Texas lawmakers can’t agree on road funding, third special session called

Currently only 47% of the state gas tax revenue actually makes it to roads – 25% goes to public schools, 5% goes to the Department of Public Safety, plus lawmakers routinely raid even more for non-road purposes, up to $1.1 billion a year by some estimates.

By Terri Hall | August 2, 2013

The second called special session of the Texas legislature began with all eyes on Texas’ fetal pain bill after a filibuster scuttled it – transportation appearing an afterthought, but this one ended in yet another flop. Texas Governor Rick Perry immediately called a third special session 30 minutes later to address transportation funding. State lawmakers had initially agreed on a road funding bill at the end of the first special session and took up the same bill in the second.

However, changes in the bill and new ideas put on the table ended up causing the whole thing to fizzle. The ‘compromise’ bill decided by a conference committee couldn’t garner the needed 100 votes in the Texas House. According to a tweet from a Houston Chronicle reporter, Speaker Joe Straus is said to want a road funding crisis and would rather see no bill pass in order to push tax hikes in the next regular session in 2015. When lawmakers were expected to pass the final version in the Senate Monday, not enough senators even showed up to get the required votes for passage there either.

The Senate bill would have dedicated half the oil and gas severance tax that currently funds the state’s emergency account known as the Rainy Day Fund (RDF) to transportation. The original bill would have had what’s been called a hard ‘floor’ or minimum amount ($6 billion) that had to remain in the RDF before it could go to transportation.

But members of the House decided to try a different approach that would have ended all diversions of the gas tax and begun to dedicate the vehicle sales tax to roads (instead of funneling all of it into general revenue where it funds general government, primarily Medicaid and education). Currently only 47% of the state gas tax revenue actually makes it to roads – 25% goes to public schools, 5% goes to the Department of Public Safety, plus lawmakers routinely raid even more for non-road purposes, up to $1.1 billion a year by some estimates. In the House bill, the 25% of gas tax that goes to education would have been replaced by oil and gas severance tax. However, some conservatives didn’t like that guarantee and felt it would negatively effect the emergency fund.

Arguing that the number one complaint of the public with regard to road taxes is the persistent raiding of road taxes for non-road purposes, the House sought to restore the public’s trust by ensuring all gas taxes and some of the vehicle sales tax gets to roads first before there’s any discussion about other revenues. Each version would have allocated approximately $850-$900 million more to roads, falling far short of the $4 billion needed.

Both bills as well as the conference committee version had prohibitions on the new money going to fund any toll roads. However, in conference committee, the House version was completely gutted and replaced with the Senate’s straight RDF raid, and the floor for the emergency fund was taken out of the final bill. The final version also would have given the Legislative Budget Board (LBB) the discretion to set the amount of any minimum balance in the fund. The LBB, a board controlled solely by the Lt. Governor, Speaker, and a handful of their appointees, is not known for being fiscal hawks and often places the state’s spending cap much higher than fiscal conservatives think prudent.

In the end, many lawmakers balked at concentrating the power in the hands of a few, and felt the LBB would not set an appropriate minimum balance for the emergency fund to protect the state’s credit rating and ensure sufficient funds are secured in case of emergencies. Democrats objected to any firm minimum amount required to stay in the state’s emergency fund, and conservatives balked at not having one. Still others objected to putting a measure to the voters that doesn’t solve the road funding problem, fearing the public would then conclude the crisis is over when, in fact, at least $3 billion more is needed to properly fund highways.

So it’s back to the drawing board. The House and Senate convene again Monday. Speaker Joe Straus appointed a seven member House Select Committee on Transportation Funding to handle the transportation legislation for the third session which includes the following state representatives: Larry Phillips (Chair), Linda Harper-Brown, Todd Hunter, Charlie Geren, Senfronia Thompson, Sergio Munoz, and Cindy Burkett. The Select Committee will disband at the conclusion of the session.

On the first day of the third special session, the Senate immediately suspended all rules and passed the previous conference committee version to fund highways with the severance tax and that allows the LBB to set a ‘floor’ for the emergency fund. It also includes a study committee on the fund as well as a study of future transportation funding options.

With the Senate dug in and the House in chaos, who knows how it’ll end up. One thing’s certain, the taxpayers had better weigh-in before the state’s reserves and their wallets get raided.

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.