Despite statewide Proposition 1 passing in 2014, highway and road construction in Texas remains underfunded. The shortfall is due mostly to an underperforming gasoline tax and an unwillingness to adjust the tax or increase other transportation-related fees.
The problem is magnified by a population boom, mostly in and around urban population centers. In fact, Texas has four of the 11 most-populous metro areas in the United States (Houston, Dallas/ Fort Worth, San Antonio, and Austin), each of which is growing rapidly.
Due to an insufficient revenue stream, the Texas Department of Transportation (TxDOT) has been forced to over-rely on bond debt to fund roadway maintenance and new transportation projects. However, TxDOT’s main bond programs (State Highway Fund bonds, Texas Mobility Fund bonds, and general-obligation highway bonds) are effectively exhausted. Additionally, the agency currently pays approximately $1 billion per year (about 10% of its annual budget) in interest payments on the outstanding bond debt—which exacerbates the funding shortfall.
With the uncertainty of future federal dollars, diminishing revenue, and depleted bond capacity, TxDOT has also resorted to a large number of public/private partnerships, (i.e., toll roads).
Clearly, bonds and toll roads are important pieces of the transportation-funding solution, but they will not meet the growing demands on transportation infrastructure by themselves. The agency needs to re-evaluate the current transportation model for the state to identify new methods to efficiently handle the population increases and the state’s transportation needs.
What does this mean for the real estate industry?
An insufficient transportation network impedes commerce, increases the costs of goods and services, and creates air-quality issues. Furthermore, poor infrastructure limits Texans’ viable housing options and decreases quality of life.
The Texas REALTOR® position
The State of Texas must ensure its citizens the right to a safe and efficient transportation system. In doing so, the state must address numerous issues: congestion, capacity, construction and maintenance costs, safety, age and condition of roadways, and the impact transportation delays have on air quality, cost of goods, and quality of life.
Failing to pay for infrastructure needs will ultimately cost state taxpayers an extraordinary amount of money in the future.
Our association supports the following:
- The Texas Transportation Commission and Texas Department of Transportation should ensure accountability, transparency, and public involvement in the transportation-planning process
- A statewide, multi-modal transportation system that facilitates safe and efficient movement of people and goods, including sufficient transportation choices such as roads, freight and passenger rail, waterways, sea and inland ports, and air.
- Local option transportation funding sources, in addition to state funding, which may include toll roads.
- A study on transportation funding sources needed to create infrastructure at or above the state’s current levels of service.
- TxDOT’s efforts to secure BUILD grant funding for rural roadways near energy sectors.
- The concept of high-speed rail as a mode of transportation in Texas.
We expect to see a number of transportation-funding bills, including proposals to send proceeds from the motor vehicle sales tax to the State Highway Fund, increase the annual registration fee, and apply a vehicle-miles-traveled surcharge.
While various financing options have been proposed and a few passed in recent sessions, the state gasoline tax has not been raised from its current 20 cents per gallon since 1991. The result of this is a decrease in the tax’s purchasing power.
In 2014, Texas voters passed a Texas constitutional amendment (Proposition 1) for transportation funding with an overwhelming 80%, signaling to the Texas Legislature that funding for transportation is an important issue and must be addressed.
In 2015, the 84th Texas Legislature ended diversions from the Texas Highway Fund, decreasing bond debt, and allocating motor vehicle sales taxes to the state highway fund (HB 1), ended diversions from the Texas Highway Fund, and prioritized future TxDOT projects based on safety, maintenance, and congestion (HB 20).
In addition, in 2015 voters approved Proposition 7, a constitutional amendment authorized by SJR 5 to dedicate $2.5 billion of sales tax revenue and 35% of motor vehicle sales taxes to the Texas Highway Fund when revenue milestones are met.
In 2019, a new law (SB 962) extended provisions related to that constitutional amendment to ensure no interruption of funding for 10 years, continuing voters’ desire to invest in transportation projects.