Proposition 1 on November Ballot Focused on Road Improvement Funding

“We’ve got enough work there to last a lifetime,” said Will Conley, chairman of the Capital Area Metropolitan Planning Organization, which is responsible for coordinating transportation projects in Central Texas. “It’s all of the above: It’s adding lanes. It’s redesigning ingress and egress for higher levels of safety and mobility. It’s a combination of small to large projects and everything in between.”

Proposition 1 would amend the Texas Constitution so as to divert some of the taxes paid by the state’s oil and gas companies to the State Highway Fund, which helps fund the Texas Department of Transportation. The state comptroller’s most recent estimate pegs TxDOT’s potential windfall from the proposition’s passage at about $1.7 billion in the first year alone.

Currently 75 percent of the severance tax—essentially a production tax paid by oil and gas companies—goes to the state’s Economic Stabilization Fund, also known as the Rainy Day Fund. If Proposition 1 passes, 37.5 percent of the tax would continue to go to the Rainy Day Fund, and 37.5 percent of the tax would go to the SHF. The remaining 25 percent would help fund the state’s education system.

The revenue would come without raising taxes and would have an assortment of strings attached, including a provision barring the money from being used for construction of toll roads and a mandate for TxDOT to identify $100 million of cost savings.

Scott Haywood, a spokesman for Move Texas Forward, an organization created by former TxDOT commissioners dedicated to lobbying for increased funding for Texas roads, said the measure would help TxDOT bridge its estimated $5 billion annual shortfall for maintaining existing roads and paying down its debt.

How we got here

Haywood said most of the state’s transportation revenue sources have remained steady since the early 1990s, but costs and congestion have soared.

Currently 20 cents of every gallon of gas purchased in Texas goes toward the state’s fuel tax. Of that, 5 cents helps fund the state’s education system, and 15 cents goes toward the SHF. The fund is also bolstered by the state’s vehicle registration fee, among other sources.

In 2012 the fuel tax provided $2.3 billion for the SHF.

Since the early 1990s, however, the cost of building roads has doubled, Haywood said. Additionally, in 2013, the average fuel economy of cars sold in the U.S. reached an all-time high of 24.9 miles per gallon, according to a study by the University of Michigan Transportation Institute. As fuel economy improves, drivers use less fuel, pay less in fuel taxes and contribute less to the SHF.

According to a 2007 study commissioned by TxDOT entitled “Accounting for Fuel Efficiency in Texas Fuel Tax Revenue Estimations,” the department could lose out on $86 billion in fuel tax collections because of assumed increases in the fuel efficiency of vehicles between 2007 and 2031. To overcome that deficit, the study found TxDOT would need to raise the state fuel tax 665 percent to $1.53 per gallon of gas.

To keep up with the state’s growth, Texas voters approved bond debt issuance for road infrastructure in 2001, 2003 and 2007 totaling $17 billion, Haywood said.

In all, stagnating revenue sources and mounting debt has left the state with a cash-strapped department, he said.

“When you look at the next [two years], we have a significant drop-off in what the department can do from a transportation standpoint,” Haywood said.

Georgetown implications

If Proposition 1 passes, TxDOT must identify $100 million of savings, although is not clear how the department will do so.

“TxDOT is continuing to look at opportunities set forth in [Proposition 1] that will fulfill this legislative requirement,” TxDOT spokesman Mark Cross said. “We are working with divisions within the agency to identify cost-savings measures.”

Although there have been discussions of state roads being handed over to the city, TxDOT has not confirmed if it will cede control of any roads to Georgetown.

The city took over Williams Drive from TxDOT six years ago. The roadway had cost the state an average of $1 million to $2 million annually for maintenance, Georgetown Transportation Director Ed Polasek said. However, the city has still worked to incorporate state funding in routine maintenance of the road because expenses exceed the city’s budget.

“Our total budget for maintenance is under $3 million a year,” Polasek said. “We have 640 lane-miles, and we’re doing maintenance on all of those roads.”

Georgetown has roads that have faced developmental pressures for years, but funding remains an obstacle, he said.

“We would love to see that [Proposition 1] money passed and adopted to do certain projects like Leander Road—a widening project,” Polasek said. “There’s no money.”

The Legislature

After legislators voted 124-2 in August 2013 to put Proposition 1 on this November’s ballot, Gov. Rick Perry praised lawmakers for moving the state “closer to securing a strong economy well into the future by providing more resources for building and maintaining a transportation system that will keep our economy growing and our population moving.”

“Just as important is the fact that we are increasing funding for transportation without raising taxes, which sends an incredibly strong message that Texas is committed to keeping the wheels of commerce turning while protecting taxpayers,” he said.

State Sen. Charles Schwertner, R-Georgetown, said he believes Proposition 1 is a step in the right direction toward maintaining a strong transportation system.

Schwertner noted how the state’s population growth affects transportation in the suburbs as well as in metro areas, with drivers facing difficulties getting from one point to another.

“It is a very important measure to meet the growing demands of a growing state and to continue Texas’ economic miracle,” he said. “It doesn’t include any new taxes, tolls or debts. In the past we voted for road bonds and we put it off for the state to pay later … but this is not new debt.”