By John Colyandro & Brent Connett
Published by Austin Business Journal on February 8, 2013
Transportation infrastructure is among the first priorities of state government, and is a critical component of any robust free market economy.
In recent decades, however, vehicles have become more fuel efficient and inflation has made raw materials more expensive, causing gasoline tax revenues to grow slowly, and significantly hampering the purchasing power of those dollars that are collected.
For years, there have been warnings about the decline in financing for highway construction and maintenance. The Texas Department of Transportation (TxDOT) Legislative Appropriations Request for the 2014-2015 biennium, notes: “There is no question that Texas has a transportation funding challenge. Our traditional sources of funding have proven no longer reliable, making it difficult to meet the mobility needs of our rapidly growing state.”
The Texas State Data Center projects our state’s population to be as high as 55 million people by 2050. Furthermore, a recent Census Bureau report highlights Texas as the recipient of net internal migration: people leaving other states and moving to Texas. As population grows, so do the demands on infrastructure.
The state must construct more roads, and the money to do so has been in state coffers all along. State Senator Robert Nichols (R – Jacksonville) and State Representative Larry Phillips (R-Sherman) will offer a proposal this legislative session to dedicate most of the revenues from the existing motor vehicle sales and use tax to TxDOT for highway maintenance and construction, ensuring a reliable funding source to augment the gasoline tax [a primary source of funding for road construction and maintenance], and lessening the state’s reliance on debt to build roads.
Texas debt service payments have doubled since 2007, and in the most recent state budget, debt service payments total more than spending on the judiciary and the Department of Public Safety, combined. Transportation-related debt is among the chief contributors to increases in state debt, accounting for more than one-third of all outstanding state debt. Transportation debt accounts for 57.6 percent of the debt that the Bond Review Board anticipates will be issued in fiscal year 2013.
The approach chosen by Sen. Nichols and Rep. Phillips would finance road construction and maintenance up front. In fiscal year 2012, the motor vehicle sales tax brought in more than $3 billion to state coffers, making it among the largest sources of state revenue. Yet most of that money goes into the General Revenue Fund (GR), most of which is consumed by education and health and human services. Those two categories along with public safety and criminal justice account for 94.7 percent of state GR spending.
Using motor vehicle sales tax revenue for road construction and maintenance will help to refocus state government on a core responsibility. In addition, the proposal would gradually shift the motor vehicle sales and use tax revenues from GR to TxDOT, easing the reduction in funds. Furthermore, revenues from the motor vehicle sales and use tax should be dedicated to road maintenance and construction since sales of vehicles directly impact the usage of Texas’ transportation infrastructure.
As Senator Nichols asks, “What would be more logical than to use the transportation-related funds to make the improvements needed on the highway the vehicle is dependent on?” The Senator frequently names core principles for transportation finance, which include: the funding source must be predictable over long periods of time, transportation related, and automatically adjustable for inflation. The motor vehicle sales tax does all of these.
The proposal garners broad support from Texans. In a poll of 750 likely general election voters, conducted by the Texas Conservative Coalition Research Institute in late October, 2012, respondents were asked if they support or oppose the idea. 63 percent support it, while only 22 percent oppose the idea.
Combined with public-private partnerships, the Nichols/Phillips proposal takes an existing revenue stream that is directly related to the number of vehicles on the road and repurposes it, ensuring sufficient and predictable funds for highway construction and maintenance that are necessary for Texas’ economic future.
John Colyandro is Executive Director and Brent Connett is Communications Director at the Texas Conservative Coalition Research Institute, based in Austin.