DALLAS - With Texas facing the first drop in fuel-tax revenues in nearly two decades, state Sen. John Carona yesterday called for passage of his bill that would allow counties in metro areas to seek local tax increases.

Carona, a Republican from Dallas who chairs the Senate Transportation and Homeland Security Committee, is considered the leader on transportation issues. In the 2007 session, he brokered a major piece of legislation that revamped how the state allocates toll road and public highway projects.

His push for new ways of raising revenue comes after the Senate has already passed a $178 billion budget that is awaiting debate in the House next week. Under the current budget, funds for transportation would not increase substantially, as the state relies on the federal stimulus funds for "shovel-ready" projects.

In a press conference yesterday, Carona and other leaders voiced support for SB 855, which would allow county commissioners to seek voter approval for taxes that would go toward road or rail projects. In the Dallas-Fort Worth area, the legislation would enable the creation of a regional rail district.

The proposal would allow fuel taxes to increase at a local level, avoiding a statewide political fight in the Legislature. Any effort to raise fuel taxes to maintain the state's highways appears doomed to failure based on past experience, officials say.

In the first eight months of Texas' fiscal year, fuel tax revenue is down 3.2%. With revenue at $3.1 billion last year, a 3.2% drop would come to $100 million.

About 72% of the revenue goes to the Texas Department of Transportation. Lawmakers this year have reduced the amount of fuel tax going to non-transportation programs by $22 million, but critics say that is not enough to help the state keep pace with growth.

"Just to keep even with current demand, the highway fund will need $8 billion per year," Sen. Eliot Shapleigh, D-El Paso, said in a recent statement. "So what is in this budget to keep Texas moving? Here's what - $2 billion to pay for bond debt in 2010. That's it."

Like transportation authorities in other states, TxDOT has been warning for years that increasing fuel efficiency of vehicles will mean declining revenue. Now the recession is causing even less travel.

In eight of the last 12 months, revenue has been down compared to the same month in the previous year, starting in May 2008.

Under the two-year budget approved last week, TxDOT would receive $17.1 billion. About 10% of the budget would go toward debt service on existing roads, and borrowed money would represent about 20% of the budget.

TxDOT was not allowed to issue debt until early in the decade, but last year, Texas top three elected leaders ordered the agency to issue $1.5 billion in bonds that had been authorized by the Legislature. TxDOT officials were wary about issuing the debt until projects and funding streams were more certain.

In the House version of the budget bill, nearly $4 billion is cut from the Senate version, with $2 billion less in bond financing for highways and $2 billion less for Medicaid.

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