DALLAS — The Texas Department of Transportation would be spared the kind of funding cuts hitting other agencies under a budget bill approved by the state Senate last week.

TxDOT would actually see its funding increase by 23% under the 2012-13 biennial budget, while the House version would increase funding by 2.2%. The two budgets must be reconciled before final passage.

The funding increase would come primarily in the form of new debt authorization. The agency, which issues debt under the name of its supervisory board, the Texas Transportation Commission, would be able to issue $3 billion of bonds for projects.

Debt service of about $257 million over two years would be provided by the state’s general fund.

TxDOT would be unusual among state agencies if it indeed receives additional funding while other agencies are taking severe cuts.

The Legislature started off the budget process $24 billion short of the revenue required to keep pace with state agency needs.

The Senate version provides $176.5 billion in spending over the next two years compared with $164.5 billion in the House version.

Both chamber’s budgets would cut appropriations for nearly every state agency. Spending would be $23 billion less than current expenditures in the House version and $11 billion less in the Senate’s proposal.

The House bill reduces the current $76.4 billion in state aid to local education by $6.7 billion, while the Senate version lowers it by $712 million.

Current health care spending of $65.5 billion is cut by $11.5 billion in the House bill and by $7.8 billion in the Senate plan.

Despite the budget pressures, Standard & Poor’s last week affirmed Texas’ AA-plus issuer credit rating and stable outlook, which would apply to TxDOT general obligation bonds.

The rating on revenue bonds was affirmed at AA.

“The ratings reflect our opinion of Texas’ large and steadily diversifying economy, which continues to perform better than the nation in terms of both economic activity and employment,” said Standard & Poor’s credit analyst Horacio Aldrete-Sanchez.

If TxDOT emerges with the proposed funding intact, it would be able to continue building new projects, according to officials.

With the state’s transportation needs outgrowing revenue sources, the department was faced with curtailing any new projects and limiting its work to maintenance and completion of existing roads and bridges.

Meanwhile, the agency appears to have escaped the most punitive measures proposed by lawmakers under the Sunset process.

Texas lawmakers had proposed replacing the five-member Transportation Commission with a single commissioner who would not be required to deliberate in public or discuss his or her funding decisions.

The commissioner would have been answerable directly to the Legislature, but the proposal was dropped.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.