Texans don’t take kindly to unelected boards and commissions raising taxes on them, and that is just what these toll agencies can and will do if lawmakers don’t change course now.
By Terri Hall | March 22, 2013
Terri Hall of TURF and JoAnn Fleming of Grassroots America
Texans from across the state recently converged at the capitol in Austin to stress the need for Texas Governor Rick Perry, Lt. Governor David Dewhurst, Speaker Joe Straus, and House and Senate budget writers to prevent the most fiscally sound, long-term road funding solutions from being held hostage to more tolls, debt, and tax hikes.
Activist leaders like JoAnn Fleming, Chair of the Texas Legislature’s TEA Party Caucus Advisory Committee and Executive Director of Grassroots America along with leaders from Texans Uniting for Reform and Freedom (TURF) sounded the alarm to Texans across the state that soon every major road will be tolled, and foreign corporations can take over Texas roadways, driving up the cost of daily travel with unfettered tolling.
Texans don’t take kindly to unelected boards and commissions raising taxes on them, and that is just what these toll agencies can and will do if lawmakers don’t change course now. Washington State passed Initiative 1185 that took effect last year, which prevents the unelected Transportation Commission from setting or raising tolls. It is now the responsibility of the state legislature to set or raise toll rates. However, Texans do not have statewide initiative referendum, so they have to rely on the very legislators who like outsourcing tax increases to unelected boards to remedy the very situation lawmakers created.
“Sensible bills should not be held hostage to promote special interests, more road debt, tax hikes, and budget-busting tolls that will only burden small businesses, families, seniors, and young adults on limited income,” Fleming cautioned.
Lawmakers don’t want to prioritize spending in order to get the money we already pay in taxes allocated to roads. Instead, Perry is supporting SB 1632 that will make Texans pay back their own federal gas tax money with interest through tolls or local tax hikes for toll projects that can’t pay for themselves, without taxpayer bail outs. Another bill backed by Perry, HB 3363, actually creates a new type of bond called the ‘century bond.’ As its name implies, these bonds would take up to 100 years to pay back.
Thomas Jefferson warned against such multi-generational theft through debt: “…the principle of spending money to be paid by posterity… is but swindling futurity on a large scale.” He also said, “We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude.” Yet Perry specifically called these bills ‘fiscally responsible.’ However, common sense and sound monetary policy dictate that a 100-year bond is fiscally reckless, bringing perpetual debt rather than freedom and prosperity.
“If our leaders insist on dealing with the problem with more tax hikes, more tolls, and more debt, there will be a voter revolt. People are already saddled with higher payroll and income taxes from Washington, DC, and property taxes and local debt are rising around most of the state. Just as we cannot afford more tax and spend from government, we cannot afford more borrow and spend for roads,” insists Fleming.
“Some of the folks inside the Capitol are the architects of this debt cliff with their fairy-tale, smoke-and-mirrors budgeting and ‘creative financing’ – they’ve maxed out the state’s credit card. We can get out of it, but it will take leadership and somebody standing up for the taxpayers,” Fleming said.
She added, “If our wallets are the first solution they will be the only solution that survives the session. We aren’t going to give anybody a green light for raising the gas tax or vehicle registration fees until our leaders clear the debris they put in the road, out of the road.”
Proposals the Coalition Opposes
Perry’s endorsed solution is to redirect federal highway funds into the State Infrastructure Bank to be used to guarantee toxic local toll road debt and even mass transit projects, which these funds currently cannot be used to do. Perry’s proposal also encourages local taxes and tax hikes to bailout toll projects that can’t pay for themselves.
However, this proposal won’t solve the long-term funding problem and it won’t solve it in a fiscally-sound, transparent way. If Perry’s bill passes, Texans will not be able to get to work or get their kids to school without paying $10 or more a day to get across town, leading some to ask how is this not a tax hike?
Senate Finance Committee Chair Tommy Williams proposes (SJR 38) a similar loan guarantee program for economic development toll road and mass transit projects using the Rainy Day Fund as well as a separate proposal (SJR 39) to increase vehicle registration fees to build new road capacity. Neither solve the long-term road funding shortfalls (they’d have to raise registration fees $200/yr to raise the needed revenue) nor will it get the state back to pay-as-you-go.
Unsustainable Debt Spiral
Securing a reliable, long-term source of revenue, coupled with operational reforms at the highway department, are necessary for cost-effective highway planning and the avoidance of more debt; however, the state has no sustainable policy for funding roads. The TxDOT management audit by Grant Thornton in 2010 states that Texas’ road debt is unsustainable.
Texas leads the nation in road debt ($31 billion, principle and interest). Incurring more road debt, whether at the state or local level, is not fiscally responsible, conservative, nor sustainable. Several sources have also indicated that there are no more viable toll projects in the state – where the tolls could ever hope to pay for the expense of the road without considerable taxpayer subsidies. Texas must return to pay-as-you-go.
