day fund for transportation, a move that has some lawmakers cheering about the infusion of state cash for new construction.

State transportation officials and legislative leaders, however, said their options for funding maintenance costs and infrastructure needs during the next two years are shrinking.

"We're tapped," said Phil Wilson, executive director of the Texas Department of Transportation.

New revenue system needed

The state runs out of transportation bond money in 2014, having exhausted its bonding capacity after a decade of voters approving big bond packages, and needs a new revenue stream, Wilson said.

Senate Finance Chairman Tommy Williams, R-The Woodlands, has called the situation a "fiscal cliff" after which funding for highway projects drops drastically—at a time when 1,200 people are moving to Texas every day and an oil and gas boom is deteriorating roads at a fast clip, according to transportation officials.

Wilson told lawmakers this week that his agency needs $4 billion more each year to build and maintain transportation infrastructure in the absence of bond money.

More tolls are not always an option, he said, as some projects—such as the $818 million Horseshoe project in Dallas around I-30—are done for safety and congestion reasons and are not always toll-viable.

And he said lawmakers need a fix immediately because even a delay of a couple of years will have consequences for a state that is already home to one of the nation's top 10 most congested cities in America—Houston—according to a study released earlier this month by the Texas Transportation Institute at Texas A&M University.

It takes between five and 10 years to plan and build major highway projects, Wilson said. Without funding, there can be no planning, he said.

"You can plan to the nth degree and have everything on the shelf ready to go, but if you don't have the funding to go do it, you're in that cycle of having to choose the best of the best of the best, which has a really harmful effect on the state," Wilson said.

Rainy day fund plans

Perry has not said what he has in mind for rainy day funds, but state law requires that the money be used for one-time projects or emergency situations, and not for something that requires lawmakers to routinely dip into the funds.

But Perry, as well as House Speaker Joe Straus and Lt. Gov. David Dewhurst, have agreed that it is time to use the fund, which is expected to reach a record of nearly $12 billion by 2015, to kick-start a new era in transportation for Texans.

"Whenever we're recruiting a business seeking to relocate or expand, a chief concern of theirs is ensuring there are adequate water, power and transportation systems for their needs," Perry said in his State of the State Address on Jan. 29. "We've been the nation's top exporting state for 10 years now, and for us to continue that dominance requires a clear way to move goods from one place to another."

Williams, who oversees the Senate's budget-writing process, said the rainy day fund can be used to fuel ongoing projects in a way that does not require it to be tapped every two years.

"I could see us tapping the fund for $2 billion to set up a revolving loan program for water projects and $2 [billion] to $3 billion for transportation projects," he said in a recent editorial.

Increasing gas taxes

Straus has also said he would support raising driver's license fees to fund projects, an idea that failed in 2011; lawmakers are also considering making motorists renew their licenses more often.

Democrats have floated the idea of raising the 20 cents/gallon gasoline tax, which has not increased since 1991.

But the gas tax, which accounts for the majority of highway funding beyond the bonds, is unreliable and slowly shrinking—both on the state and federal levels—because of more fuel-efficient vehicles and less driving by motorists who do not want to pay high gas prices, said Rep. Larry Phillips, R-Sherman, chairman of the House Committee on Transportation.

Aside from that, the Republican-led Legislature is never a fan of raising taxes, Phillips said.

Fee diversion

The governor's office has estimated that some $1.3 billion annually in transportation fees and funding is not actually going to transportation projects when it should and could be put back into TxDOT as a revolving annual funding stream.

Fee diversion is a popular subject among Republicans this session, but Phillips said that figure may be closer to $300 million—barely enough to fund a new major highway exchange, much less the billions of dollars in maintenance and new construction costs that need to be funded.

While declining to say which ideas he would support, Wilson said the agency welcomes new ideas and looks forward to lawmakers exploring the options.

"The agency would welcome every dollar we could get," Wilson said. "From diversions, or a new funding trough, perhaps an infrastructure fund, [or] enhancing opportunities to leverage projects with other methods of finance. We're open to that."



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