Perry’s Budget Compact Should Dictate Adjustment to Gas Tax

The Governor’s new Budget Compact calls for government spending to be tied to inflation, so it stands to reason that would include indexing the gas tax to inflation.


By Terri Hall l November 4, 2012

Senator Tom Coburn
Photo credit: Enviroknow.com

Texas Governor Rick Perry recently announced his support for ending diversions to the state motor fuel tax, a practice that’s starved traditional road funds and allowed him to push tolling and road privatization. So why now? Attempting to shore up his conservative credentials after being attacked for smoke and mirrors ‘balanced’ budgets, a massive business tax hike, and wasteful special interest slush funds like the Texas Enterprise Fund during his run for president, Perry added halting the raid of gas taxes for non-transportation purposes to his Texas Budget Compact, calling it a matter of truth in budgeting.

In his public statement given from UPS shipping center in Irving, Texas, he says, “Committing to the core conservative value of truth-in-budgeting will maintain our national economic standing.”

Pretty interesting considering Perry funded his security detail while he was running for president with Texans’ state highway fund or gas tax. Ending gas tax diversions is job one for the new legislature, and it will give a badly needed boost to road funding which used to garner 15% of the state budget and now sits at a paltry 8%. Another obvious answer is to dedicate vehicle sales tax to roads — a $3 billion a year pot of money that’s being dumped into general revenue, not going to roads.

An additional notable statement is his call to restrain government ‘spending to the growth of population and inflation.’ In October of 2007, Perry flirted with the possibility of indexing the gas tax to inflation. This would allow the gas tax to keep pace with inflation. The state gas tax has not been raised since 1991 and the federal gas tax has not been adjusted since 1993, yet the buying power of the gas tax to maintain and repair roads, highways and bridges has been cut by more than a third due to inflation.

However, during the following legislative session in 2009, the grassroots led by groups like Texans for Fiscal Responsibility still saw this as a tax increase and lawmakers’ attempts to index the gas tax went nowhere. Every bill that involved indexing the gas tax also included an increase in the gas tax. The bill that actually moved, however, was Senator John Carona’s bill to allow a local option 10 cent gas tax increase that would require voter approval. The bill also had a menu of other local option tax increases, which doomed the initiative from the start.

After Carona’s bill went down in flames, Perry renewed his opposition to raising the gas tax, but only days later said ‘we need to raise some dollars for roads,’ though he didn’t say how. In 2011, the following session, it was clear that to ‘raise some dollars for roads’ would entail more debt ($3 billion more) and more privatized toll roads.

Toll roads, specifically privately operated toll roads, are the most expensive way to fund roads. Toll rates to be charged by Spanish company, Cintra, in Dallas-Ft.Worth will cost 75 cents a mile, or nearly $20/day and over $5,000 more per year to drive a stretch of highway dubbed the North Tarrant Express.

However, Perry’s new Budget Compact calls for government spending to be tied to inflation, so it stands to reason that would include indexing the gas tax to inflation.

Perry was mum on any adjustment to the gas tax, and has only focused on ending diversions at his press gig at UPS. But, it would seem like a contradiction to block tying the gas tax to inflation, especially when Perry’s Budget Compact commitment implicitly allows for it. So, it’s time to put his money where his mouth is and get some more affordable dollars for roads and highways.



Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of eight turned citizen activist. Ms. Hall is also a contributor to

SFPPR News & Analysis.