New money for TxDOT: Lawmakers discuss potential funding increase

Texas lawmakers are searching for a path to finding billions of dollars in new funding each year for highway maintenance.

Devising a plan to double the state's highway capacity in the next 50 years has emerged as one of the top priorities of the 83rd Legislative Session, and there has been little debate over funding new projects with the state's healthy rainy day fund.

Ideas vary widely on how to significantly raise the budget of the Texas Department of Transportation, which has said it needs more than $4 billion in additional funding every year just to maintain highway projects in the face of rapid population growth and infrastructure strain in the coming decades.

Bills in the Texas House of representatives and Senate range from "century loans," which would issue 100-year loans at a low fixed rate, to increasing fees for driver's licenses to raising registration fees or fuel taxes for the first time in two decades.

But halfway through the session, which ends in late May, no clear plan has yet been outlined on how to solve the funding issue in a state that has exhausted its transportation bonding capacity and runs out of bond money in 2014 after a decade of successful building and borrowing.

New funding source needed

State Sen. Kirk Watson, D-Austin, is pushing for a $50 increase in annual motor vehicle registration fees, which currently start at $50.75 per year. Local governments have the power to raise that fee by $10.

Lt. Gov. David Dewhurst has promised to propose an amendment to the budget passed by the Senate Finance Committee in early March that would authorize at least $1 billion from the state's Economic Stabilization Fund, also known as the rainy day fund, for a revolving loan program for local transportation projects.

Gov. Rick Perry, who held off efforts to use the fund during the money-strapped session of 2011, has endorsed the use of $1.7 billion for transportation projects from the fund, which is expected to have a record high balance of $11.8 billion in the next two years.

Using rainy day funds

Bills have also been filed in the House of Representatives to withdraw money from the rainy day fund.

The caveat to using the fund is that it cannot be used for any revolving cash flow to the Texas Department of Transportation, so another funding mechanism for maintenance and other operating costs must be found.

Leaders, including Perry, have suggested that more than $1 billion can be found in dedicated fees that are diverted from highway projects, but House Transportation Committee Chairman Larry Phillips has argued that the amount might be closer to $300 million—nowhere near the more than $4 billion in additional annual funding TxDOT officials have said the department needs just to maintain highways.

Proposed fee increases

House Speaker Joe Straus has said the $25 fee paid for driver's license renewals every six years should be looked at as an additional revenue stream, and bills have been filed that would both increase that fee and decrease the amount of time between renewals.

A comprehensive omnibus bill by Rep. Patricia Harless, R-Spring, addresses several methods of funding in a proposal that would require voter approval for transportation funding and collects nearly $5 billion in annual new money for highway maintenance.

The bill would include a $50 increase in registration fees, a 10 cent increase in the gas tax and a redirection of some sales taxes from car sales into highway maintenance. The bill also addresses the fee diversion issue described by Perry and others.