Raising Taxes Not the Answer
Any tax collected from road users should be going to fund roads first, especially before any politician asks us to dig deeper into our pockets to fund roads with tax hikes and more tolls. Tolls are taxes the way they’re being done in Texas today, since $10 billion in public funds are going to build toll roads, yet they’re still charging us a toll to drive on them.
Conservatives feel the state leadership is behaving as politicians in Washington do – holding out for tax increases so they don’t have to cut spending and reform TxDOT.
“Texans are fed-up with out-of-control government that never gets its priorities straight, and keeps asking us to pay more when the taxes already collected aren’t going for their intended purpose,” reiterated Fleming.
Gas tax a source of diminishing funding
The state gas tax, the primary source of revenue for TxDOT, has been unchanged for 20 years. This has caused a shift to and reliance on toll roads in order to bridge the funding gap, which costs Texans prohibitively more than a gas tax-funded road (1-2 cents a mile vs. 15 – 75 cents a mile for tolls).
We cannot expect to build today’s roads with a 20-year-old revenue source, just because the politicians can’t properly manage dedicated taxpayer funds. This structural defect must be addressed without more tolls, more debt, and more taxes.
According to the Texas Public Policy Foundation, between 1990 – 2012, Texas state spending rose 310%, while population growth plus inflation totaled only 132%. Lawmakers should refocus their efforts on funding the core constitutional functions of state government.
Comprehensive transportation package needed
The proper pay-as-you-go funding of road construction can be done with a comprehensive transportation package, which the groups say should include:
- State government restructuring to eliminate overlapping, duplicated effort;
- Phase-out of funding for budget items beyond the core constitutional responsibilities of state government;
- TxDOT operational reforms;
- Reigning in flagrant waste documented through local transportation and toll agencies like Regional Mobility Authorities & Metropolitan Planning Organizations that spend millions on bureaucracy & ‘enhancements’;
- Refocus on building highways to relieve traffic congestion – not funding light rail, street cars, hike & bike trails, or parks and roads for economic development (the ‘build it and they will come’ approach);
- Ending diversions;
- Dedicating vehicle sales and use tax revenue to highway construction (SB 287);
- Early debt retirement, if approved by the people (SJR 47)
State leaders should work together on this commonsense, taxpayer-friendly transportation package by first actively supporting Senator Robert Nichols’ bill (SB 287) which phases in the dedication of vehicles sales/use tax to roads. A dedicated vehicle sales tax revenue stream will keep pace with inflation on its own and help meet the growing transportation needs of Texas.
The vehicle sales tax currently represents $3.3 billion a year (and growing), and coupled with ending gas tax diversions, which Perry estimates is $650 million a year, it gets the State very close to the $4 billion it says it needs to build and maintain our state highway system utilizing the fiscally sound approach of pay-as-you-go. The vehicle sales tax phase-in facilitates long-range TxDOT construction planning, and it does not provide a sudden shock to general revenues, since the vehicle sales tax is growing so rapidly.
Summary of solutions
The conservative activist leaders admit their recommendations are not easy, but insist they are workable, sustainable solutions a majority of voters will support to end the current borrow and spend cycle:
- Return to pay-as-you-go; no more public road debt (state or local).
- No more public-private partnerships (P3s), handing control of our Texas infrastructure to private, even foreign, corporations. This applies to roads and other public facilities such as the Capitol Complex. No more use of eminent domain for private gain.
- No more public subsidies, credit enhancements, or loan guarantees for any type of toll project.
- Comprehensive financial audit of TxDOT prior to the agency’s next sunset review in 2015 to gain efficiencies and end practices that drive-up costs, e. g., Design-Build CDAs, P3s, and multi-million dollar “enhancements” that have nothing to do with moving traffic.
- End diversions of all road user fees (motor fuel tax, vehicle sales tax, tire sales, auto parts sales tax) to non-transportation uses.
- Phase-in motor vehicle sales/use tax revenues to the State Highway Fund, consistent with Nichols’ SB 287.
Constitutional restrictions on the use of New Revenues
- No diversions: May only be used for planning, design, construction of new state highway system road capacity and the maintenance of this new capacity once built.
- Not Used for Toll Roads: May not be used on comprehensive development agreements or projects involving the construction of toll lanes.
- No Debt: Shall be used for pay-as-you go projects and may not be used as backing for new debt financing (whether at the state or local level).
- No non-road expenditures: None of these funds should be used for any expense related to bike trails, transit or pedestrian walkways.
The grassroots insist implementing these reforms, securing all existing transportation-related taxes, and dedicating these taxes to a ‘roads-only priority plan’ will restore an affordable, pay-as-you-go, pro-taxpayer, pro-freedom transportation policy for all Texans.
“Since we believe the people are taxed enough already, and we know other solutions exist to fund needed road construction, we promise two things: 1) we will work with the leaders on the transportation package; and 2) we will make ending the ‘innovative financing’ gimmicks, waste, and debt spiral a campaign issue in the next election cycle,” concludes Fleming.
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