"We've got enough work [on I-35] to last a lifetime," said Will Conley, chairman of the Capital Area Metropolitan Planning Organization which is responsible for coordinating transportation projects in Central Texas. "It's all of the above: It's adding lanes. It's redesigning ingress and egress for higher levels of safety and mobility. It's a combination of small to large projects and everything in between."
Proposition 1 would amend the Texas Constitution so as to divert some of the taxes paid by the state's oil and gas companies to the State Highway Fund, which helps fund the Texas Department of Transportation. The state comptroller's most recent estimate pegs TxDOT's potential windfall from the proposition's passage at about $1.7 billion in the first year alone.
Currently 75 percent of the severance tax—essentially a production tax paid by oil and gas companies—goes to the state's Economic Stabilization Fund, also known as the Rainy Day Fund. If Proposition 1 passes, 37.5 percent of the tax would continue to go to the Rainy Day Fund and 37.5 percent of the tax would go to the SHF. The remaining 25 percent would help fund the state's education system.
The revenue would come without raising taxes and would have an assortment of strings attached, including a provision barring the money from being used for construction of toll roads and a mandate for TxDOT to identify $100 million of cost savings.
Scott Haywood, a spokesman for Move Texas Forward, an organization created by former TxDOT commissioners dedicated to lobbying for increased funding for Texas roads, said the measure would help TxDOT bridge its estimated $5 billion annual shortfall for maintaining existing roads and paying down its debt.
How we got here
Haywood said most of the state's transportation revenue sources have remained steady since the early 1990s, but costs and congestion have soared.
Currently 20 cents of every gallon of gas purchased in Texas goes toward the state's fuel tax. Of that amount, 5 cents helps fund the state's education system, and 15 cents goes toward the SHF. The fund is also bolstered by the state's vehicle registration fee, among other sources.
In 2012 the fuel tax provided $2.3 billion for the SHF.
Since the early 1990s, however, the cost of building roads has doubled, Haywood said. Additionally, in 2013, the average fuel economy of cars sold in America reached an all-time high of 24.9 miles per gallon, according to a study by the University of Michigan Transportation Institute. As fuel economy improves, drivers use less fuel, pay less in fuel taxes and contribute less to the SHF.
According to a 2007 study commissioned by TxDOT entitled "Accounting for Fuel Efficiency in Texas Fuel Tax Revenue Estimations," the department could lose out on $86 billion in fuel tax collections because of assumed increases in the fuel efficiency of vehicles between 2007 and 2031. To overcome that deficit, the study found TxDOT would need to raise the state fuel tax 665 percent to $1.53 per gallon of gas.
To keep up with the state's growth, Texas voters approved bond debt issuance for road infrastructure in 2001, 2003 and 2007 totaling $17 billion, Haywood said.
In all, stagnating revenue sources and mounting debt has left the state with a cash- strapped department, he said.
"When you look at the next [two years], we have a significant drop-off in what the department can do from a transportation standpoint," Haywood said.
Identifying savings
If the Prop. 1 passes, TxDOT must identify $100 million of savings. It is not clear how those savings will be identified, though.
"TxDOT is continuing to look at opportunities set forth in [the Proposition 1 legislation] that will fulfill this legislative requirement," TxDOT spokesman Mark Cross said in an email. "We are working with divisions within the agency to identify cost-savings measures."
As part of a voluntary program, the city of San Marcos has been in discussions with TxDOT to take over maintenance of a portion of Hopkins Road west of the San Marcos Square and a portion of Old RR 12 for months, San Marcos City Manager Jared Miller said.
"One of the reasons they turn roads over to cities is so they can divest themselves of maintenance costs, and repair and reconstruction costs especially," Miller said.
Miller said although taking control of maintenance and repairs of the roads from TxDOT would require an additional financial commitment from the city, San Marcos would benefit because the city would build a higher-quality street.
"We want to build [Hopkins] slightly different from what they would do," Miller said. "We want to do it better. Theirs would just be a resurfacing project, but we want to include lighting and make it more like what we want one of our roads to be like since it won't be a TxDOT road anymore."
The Legislature
After legislators voted 124-2 in August 2013 to put Proposition 1 on this November's ballot, Gov. Rick Perry praised lawmakers for moving the state "closer to securing a strong economy well into the future by providing more resources for building and maintaining a transportation system that will keep our economy growing and our population moving."
"Just as important is the fact that we are increasing funding for transportation without raising taxes, which sends an incredibly strong message that Texas is committed to keeping the wheels of commerce turning while protecting taxpayers," he said.
State Rep. Jason Isaac, R-Dripping Springs, who represents Hays and Blanco counties, said when legislators voted last year to put the proposition on this November's ballot, most experts estimated it would generate about $800 million for roads in its first year. But because of growth in the state's energy sector, those estimates have more than doubled in the past year.
"I think we're going to continue to see that kind of success for the foreseeable future," Isaac said. "The next 10 to 20 years, as our energy sector plays out, I think we're primed to get even more money going directly to roads [if Proposition 1 passes]."
Even with that growth, Isaac said Proposition 1 is still only a first step toward repairing the state's transportation funding. Among other possibilities is dedicating a portion of the state's vehicle sales tax—currently 6.25 percent—to the SHF, a move that has been championed by current gubernatorial candidate and Texas Attorney General Greg Abbott.
The state will still need to be creative in order to solve all of its road problems, Isaac said. According to the Texas Transportation Institute, a freeway interchange such as that at Ben White and I-35 in Austin costs about $250 million to build, a figure significantly higher than 20 years ago.
"My concern is, 'How come it's not getting cheaper to build roads,'" Isaac said. "You have economies of scale, so we should be finding efficiencies and reducing our costs of building roads. [Costs] have just skyrocketed. I know a private business would not tolerate that kind of increase in costs."
