DALLAS — The Texas Department of Transportation would no longer be allowed to issue bonds backed by the Texas Mobility Fund under legislation approved by the state House.
House Bill 122 by Rep. Joe Pickett, D-El Paso, would prohibit any further issuances of the bonds backed by a revolving fund that was approved by voters in 2001 as Proposition 15. The bill passed the House on a voice vote April 8.
"This was the start of all the bonding capability for the Texas Department of Transportation," Pickett said. "This is a revolving fund that has the ability to have debt issued continually. House Bill 122 suggests that we stop adding to our debt."
Pickett later added an amendment that would allow refunding of outstanding debt but no issues for new money.
TxDOT, through its governing board the Texas Transportation Commission, would retain its ability to issue bonds through Proposition 14 revenue bonds approved by voters in 2003 and Proposition 12 general obligation bonds approved in 2007.
Because the Texas Constitution bans state debt, bonds for highways must win voter approval as a constitutional amendment. Prior to Proposition 15, transportation was the only capital project category that the state did not allow bonding for. Proposition 15 created the Mobility Fund as a way to build highways more quickly by leveraging state and federal funds.
Pickett's bill also prohibits use of any revenue in the Mobility Fund for toll roads. About $90 million to $120 million would continue to flow into the fund annually but would not be available for new debt service, Pickett said.
According to a fiscal note on the bill, TxDOT would be required to pay off certain outstanding variable rate bonds prior to the original maturity date upon expiration of the credit agreement in fiscal year 2017.
TxDOT estimates total savings from interest costs avoided from the early repayment of outstanding variable rate TMF bonds would be $339 million over the life of the bonds.
The outstanding principal amount of TMF bonds as of Aug. 31, 2014 was $5.65 billion, leaving about $1.55 billion authorized but unissued, according to the fiscal note.
