DALLAS — A Texas House select committee was told on Thursday that a proposed state constitutional amendment could boost transportation spending by $1.7 billion a year, an increase of $500 million a year from earlier estimates.
Texas voters will decide in November on the Proposition 1 amendment that would move into the State Highway Fund a portion of the revenues from oil and gas production taxes that now flow into its rainy day fund. The fund, officially known as the Economic Stabilization Fund, is expected to total $8 billion when lawmakers return to Austin in January for their biannual 150-day session.
The rainy day fund now receives 75% of the annual energy production tax revenues over and above the collections posted in fiscal 1987, when it was created. If Proposition 1 passes in November, the highway fund will get half of the additional revenues and half would go into the rainy day fund.
Comptroller of Public Accounts Susan Combs estimated in August 2013 that the amendment would shift $1.2 billion a year into the highway fund in fiscal 2015.
The latest revenue estimates from the Comptroller's office, based on steady increases in Texas oil and gas production due to fracking now puts the expected revenue at $1.7 billion in the first year that the amendment is in effect.
The Texas Legislature passed the bill putting the constitutional amendment on the November ballot in the third special session last year after an earlier bill died at the end of the regular session.
The $1.7 billion in 2015 would provide $1 billion to relieve congestion on urban roads and improve connectivity of the rural road system, $340 million for highway maintenance, and $340 million to repair and upgrade roads in south and west Texas damaged by heavy trucks used in oil and gas drilling.
However, TXDOT says it needs another $5 billion to keep up with demand for new roads and upkeep on the existing system.
The amendment specifically stipulates that the additional revenue cannot be used for toll roads. House Bill 1, which put the question onto the November ballot, requires that TXDOT identify $100 million in operational savings and use that money to reduce its long-term debt. The savings can include efficiencies and spending reductions, lawmakers said, but it cannot reduce spending on transportation projects.
Rep. Joe Pickett, D-El Paso, chairman of the House Select Committee on Transportation Funding, Expenditures, and Finance, suggested that the Texas Transportation Committee stop issuing bonds supported by the Texas Mobility Fund.
Revenue from driver's license fees and other transportation-related charges go into the debt-service fund, which was created in 2001 to allow the state to issue highway bonds backed by future revenues. The fund had a balance of $1.1 billion at the end of fiscal 2013.
Texas is currently spending twice as much on annual road debt service as it does for new highway construction projects, Pickett said.
"That is terrible in my opinion," he said.
James Bass, TXDOT's chief financial officer, said that the mobility fund would contain an extra $90 million at the end of fiscal 2015 if no new bonds are issued. The annual surplus would go to $122 million in fiscal 2016 and to $125 million by 2018.
"That's $200 million every biennium that we could use for pay-as-you-go projects or the state's share of toll roads," Pickett said. Texas operates with a two-year state budget.
Bass said proceeds from bond issues allow critical projects to be built quickly.
"If you shift to pay-as-you-go, you will do projects over 30 years rather than two years," he said.
Recent bond restructurings and refundings have cut TXDOT's future debt payments by some $500 million, Bass said.
