How it Works: Why is there a $5 billion State Highway Fund shortfall?

The Houston-Galveston Area Council's Call for Transportation Improvement Projects will begin this fall.

The Houston-Galveston Area Council's Call for Transportation Improvement Projects will begin this fall.

In Texas, funding for new roads and maintenance comes from a number of sources, including fuel taxes and vehicle registration fees, according to the Texas Department of Transportation. These revenue streams make up the State Highway Fund—the fund TxDOT uses to pay for existing and new roadways.


However, because state and federal fuel taxes have not been raised since the early 1990s, revenue from these sources has remained steady while road congestion costs have increased.


Each year, Texas has a $5 billion shortfall for road maintenance and mobility improvements, according to TxDOT.


In 2014 and 2015, Texas voters approved propositions 1 and 7, respectively, measures to transfer taxes paid by oil and gas production companies and general sales tax revenue from the state into the State Highway Fund. It is estimated the measures will transfer a total of $4.2 billion annually to the fund, beginning with the 2018 fiscal year.


To bridge the rest of the gap, TxDOT and state legislators are considering other revenue sources for this upcoming session, such as increasing the fuel tax or partnering with private entities.



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