Friday, November 22, 2002

"Stop the Plundering!"

Senate State Affairs report tackles transportation funding options


by James A. Cooley
The Lone Star Report
Volume 7, Issue 14
Copyright 2002

The interim report on transportation from Sen. Florence Shapiro ’s (R-Plano) State Affairs Committee contains one main recommendation: Stop the plundering!

In unusually frank language, the report blames ongoing transportation funding shortfalls on legislators’ penchants for diverting highway money to other programs. “Transportation fees subsidize other programs,” the report says in bold print.

A couple of paragraphs explain the situation succinctly:

“Unlike healthcare, education, public safety and other state priorities, the State of Texas has adequate transportation funds – fees derived directly from transportation service users. So, what is the problem? The problem lies in the fact that a significant portion of our transportation user fees are used to subsidize non-transportation programs or supplement general revenue. These fees are diverted while our transportation system falls further and further behind due to a lack of adequate funding. User fees are one of the least intrusive forms of taxation, as they are paid by the users of a government program or service and reinvested in the enhancement of the system from which they were derived.

“In the last 10 years, Texas’ guaranteed protection of highway user fees [have] been manipulated to such a degree that we now find ourselves falling further and further behind in needed highway and general transportation funding. This trend is extremely alarming when one considers that demand for transportation services is increasing while available funding is decreasing proportionately. Today the State of Texas ranks 48 th in the nation in per-capita transportation spending and third in the amount of transportation user fees diverted to non-transportation purposes.”

Hundreds of millions of dollars in transportation-related taxes and fees are siphoned off each year, the report charges.

Shapiro’s committee is urging that these diversions be curtailed, with the savings used to fund the new Texas Mobility Fund (TMF). The goal is to set aside enough ongoing revenue to make possible the issuance of bonds to pay for critical projects.

One clear-cut example of fund-diversion is the use of transportation revenues to pay the cost of collecting the fees for motor vehicle inspections, driver’s license issuance, and driver record information requests. Yet, once collected, the money is sent to the state’s general fund to be spent on other programs.

Restoring the money from just these three fees would put another $238 million annually back into fighting gridlock, the report contends.

Four other transportation-related fees go straight into the general fund: motor vehicle sales and use taxes, motor vehicle rental taxes, motor vehicle certificates, and personal license plate fees.

The transportation fund pays 98 percent of the Texas Department of Public Safety (DPS) budget. Yet only 73 percent of DPS duties relate to the highway system. Thus millions of dollars that DPS spends on non-transportation functions, such as providing security for the Capitol, come out of transportation funds.

Some budgetary manipulations are even more subtle. Consider the little-known “Registration Fee Switch” and its impact on highway funding:

“Prior to 1992,” says the committee report, “counties submitted 95 percent of vehicle sales taxes collected in the previous year to the general revenue fund and retained the remaining five percent for their own transportation construction projects. Since 1992, counties have instead submitted 100 percent of their vehicle sales taxes collected to general revenue and retained an amount equal to five percent of these taxes from motor vehicle registration fees collected. Motor vehicle registration fees are deposited in the state highway fund. The amount of fees deposited in the state highway fund is now diminished due to a change in law.”

Simply undoing this one change would restore more than $133 million a year to transportation needs.

Then there is the way that Texas collects its motor fuels taxes. Several other states and the federal government collect them at the “at the rack” – the main distribution terminal; Texas collects them at the distributor level, one step down in the distribution chain. The Texas Department of Transportation (TxDOT) estimates that moving the collections up to the terminal rack could increase revenues by $50 million to $75 million due to lowered rates of tax evasion.

While the latest report doesn’t contain an explicit recommendation to change the “point of collection,” one section excerpts a previous committee report to that effect.

So will the diversions end? While the current report makes the most explicit argument yet for such a change, similar recommendations in the past have not borne fruit. The problem is that putting the money back means either cutting spending or finding alternate funding sources for general fund programs. When it came time actually to lift the ax, lawmakers have always lost their collective nerve and continued the pillaging.

The report’s cover sheet features a sentence – reportedly inserted at the insistence of Lt. Gov. Bill Ratliff (R-Mount Pleasant) – that illustrates the difficulty: “Due to the budget situation the Legislature is likely to face in the 78 th Session, this report is submitted with the understanding that recommendations requiring funding should be pursued only in the event that funding becomes available.”

Another pressing money matter on the committee’s mind was federal highway funds. This topic drew suggestions ranging from indexing the federal motor fuels tax to inflation to increasing the amount of money in the federal Highway Trust Fund by ending the transfer of interest earning to the general revenue fund. Improved federal funding equity is addressed in the proposal to raise to at least 95 percent the amount of transportation funds a state gets back from its contributions. The present minimum return of 90 percent is unpopular with the “donor states” that perennially send more money to Washington, D.C., than they get back.

Aside from money matters, the report covered many other transportation topics. Several proposals touched on the commercial trucking industry, such as a call to increase the fines for overweight vehicles and other safety violations.

Another item to watch is a recommendation to expand statewide a “no-truck lane” pilot program conducted in Houston, where a municipality can restrict trucks to just two designated lanes on a highway with at least three lanes. If trucks use the forbidden lane(s) other than in passing, they are ticketed. The Houston pilot program, conducted on IH-10, has produced a 68 percent reduction in crashes.

The legislation that created the Houston pilot program allowed these no-truck lane restrictions only during peak traffic hours. The committee believes participating communities should have the option of imposing these limits full time.

The committee further favors the creation of model inspection stations based on a prototype developed by the Center for Transportation Research (UT-Austin) and the Texas Transportation Institute (Texas A&M). The priority would be to develop these new streamlined inspection stations at the seven busiest border crossings.

One goal of these new stations would be to ensure that all vehicles, regardless of origin, comply with American truck safety standards. To facilitate this, the state’s permanent inspection stations “should be linked with their federal counterparts in order to better track safety compliance and to identify ‘good operators’ for pre-clearance,” the report says.

Lawmakers are also urged to consider granting the DPS the authority to stop unauthorized vehicles from leaving the border’s commercial zone. California already has such a law.

As for the contentious topic of TxDOT’s proposed access management rules, the committee sided with the protesting communities. TxDOT wants to reduce the number of driveways, median crossings, and stoplights on roads included in the state system, but local governments argued that the proposed guidelines would stifle economic development.

Their first finding: “The Texas Transportation Commission is trying to create a ‘one-size fits all’ policy for access management across the state... No evidence has been established that the Texas Transportation Commission’s proposed access management guidelines are better policy than those currently in effect,” the committee concluded.

Their recommendation: “Local access management policies should prevail over any statewide policies. Local control should be maintained.”

Regarding rail, the committee urged studying the viability of an “Alameda-type Corridor” for linking freight rail to ports. The name comes from a largely privately funded project in California that created a grade-separated freight rail corridor that both increased transport speed and safety. The Port of Houston is one location frequently mentioned as a promising location for a similar project in Texas. The Alameda Corridor model can also be used to facilitate the movement of trucked freight to rail lines at busy border crossings like El Paso and Laredo.

Texas, the report says, should also look for ways to increase the amount of money available for developing general aviation airports; develop a “levels of service” scoring system for accurately measuring progress towards meeting transportation improvement goals; and ensure that addressing the current backlog of projects in the Unified Transportation Plan is the first priority for bonds repaid with TMF dollars. O

The Lone Star Report: