Understanding State Road and Highway Funding in Texas

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Understanding State Road and Highway Funding in Texas

TEXAS DEPARTMENT OF TRANSPORTATION

2012–2013 Statewide Edition

TRANSPORTATION

FUNDING

Understanding State Road

and Highway Funding in Texas

2008

2019

2013 2024

2030

F

E

FUNDING

CHALLENGES

AHEAD


I

TRANSPORTATION

NEEDS AND COSTS

n 2009, the 2030 Committee, a group of Texas

business, academic and civic leaders,

determined that the state needed to invest some

$315 billion over the next two decades to maintain

the existing transportation infrastructure, prevent

worsening congestion in urban areas and ensure

rural mobility and safety. The Texas A&M

Transportation Institute (TTI) later updated that needs

figure to about $370 billion and expanded the needs

outlook to 2035.

Current state revenue projections show that less than

half of that amount will be available over the next

two decades.

What is the cost to taxpayers if congestion continues

at its current level? If roads and bridges can’t be

maintained? If businesses locate to other states

because they can’t transport their products on Texas

roads in a timely manner?

In 2011, the 2030 Committee worked with TTI to

answer those questions. According to TTI, the

average Texas household will pay about $232 a

year in state taxes and fees for transportation—if

there are no changes to funding levels.

But the average Texas household pays much more

than that. Rougher roads and traffic congestion add

another $6,000 a year in transportation costs due to

longer travel times, increased vehicle maintenance

and wasted fuel. Texas businesses also experience

considerable costs from increased delivery and

shipping times.

It is a daunting task to fill the gap between the state’s

expected needs and projected revenue, but exploring

funding solutions for our most critical transportation

needs is a realistic starting point. As state leaders

explore long-term financial solutions, TxDOT will

continue to make the most of every available resource

to improve the state’s transportation system.

HIGHWAY CONTRACTS

10

9

8

7

6

5

(in billions)

4

3

2

1

0

2000

State Highway Fund Temporary Sources, which includes Texas Mobility Fund, Proposition 12 bonds, Proposition 14 bonds, SH 121, SH 130 (Seg. 5 &6), SH 161, and federal stimulus dolla

TRANSPORTATION FUNDING

2001

2002

TEX AS DEP A R TMENT OF T R ANSPOR T A TION

ESTIMATED CONSTRUCTION AND MAINTENANCE NEEDS

This is a compilation of statewide transportation funding needs through

2035 as identified by the TTI. Heavy oil and gas production will also

impact the state’s road system.

El Paso

62

TEXAS POPULATION GROWTH, 1970-2030

35

30

25

20

15

10

5

0

1970 1980 1990 2000 2010 2020 2030

SOURCE: Texas State Data Center

(In millions)

180

10

Laredo

Urban mobility needs: $243 billion

Rural mobility, pavement, bridge, safety

and connectivity needs: $127 billion

SOURCES: Texas Statewide Long-Range Transportation Plan 2035,

current as of 2010. Railroad Commission of Texas, March 2012

2003

90

Amarillo

Lubbock

20

Midland-Odessa

2004

San

Angelo

Approximate significant well permits, 2012

54

285

62

27

87

10

84

60

40

83

287

277

83

83

277

Wichita

Falls

Abilene

87

San

Antonio

35

83

67

Austin

59

37

Hidalgo

281

35

77

2005

Dallas-Fort Worth

Waco

10

Brownsville

35

Sherman-Denison

Killeen-Temple

Victoria

Corpus

Christi

Harlingen

Tyler

College Station-

Bryan 45

77

75

290

45

Houston

Longview

69

59

2006

Texarkana

30

20

96

Beaumont

2


?

CHALLENGES?

T

WHAT ARE THE

raditional transportation funding sources–primarily

motor fuels taxes and registration fees—have not kept

pace with mounting transportation demands.

Since the early 1990s, Texans have continued to pay 38.4

cents per gallon in state and federal motor fuel taxes while

the state’s population has grown by more than 8 million, and

vehicle miles traveled have increased by more than 40

percent. Population growth is projected to continue, and

although more Texans should mean more money in

transportation coffers, there are some factors to keep in mind.

Fuel efficiency. By 2025, Texans could be driving

passenger cars and trucks with an average fuel efficiency of

about 54 miles per gallon. That affects hybrid and SUV drivers

the same: fewer fuel tax dollars to build roads and bridges.

Inflation. One of the most significant challenges we

face is the declining purchasing power of the State Highway

Fund. In Texas, construction inflation has increased 62

percent since 2002. Motor fuel tax revenue buys far less

these days than it did when the state rate was set in 1991.

Federal funding issues. Because of several factors,

including the expiration of the federal-aid highway program

after 2014 and the need to infuse general funds into the

Federal Highway Trust Fund, federal funding is increasingly

unpredictable. By any measure of rate of return, Texas ranks at

the bottom relative to what other states contribute to the fund

and receive back from Washington, D.C. These circumstances

make it difficult to plan for future transportation projects.

Aging infrastructure. Many Texas roads and

bridges have exceeded their intended lifespan and require

extensive rehabilitation.

Other challenges to consider. Growing congestion

and rural mobility needs aren't the only challenges to our

transportation system. The state must also manage impacts to

our roadways from the growing energy sector. And with the

expansion of the Panama Canal, Texas must be prepared to

capitalize on this economic opportunity.

2012–2013 TxDOT BUDGET: $19.8 BILLION

$406M

$613M

Committed Projects that Began Prior to Biennium $4.224B

Pay Back Borrowed Funds $1.717B

Maintaining and Replacing Existing System $7.015B

New Projects from Borrowed Funds (Prop 12 & 14) $1.129B

New Construction from Traditional Funding

SOURCE: TxDOT, Finance Division

$1.146B

007 2008 2009 2010 2011 2012 2013 2014 20

$1.146B

$1.129B

rs Private and local funds State Highway Funds to CDAs Federal stimulus dollars and SH 121 to CDAs Total dollar value

CONSTRUCTION & MAINTENANCE PURCHASING POWER

Since a dollar in 2000 equals 61cents today, a $20 million project built

that year would cost $32 million today.

$2.387B

2000 = $1.00

2012 = 61¢

SOURCE: TxDOT, June 2012 Highway Cost Index, 12 month average

$6M

$1.158B

$7.015B

$4.224B

$1.717B

Project Development Costs $2.387B

Other Modes and Services $613M

Administration and Support $406M

SH 121 Funds (Dallas District only) $1.158B

State Infrastructure Bank (Prop 12) $6M


SO WHAT’S THE

DISCUSSION?

D

etermining acceptable methods to fund our future transportation needs will be difficult, and no single action is likely to

address all of the state’s transportation requirements. Several proposals are part of the public dialogue. Here is a sampling.

MAXIMIZE TRADITIONAL SOURCES

■ Address other uses. Dedicating all state motor fuels tax

revenue to transportation would provide additional revenue each

biennium, but other essential state services that are currently

supported with state highway fund revenues would need new

funding sources.

■ Improve TxDOT efficiency. TxDOT is continually

maximizing its budget by streamlining the department and has

also enhanced competition for construction and maintenance

contracts to get the most out of limited taxpayer dollars.

CREATE NEW CAPITAL

■ Increase vehicle registration fees. Each $10 increase

in motor vehicle registration fees should yield almost $210 million

annually statewide in additional revenues.

■ Index or increase the motor fuel tax. If the current fuel

tax were indexed to the Consumer Price Index, for example, each

one percent increase would add about $20 million a year to the

State Highway Fund. A one cent increase in the tax would

generate about $100 million a year in revenue. Any additional

gains, however, will eventually be tempered by higher fuel

efficiency.

■ Local options. A proposal that was discussed in past

legislative sessions would have allowed local governments to

raise fuel taxes and other fees to address their transportation

needs.

■ Vehicle Miles Traveled (VMT) tax. Replacing the current

per-gallon fuel tax with a VMT system would accurately reflect

road usage and could compensate for future fuel efficiency.

■ Motor Vehicle Sales Tax. Some legislative leaders have

suggested using a portion of vehicle sales tax revenue for

transportation. Such revenue was projected to reach $6.3 billion

in the FY 2012-2013 biennium for the General Revenue Fund.

CONTINUE/EXPAND PROGRAMS

■ Public-Private Partnerships. Partnering with the private

sector brings in additional money. It allows projects to be built

sooner rather than waiting until traditional funding becomes

available.

■ Bonding. In recent years, the Texas Legislature has

approved borrowing against future general and State Highway

Fund revenues to accelerate projects statewide. Any new

revenue sources the Legislature enacts could help retire the debt

or expand the capacity of the Texas Mobility Fund.

■ Tolling. Toll authorities play a significant role in developing

transportation solutions. While toll roads cannot be the state’s

sole funding source, they offer drivers alternative routes and

more time-saving choices.

■ Transportation Reinvestment Zones (TRZ). TRZs

provide another local funding option for entities that choose to

participate. Increased property values generate revenue within

the improved zone to finance transportation projects.

NOTE: These funding sources are not all-inclusive. TxDOT does

not advocate any particular solution. Final decisions about

transportation funding options are made by state legislators

and members of Congress.

15 2016 2017 2018 2019 2020 2021 2022

10

9

8

7

6

5

3

2

1

0

SOURCE: TxDOT, Finance Division, June 2012 Cash Forecast

(in billions)

TEX AS DEP A R TMENT OF T R ANSPOR T A TION TRANSPORTATION FUNDING

4


STATEWIDE FUNDING NEEDS

T

he Texas population could reach more than 35 million by 2040. With that growth will come more demand on the transportation

system, demand that cannot be built with existing revenue streams. While every region of the state has important projects that

need funding, some projects are important to the entire state’s economic well-being. Below are just a few. (Projects are subject to

change and are not listed in order of priority.)

U.S. 54

• Upgrade to 4-lane divided between New Mexico and

Oklahoma

1

287

Amarillo

60

40

• $173 million

Ports-To-Plains corridor

2

27

287

• Construct various road improvements

• $3.1 billion (Estimate is preliminary for 4-lane divided facilities.)

Lubbock

83 Wichita

Falls

35

75

I-35E in Dallas and Denton counties

• Construct managed lanes

• $4.7 billion

Loop 49 in Smith and Gregg counties

• Continue building tolled loop around Tyler

• $165 million

Montana Corridor

• Construct grade separations

El Paso

62

5

180

10

90

62

84

349

87

20

Midland

158

Odessa 2 San

Angelo

277

10

285

277

30

3

Abilene Fort Worth Dallas

4 Longview

20

Tyler

67

84

45

Waco

69 96

6 7

87

Temple

59

45

• Add 4 express lanes from east of Zaragoza to I-10

and extension to Loop 375

• $457 million

I-35

• Expand to eight lanes

2

83

Austin

35

San 8

Antonio

37

10

290 Houston

77 7 9

Victoria

10

• $280 million

35 59

I-69 system (U.S. 59, U.S. 77, U.S. 281, U.S. 84, SH 44)

Laredo

7 44

7

11

Corpus

• Upgrade existing roadways to interstate status

• $16.4 billion (Estimate is preliminary and is based on

suggested improvements from I-69 Segment 10

83

7 77

McAllen 69

Christi

12

Harlingen

Committees.)

Hidalgo

Loop 1604 in San Antonio

Brownsville

• Add capacity to roadway

11 12

South Padre Island Causeway

• $2.76 billion

• Construct second connection to the island

• $457 million

Grand Parkway (Various segments

A through I-2)

• Construct new location roadway

• $3.8 billion

I-10 in Jefferson and Chambers counties

• Widen roadway

• $100 million

Harbor Bridge in Corpus Christi

• Replace bridge

• $600 million

See how we’re addressing the most traffic-choked roadways in Texas.

http://apps.dot.state.tx.us/apps/top_100/

87

54

TEX AS DEP A R TMENT OF T R ANSPOR T A TION

83

TRANSPORTATION FUNDING


CONCLUSION

D

emand on our transportation system is outpacing revenue.

We’re trying to meet 21st century demands with 20th century

dollars. Inflation, population growth, aging infrastructure and

more fuel-efficient vehicles have stretched available transportation

funds beyond their limits.

Just as the problem is multifaceted, so is the solution. Public

officials are working to develop options that are practical and

acceptable to the public.

Transportation is essential to Texas’ future. Investing in a

balanced, regionally determined, multimodal transportation

network stimulates economic activity. It also creates employment

opportunities and gives Texas communities choices to address

their growing and changing populations.

125 East 11th Street

Austin, TX 78701

512-463-8585

AskTxDOT@txdot.gov

www.txdot.gov

The information and ideas presented in this brochure discuss the

needs of highway and road funding in Texas. But there are other

equally important modes of transportation, from rail to public

transportation to aviation, that must be considered in the solution

to Texas’ transportation challenges. Meeting our future needs

requires a multilevel approach, and every Texan needs to be

involved in the dialogue. We hope you add your voice to the

discussion. If you have any questions or comments, please email

us at AskTxDOT@txdot.gov.

Find out more:

www.txdot.gov

Sources used in this report: http://txdot.gov/inside-txdot/division/finance/funding-sources.html

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Copyright © June 2012 Texas Department of Transportation. All rights reserved. This publication has been deposited with the Texas State Library in compliance with Texas

Government Code sections 441.101 to 441.106.

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