Texas Senate passes bill giving Houston a share of excess county toll revenue

Bloomberg News

A bill that would give Houston a share of the Harris County Toll Road Authority's surplus revenue passed the Texas Senate this week.

The nation's fourth-largest city, which is facing a budget shortfall heading into fiscal 2026, would receive 30% or $80 million in excess toll revenue, whichever is less, to cover the costs of providing public safety and emergency services on county toll roads.

Senate Bill 2722, which the Republican-led Senate sent to the House in a 21-8 vote on Tuesday, allows the county to keep 70% of the revenue remaining after paying operational and other costs, including funding bond debt service and reserves. Expenditures would be restricted to county-owned and maintained roads.

Houston Mayor John Whitmire said the move was long overdue. 

"All we're doing is trying to document the services of Houston first responders for years," he told the city council on Wednesday. "Sixty percent of the toll roads' mileage is in the city of Houston, over 60% of the revenue comes from Houston." 

Between 2022 and 2024, Houston police and fire departments responded to 6,514 incidents on the toll roads, according to a statement from Republican State Sen. Paul Bettencourt, the bill's sponsor. 

"Since 2019, toll revenues in Harris County have been distributed based on political formulas rather than actual road needs," he said. "If drivers are paying tolls, then drivers should see those funds reinvested into roads they actually use to help pay down the debt, prioritize county owned roads, and split 70/30 with the city of Houston to cover expenses."

The allocation of county toll revenue to Houston would sunset on Sept. 1, 2030, under Democratic State Sen. Carol Alvarado's bill amendment, which was approved by the chamber.

"This creates a defined runway for budget cycles for the city and the county to do what they should be doing, which is sitting down and negotiating a long-term agreement on their own terms," she said on the Senate floor.

There was no immediate comment on the bill's passage from Harris County spokespersons.

Houston's projected ending budget balance has fallen from nearly $349 million in December to $244.7 million as of the end of March, according to city Controller Chris Hollins' latest monthly financial report.

Shrinking budget reserves were a major factor cited by Fitch Ratings and S&P Global Ratings when they revised their outlooks on Houston's AA ratings to negative from stable last year. The city has a stable outlook on its Aa3 rating from Moody's Ratings.