Senate Joint Resolution 5[/caption]
Facing a $5 billion transportation deficit, the Legislature approved a bill this session that will be the largest transportation funding increase in Texas history if approved by voters in November.
The bill—Senate Joint Resolution 5—would amend the constitution to dedicate $2.5 billion of general sales tax to the State Highway Fund beginning in 2018. It would also provide 35 percent of motor vehicle sales tax revenue after the first $5 billion beginning in 2020.
Transportation funding from motor vehicle sales tax revenue is expected to be about $500 million to $600 million in 2020, said Scott Haywood, president of Move Texas Forward.
The funding mechanisms of the bill have strings attached to them in the event of a downturn in the state economy. The dedication of funds from general sales tax could be halted if sales tax revenue comes in lower than $28 billion in a fiscal year. However, the state is above those numbers and is not expected to fall that far, Haywood said.
SJR 5 was filed with the Secretary of State’s office June 1. Because the bill aims to amend the constitution, it will need to be approved by voters in the Nov. 3 election. Funding will not be available until 2018.
“As [legislators] were going through the budget process for the biennium, [SJR 5] wasn’t part of the conversation,” Haywood said. “But it will allow [the Texas Department of Transportation] to plan for the next budget cycle so they can have projects ready.”
Finding additional funding for transportation was a top priority among legislators in this legislative session. Due to the significant population growth in the state, TxDOT needs about $5 billion annually to keep up with current demands, said Veronica Beyer, director of media relations for TxDOT.
[polldaddy poll=8923383]Even with the approval of Proposition 1 last November, state transportation funding still falls short of the projected $5 billion needed annually to keep up with a rapidly escalating population and aging infrastructure.
“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. “To be able to keep up with this increasing demand, it was imperative we find a sustainable funding solution for our state. Transportation is the backbone of economic prosperity, so we must do what we can to keep commerce and goods moving.”
State Sen. Robert Nichols, R-Jacksonville, said with the progress made by the Legislature last session to fund transportation, the overwhelming support of Prop. 1 by voters last November and legislation passed this session, the state’s transportation funding is going to be close to where it needs to be now and in the future.
“I am very excited that the House, Senate and Governor were able to come together on SJR 5, which is critical for the future of transportation in our state,” Nichols said.
The Houston-Galveston Area Council released its Transportation Improvement Projects list for 2015. The list consists of pending road projects in need of funding. Projects on the list could benefit from the state providing additional funding to transportation.[/caption]
How SJR 5 came to be
Both the House of Representatives and Senate proposed major transportation funding bills this session using sales tax revenue that would have provided more than $2 billion a year to the State Highway Fund.
Nichols co-authored SJR 5 in February. The bill would have dedicated the first $2.5 billion of motor vehicle sales tax revenue every year to the general fund, the second $2.5 billion to the SHF and split any remaining revenue between the two, Haywood said.
House Bill 13 proposed an alternative sales tax revenue solution. The bill, authored by State Rep. Joe Pickett, D-El Paso, suggested dedicating the first $3 billion of general sales tax revenue to the SHF in addition to 2 percent of the remainder of sales tax revenue.
Both bills received nearly unanimous bipartisan support and were approved by their respective chambers. However, with two different visions to achieve the same goal, Haywood said the House and Senate each sent five members to a conference committee to hash out the legislation and come up with one bill that satisfied both chambers. The result was a compromise of both bills that was still dubbed SJR 5.
“I think [the bill] is definitely a win-win, and more importantly, it is a win for the state,” Haywood said. “The governor and speaker of both chambers can walk away and feel good about this. They put substantial revenue into transportation without raising taxes or fees.”
State Rep. Patricia Harless, R-Spring, served on the joint committee for SJR 5 and on the House Transportation Committee this session. Harless said she was pleased with work done this session to fund transportation.
“We had productive discussions over possible funding sources and improvements needed for our state’s transportation infrastructure,” she said. “There is still work to be done, but we [passed] several measures that highlight the state’s prioritization of transportation.”
Other legislative solutions
Legislators considered other avenues to find additional revenue streams for statewide transportation improvements this session in addition to SJR 5.
The House and Senate found $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 [the] 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].”
The diversion may just be a two-year fix, but several bills were filed this session that would have made a constitutional amendment ending diversions from the SHF permanently. However, none of those bills has been approved as of press time.
Should the Legislature want to continue to end the diversions after the biennium, it would have to address it in the next session.
Alan Clark, director of transportation for the Houston-Galveston Area Council, praised the Legislature for stopping the diversion of SHF revenue this biennium. He said the uncertainty of long-term mobility funding is a challenge for H-GAC as some projects can take years to plan.
“It’s important because TxDOT can’t count on that for 20 or 30 years,” Clark said. “So they won’t allow us to plan on spending that level of funding for 10 or 20 years.”
“I think [the bill] is definitely a win-win, and more importantly, it is a win for the state. The governor and speaker of both chambers can walk away and feel good about this. They put substantial revenue into transportation without raising taxes or fees.”
- Scott Haywood, president of Move Texas Forward
Despite pulling funds from the DPS budget for the next two years, 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.”
Harless said HB 20 was another key transportation funding bill to pass this session. The bill directs TxDOT, along with the input from local planning groups and officials, to create a 10-year funding plan and requires any major changes to formula funding to be presented in a public meeting.
“The main concern we heard from taxpayers is they want to ensure TxDOT is operating in a fair, transparent and fiscally conservative manner with the money we give them,” she said. “ HB 20 addresses that concern.”
Future funding
Andrea French, executive director for Transportation Advocacy Group Houston, said because the $5 billion needed annually only maintains current congestion levels and does not do much to improve the level of service, future legislative sessions will have to find additional mobility funding.”
“It’s great [that] we can look at existing revenue streams and transfer them to highway funding,” French said. “We still need to look at the notion that user fees are really important and that we pay to use the roads because they are essentially a service we are provided.”
