Voters statewide will decide Nov. 4 whether to approve a constitutional amendment designed to combat the state's transportation funding woes and repair its ailing road infrastructure.

"For the Greater Houston area, Proposition 1 could bring in more than $100 million—or even double that—in a given year," said Alan Clark, director of transportation for the Houston-Galveston Area Council. "Proposition 1 will be a very important source of funding for [the Houston area]. That's true whether it is part of the Houston region that is fast growing and needs new road capacity, or whether this is in older parts of the region where we need to rebuild facilities and better maintain them."

Proposition 1 would amend the Texas Constitution to allow for a percentage of revenue raised from the state's oil and gas tax to flow into the State Highway Fund. As it stands, 75 percent of severance tax revenue—which stems from a production tax paid by oil and gas companies—fills the coffers of the state's Economic Stabilization Fund, also known as the Rainy Day Fund. The remaining 25 percent of severance tax revenue goes to the general fund to pay for public education.

With voter approval, the proposition would divide the severance tax revenue—previously allocated for the RDF—equally between the RDF and the SHF. The remaining 25 percent of severance tax revenues would still be used to help fund the state's public 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.

In the first year, Proposition 1 would contribute about $1.7 billion to future road improvement and maintenance projects, according to the state comptroller.

However, experts said that amount still falls well short of what is needed annually to keep up with a rapidly escalating population and aging infrastructure.

"Proposition 1 is a great first step toward increasing funding for transportation in Texas, but it really is just a first step," said Andrea French, executive director for the Transportation Advocacy Group. "We also know that we have to look much further into the future, and the proposition is not going to be enough to sustain what we need so we also need to find other funding options."

The Texas Department of Transportation estimates its unmet annual transportation needs are $5 billion, which includes $1 billion for recurring maintenance, $3 billion for mobility projects and $1 billion for repairs related to a growing energy sector.

"The estimated annual shortfall of $5 billion is a safe line used to project what Texas needs to stay minimally competitive with other states and basically maintain the current state of transportation in the state," French said.

How Houston benefits

According to a report by Texas Infrastructure Now, a nonprofit organization that promotes investment in transportation funding, TxDOT is projected to spend $464.6 million on road construction projects in the Houston district in 2016. That amount represents a $386.4 million decline in the six-year average in funding for the district.

Texas Infrastructure Now estimates the Houston district could receive an additional $221.5 million if the proposition passes.

"That is very significant and it would help us with lots of road projects that need to be done," Clark said. "It can help with new roads that need to be constructed or interchanges that need to be constructed or reconstructed. We have lots of old infrastructure that needs replacement."

Hwy. 59 is among the top priorities identified by TxDOT in terms of corridors in need of expansion and improvement, French said.

Fort Bend County has taken a proactive approach to build, expand and maintain road projects handled by TxDOT by taking control of the project, County Judge Bob Hebert said.

Fort Bend County has had to take control of several significant projects, such as the Grand Parkway, Hwy. 59 and FM 1093 because TxDOT did not have the adequate funds to advance the projects, Hebert said, and since 2000, the county has had to build about 1,200 lane miles of roads.

Clark said the Houston region will not identify any potential projects that could be funded by Proposition 1 money prior to the Nov. 4 election. In the next couple of months, H-GAC will begin having conversations with local governments and transportation agencies to determine what needs the region has and what projects could benefit most from the additional funding. Assuming voters approve the proposition, Clark said he anticipates being able to make commitments of the new money to specific projects around March 2015.

"We [have] a lot of needs, and we want to make sure that we have identified the best places to put that additional funding if it comes available," Clark said.

How we got here

Transportation funding in Texas is generated primarily by motor fuel tax and vehicle registration fee revenue, among other sources. With soaring construction costs and traffic congestion, along with more fuel-efficient vehicles, most of the state's transportation revenue sources have remained steady since the early 1990s and have not kept pace with mounting transportation demands. The motor fuel tax rate has not been adjusted or increased since 1991, and it was never indexed for inflation. The influx of fuel-efficient, hybrid and electric cars is resulting in lost revenue tied to the gas tax that is not being captured, Clark said.

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's portion of the fuel tax 665 percent from $0.20 to $1.53 per gallon of gas.

"We need to either do something with it or switch to a very different mainstream source of funding for transportation," French said.

To try and keep up with transportation needs, the state has relied on debt and one-time funding sources for more than a decade to pay for construction and maintenance. Texas voters approved bond debt issuance for road infrastructure in 2001, 2003 and 2007 totaling $17.9 billion, said Scott Haywood, spokesman for Move Texas Forward, an organization dedicated to lobbying for more funding for Texas roads.

"As of 2015 TxDOT is maxed out on its debt and can no longer use debt to pay for projects," French said. "TxDOT cannot borrow anymore money so it has to find a different way to fund transportation. There's no more money, it is not available; it is gone as of 2015."

Alternative funding sources

Even with the passage of Proposition 1 adding a projected $1.7 billion to the SHF, funding still falls short, French said.

The Legislature could explore increasing vehicle registration fees both at the state and county level as well as increasing 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.

A PDF of October's infographic can be found here.