This November, Texas voters will vote on a proposed constitutional amendment which would allow revenues from oil and gas production taxes to help fund the state's transportation projects.
Currently those revenues flow into the state's Economic Stabilization Fund, otherwise known as the rainy day fund. That helps the state in unforeseen situations, said Alan Clark, the director of transportation planning for the Houston-Galveston Area Council. The legislation proposing the amendment includes a way to protect the fund from running dry.
"The rainy day fund will have to be above a certain minimum determined by the Texas Legislature and then funding will go to the projects or activities that were approved as part of that drought relief program," Clark said. "And only after those two things [are met] will funding be considered for transportation."
Last year, Texas voters approved Proposition 6, which allows the state to redirect money from oil and gas production revenues to fund water projects statewide.
"Those have first priority," Clark said.
Recent increases in oil and gas hydraulic fracturing have led to more money going into the rainy day fund.
"I just know that the more oil and gas [those companies] pump out of the ground, the more they are required to pay this revenue into the state fund," Clark said. "And because this goes up and down, it's part of the reason why it's in this, what we call rainy day fund."
Because the money comes from taxes already paid by the oil and gas companies, the change would not result in increased taxes or fees. If the amendment passes, it would also not require the state to borrow money or increase the state's debt, Clark said.
Estimates say that if the amendment creating the state highway fund is approved by voters, it could provide about $1.4 billion for transportation in its first year, Clark said.
James Noack, the commissioner of Montgomery County Precinct 3, said he feels the Legislature needs to make the adjustments needed to finance transportation from the general fund, but in the meantime, this fund would help.
"Money from somewhere is better than money from nowhere," Noack said. "But I don't think that this is the best solution long-term."
He said it is possible money from oil and gas production taxes could dry up if a large discovery of those resources is found somewhere else.
Some opponents to the amendment have expressed concern about putting transportation funding decisions in the hands of the voters. The voters would be allowing for another funding resource to be explored, Clark said, but they would not be able to select a fixed budget amount for the state highway fund.
Other opponents have pointed to the volatile nature of oil and gas production tax revenue history and say it is not a long-term solution for the budget shortfalls transportation has seen in Texas in recent years. Clark said the state would need to use multiple funding sources to fix its transportation funding problems.
"I think that this is a very significant and important resource for transportation and it will not meet all of our needs, but we're going to need to approach this one step at a time," Clark said. "And this is an important and valuable first step."
Part of the reason for the recent budget woes is vehicles have been getting increasingly better gas mileage while gas tax rates have stayed about the same since the early '90s. Clark said that with no plan for those rates to go up, the traditional source of transportation funding cannot keep up with the growing need.
"As the travel [mpg] goes up, the revenue from gas and fuel taxes is not going up anything like the same proportion," Clark said. "In fact, it's basically flat as a pancake."
In addition to specifying that the Legislature must set the minimum amount for the rainy day fund, the state highway fund legislation includes a sunset deadline of 2024 by which the Legislature has to renew it, alter it or allow the amendment to lapse.
