Lawmakers to revisit use of State Highway Fund money

State lawmakers are expected in 2015 to consider dedicating all of the money from the State Highway Fund (Fund 6) to highway construction and maintenance, rather than using some of it for law enforcement or other needs. Dedicating these funds is one of several proposals lawmakers have reviewed since 2013 to address anticipated shortfalls to Fund 6, the primary funding mechanism for Texas highways.

In a May 2014 press release, Speaker Joe Straus said the House will propose a budget in 2015 that dedicates all the money in Fund 6 to highway needs. According to the statement, this would increase funding for roads by about $1.3 billion during fiscal 2016-17. The Texas Department of Public Safety (DPS) and other agencies that currently receive Fund 6 dollars would be funded by other means.

The Texas Department of Transportation (TxDOT), which receives funding largely from fuel taxes and vehicle registration fees that contribute to Fund 6, has projected a need of $5 billion to pay for highway repair, maintenance, and mobility projects not currently covered in its budget. This projected need — which has been attributed to the rising costs of building and maintaining roads and to diminishing gas tax revenues resulting from increased fuel efficiency — comes amid uncertainty about federal funding levels. TxDOT also has statutory authority to issue bonds and to enter into comprehensive development agreements with private investors to build and maintain toll roads, but according to the department, bonding programs enacted by the Legislature will be exhausted by 2015.

Other proposals. Various proposals have been considered since 2013 to address anticipated highway funding needs, including increasing the revenue going into Fund 6. Advocates for raising the taxes and fees that support Fund 6 say they have not kept pace with the rising costs of highway construction and maintenance. Efforts in the 2013 legislative session to increase the vehicle registration fee were unsuccessful. In addition, a proposed amendment on the November 4 general election ballot would allocate to Fund 6 a portion of general revenue from oil and gas production that currently goes to the rainy day fund. According to TxDOT, even if the proposed amendment (Proposition 1) is approved by voters, it will not fully address the state’s highway funding needs.

Funding DPS. Other proposals have aimed to free more Fund 6 dollars for highways by creating a separate source for DPS funding. The 83rd Legislature in 2013 considered HB 3666 by Darby, which would have generated about $260 million each year in general revenue by imposing a $15 public safety fee on vehicle inspections, according to the Legislative Budget Board. The new fee would have created a dedicated revenue stream for DPS, while restoring money to Fund 6 that currently provides partial funding for the department. HB 3666 died in the House Calendars Committee.

Supporters of dedicating Fund 6 money to highways say it would provide needed transportation revenue without a tax increase, while making the state budget more transparent, which taxpayers favor. Fund 6 is largely composed of user fees, such as taxes on motor fuels and vehicle registrations, which supporters say should be dedicated to the purposes for which they are collected — maintaining and expanding the state’s transportation network. The strength of the Texas economy will allow the Legislature to fund DPS and other affected agencies through general revenue instead of Fund 6 diversions, they say.

Opponents of dedicating Fund 6 money to highways say this measure would force DPS and other affected agencies to compete with other state priorities for limited resources as the state struggles to meet existing needs through general revenue. Excluding DPS from state highway funding would be particularly inappropriate, they say, because both the Texas Constitution and the Transportation Code explicitly authorize using Fund 6 revenue for policing state highways. DPS enforcement activity helps ensure the safety of motorists, a task directly related to the taxes and fees that contribute to Fund 6, opponents say.

by Blaire D. Parker

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