As federal road money ebbed, Texas filled gap with borrowing


Texas transportation insiders saw this coming a mile away.

Or, more to the point, more than a decade away.

As an Associated Press review of federal transportation dollars shows, a federal gas tax that’s been stagnant for 22 years and the increasing congressional gridlock in the past few years have stanched the flow of Uncle Sam’s highway money to states around the country. In response, legislatures in many states are scrambling to increase gas taxes, or turning to other tax or fee increases to keep their highways and bridges in shape.

But in Texas — which has seen the same diminution of federal highway money — spending on state roads over the past decade has been the very definition of robust. Adjusting for inflation, total Texas spending per capita on highways has gone up almost 50 percent since 2003, from $388 per Texan in 2003 to $567 in 2013. And all of this, many Texas politicians like to brag, without raising the state gas tax.

But the picture is more complicated than that, and is changing.

“It’s credit card,” said state Rep. Joe Pickett, D-El Paso, chairman of the House Transportation Committee and one of the authors of Proposition 1, the state constitutional amendment overwhelmingly approved by voters in November that promptly gave the Texas Department of Transportation a $1.7 billion infusion.

“Over 10 percent of TxDOT’s proposed budget (for the next two fiscal years) is paying back what we borrowed,” Pickett said of the $2.4 billion in debt payments TxDOT anticipates in fiscal 2016 and 2017. “I think there’s a general consensus that we’ve been there, done that. We’re not going to borrow anymore.”

Early last decade, Texas transportation officials, led by then-Gov. Rick Perry and his close friend, Texas Transportation Commission Chairman Ric Williamson, steered Texas highway finance abruptly from the pay-as-you-go approach that had been the tack for about 85 years. TxDOT, along with the existing and newly created local toll authorities around the state, plunged neck deep into building tollways, which typically are financed by borrowing most of the construction cost and paying it back with tolls.

Beyond that, the Legislature, at the urging of Perry and Williamson (who died in 2007), pushed through three constitutional amendments that collectively allowed TxDOT to borrow about $18 billion for roads in less than a decade. That money funded aggressive highway expansions in urban areas all over the state, often tollways with generous portions of the construction paid by TxDOT funds, and an expansion of about 90 miles of Interstate 35 between Salado and Hillsboro.

Taking into account what the local authorities and even cities and counties threw into the state highway system, Texas spent almost $114 billion on major roads between 2004 and 2013. But with the state growing about 20 percent over that same time frame, with much of that growth in a half-dozen or so major metropolitan areas, even that bonanza hasn’t been enough, transportation officials say.

And if the rush of borrowing is in the rear-view mirror, and with both federal and state gas tax revenue losing ground to inflation, the Legislature this session is giving serious consideration to several measures that would direct several more billion dollars a year into TxDOT.

In that at least, Texas officials are in concert with their counterparts around the country.

State officials nationwide are accelerating their drive for new taxes, tolls and fees to repair an aging road system whose historical reliance on fuel taxes no longer is providing enough money to cover its costs.

Figures compiled by the Associated Press show the total amount of money available to states from the Federal Highway Trust Fund has declined 3.5 percent during the five-year period ending in 2013, the latest year for which numbers were available. During that span, the amount of inflation-adjusted federal highway money dropped in all but two states, New York and Alaska.

The shortfall has led to rougher roads requiring more frequent, short-term repairs, suspect bridges and jammed commuter routes that simply have more vehicles than the roads were designed to carry.

Transportation funding increases could be on the agenda in as many as one-third of the state legislatures this year. That comes after roughly one-fourth of the states increased transportation taxes or fees during the past two years.

The state proposals stand in stark contrast to the inaction in Congress, where a temporary funding patch is scheduled to expire in May and lawmakers have been at odds over a long-term highway plan.

“You’re seeing states all across the country that are looking to do something, because they realize you can’t count on the federal government,” said Missouri state Rep. Dave Hinson, a Republican who supports the idea of raising the state sales tax for road improvements.

The annual amount available to states from the Federal Highway Trust Fund has hovered just above $40 billion between 2007 and 2012, before slipping below that threshold in 2013. Even though total state and federal road funding exceeded the general rate of inflation over the past decade, the pace has tapered off in recent years as the amount coming from the federal government declined.

“A lot of those facilities are in need of really massive rehab, almost reconstruction from the ground up,” said Jim Tyman, director of policy of at the American Association of State Highway and Transportation Officials.

The association estimates that annual road and bridge spending by all levels of government is falling $32 billion short of what is needed.

TxDOT officials in 2013 said they needed an additional $5 billion a year to properly maintain the state’s 80,000-mile highway system and fight traffic congestion to a draw. The proceeds from the Proposition 1 constitutional amendment that voters approved in November will provide a significant if wildly fluctuating portion of that — the money comes from oil and gas severance taxes and thus is sharply affected by energy price swings.

About 20 percent of the nation’s 900,000 miles of interstates and major roads are in need of resurfacing or reconstruction, and a quarter of its 600,000 bridges are rated as structurally deficient or functionally obsolete, according to federal data analyzed by the American Road & Transportation Builders Association.

The flat federal funding is having an impact because states rely on federal dollars for an average of about half their capital expenses for roads and bridges, according to the association. The rest is covered with state money, which typically comes predominantly from fuel taxes — the recent Texas borrowing binge notwithstanding.

Gasoline tax revenue has grown little since 2007, as vehicles have become more fuel-efficient and people cut back on driving.

To compensate, lawmakers in Maryland, Massachusetts, New Hampshire, Pennsylvania and Wyoming passed gasoline tax increases during the past two years.

But about half the states haven’t raised their gasoline taxes in at least a decade, and the federal gas tax has remained at 18.4 cents a gallon since 1993. In Congress, Republican leaders have said there aren’t enough votes to pass a gas tax increase.

Many states are now considering alternatives. Virginia recently scrapped its per-gallon gasoline tax in favor of a new tax on the wholesale price of gas and a higher tax on other retail sales.

Lawmakers in Minnesota, Utah and Missouri also are expected to consider proposals this year that could levy a sales tax on fuel, allowing the states to reap more money when the price of gasoline rises.

Texas voters did their bit in November with the approval of Prop 1. But some of what legislators have in mind this time — ending the use of gas tax dollars for state agencies other than TxDOT and diverting vehicle sales taxes from general government spending to TxDOT — likewise would require constitutional amendments.

Texas highway finance has bucked the recent national trend. The state’s voters, it appears, might be asked again this fall to keep Texas roads headed that direction.



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