Friday, September 03, 2004

"The Toll Roads are coming!"

Toll roads: Without new money, they’re coming


by James A. Bernsen

The Lone Star Report
Volume 9, Issue 5
Copyright 2004

Toll roads are quickly becoming one of the sleeper issues of the upcoming legislative session, as the reality of new tolling authority sets in across the state.

Rumblings of a taxpayer revolt have begun even in Austin, a city long known for its affinity for big government and the taxes that support it.

But if Texas were getting all the money it should be getting for transportation, toll roads would still be the exception, not the rule, in the Lone Star State.

Last session’s HB 3588 gave the green light to expanded tolling as a way to raise revenue bonds to speed up road construction and meet current, as well as future needs. Robert Daigh , the Austin District Engineer for the Texas Department of Transportation, told LSR (June 11, 2004) that the state gets only one-third of the money it needs.

While the storm over toll roads first blew up in Central Texas – where pay roads are still nonexistent – it is spreading to locations long used to toll roads. The sticking point, opponents say, is not the idea, it’s the questions of the individual roads that are to be tolled. Many of these are not new roads, but existing ones, built and paid for without gasoline taxes, not tolls.

In North Texas, a fight is brewing over plans to toll State Highway 121, which connects southern Denton County with McKinney to the east in Collin County. The North Central Texas Council of Governments put forth Aug. 9 a new transportation plan that included the idea, among others.

In most cases, local governments and chambers of commerce have passed resolutions supporting the idea. Not just for 121’s sake, but for that of other roads as well. The McKinney City Council recently passed a resolution encouraging tolling of Texas 121 as a revenue source for expansion of U.S. Highway 75, which connects Dallas to Sherman.

In opposition are grass-roots groups and websites such as Founder Randy Jennings told the Dallas Morning News that tolling an existing road was like “selling your soul to the devil.” The Fort Worth Star-Telegram also took aim at the idea in an editorial calling the tolling of existing roads “double taxation.”

In Austin, a group known as People for Efficient Transportation (PET) has organized to fight the toll road battle and toll opponents have organized a recall of local officials who voted for the plan as members of the Capitol Area Metropolitan Planning Organization (CAMPO).

On Sep. 1, one of those officials, Austin city council member Brewster McCracken , backed down. While still supporting the new toll roads in the CAMPO plan, McCracken balked on tolling existing roads.

The case for tolls

Whether or not they sensed others getting cold feet over the plan, toll supporters on the same day held a press conference at Austin City Hall to make their case and counter the opponents’ momentum.

“The road you drive on today, if it’s got three lanes and five stop lights, after we have toll capacity to that road, you will still be able to drive on the three lanes with five stop lights,” said Diana Zuniga , president of the Real Estate Council of Austin.

The group took on the “Top Five Myths” of toll roads. The first is that tolling represents double taxation. Not so, proponents say, pointing to the high maintenance costs of highways. Indeed, a look at the TxDOT budget shows that 40 percent of State Highway Fund disbursements goes to maintaining state roadways, compared to 47 percent for planning and construction.

Another myth, the group says, is that there will be new tolls on existing capacity. Any new toll lanes on existing roads, they say, would be on added lanes. But the CAMPO plan doesn’t guarantee that, it simply opens up roads for possible tolling, without specifying how they would be tolled.

Toll proponents also noted several other “myths” and challenged PET’s accuracy and truthfulness.

Indeed, PET’s anti-toll road website, , claims that “education tax dollars” will be diverted to fund toll roads. In fact, the reverse has been the case. The Legislature has for years raided transportation funding, giving a large portion to education.

Federal funds

Texas transportation funding could never keep up under the old pay-as-you go system. The reasons for that – and for the turn to tolls under the state’s landmark transportation bill (HB 3588) – are twofold.

First: Texas, like Oliver Twist, is last in line at the D.C. trough. Over the last 48 years, Texas has been dead last, with an average of 86 cents in benefits for every dollar it sends to the federal government in transportation taxes. Since 1956, only three other states have averaged below 90 cents. Oklahoma, which has long relied on toll roads is next-to-last, with 88 cents on the dollar.

For two years - 2001 and 2002 - Texas actually caught up, with $1.03 and $1.01 cents return. But in 2003, the state plummeted back down to 89 percent. Last year, it reached 90.5 percent but still tied for last.

Part of the reason for the 2001 and 2002 increases was the heavy lobbying by Sens. Phil Gramm and Kay Bailey Hutchison . But Gramm’s retirement set back those efforts. His replacement, Sen. John Cornyn , however, has secured a seat on one of the Senate transportation subcommittees, where he hopes to press Texas’ claims. He has set as a goal a minimum of 95 percent return for the state, but sees 2009 as a realistic date for reaching that number, since that’s when the next transportation bill – which is approved on a six-year cycle – comes up.

“As a member of the committee, I will be working closely with the chairman and ranking member during the reauthorization process to improve and further address the bill’s proposed funding distribution,” Cornyn said.

The biggest winners in the fight for federal dollars are the asterisk states. Alaska, which is the largest, but with a tiny population, has received $6.40 for each dollar it spends on education (1998-2003). The District of Columbia gets $3.65 back. Hawaii is fifth with $2.25. The top 10 states are all small, and a percentage here or there doesn’t really represent a lot of money. But for large states, the reverse is true, and not all are on the losing end.

New York, for example gets $1.30 for each $1 it puts in, or $730 million extra a year. Pennsylvania gets $1.23. Other big states, like Missouri (97 cents) and California (95 cents), don’t win, but still don’t lose as much as the Texas (90 cents).

A further element actually reduces Texas’ return even more. The formulas establishing those rates of return don’t apply to the entire gas tax proceeds, but to a percentage, which is currently around 90 percent of the federal Highway Trust Fund. The remaining 10 percent of the fund is “discretionary” funding, of which Texas gets even less than it does under the formulas, according to TxDOT Finance Director James Bass .

“The rate of return is even worse than that. Once you blend it all together, we get about 86 percent,” Bass said.


The second reason for the transportation shortfall is diversions of state transportation revenue. Only 72 percent of the state’s 20 cent per-gallon gas tax actually goes into the State Highway Fund. The rest goes to two sources. One, which makes up five percent, is refunds, collection expenses and “other” expenses. While those numbers are changing somewhat as a result of the movement of the point of collection of gas taxes, the exact amount of the savings is in dispute.

The biggest diversion, however, is to the public school system - $665.7 million in FY 2003. Moving those funds, however, is very unlikely because they are constitutionally dedicated, and a 2/3 majority in the Legislature to take money out of the school finance system is very remote.

But there are other funds being diverted – most of them before they even make it into the Transportation Fund. The total cost of diversions (depending how they are defined, and varying year-to-year), is around $3.3 billion, not including the money going into the school system.

Some of these funds – about $238 million – are already earmarked to be turned over to the Transportation Fund, as a result of legislation passed in 2003. The change takes place in 2006.

As to federal funds, Texas, in 2003, put in $2.56 billion and got $2.28 billion back. Few think the state could get a 100 percent return, but using Cornyn’s goal of 95 percent, the state could get an additional $240 million a year.

If Texas could end non-school-related diversions and get 95 percent of its federal gas tax money back, the total boost to transportation revenue would be about $3.5 billion, for a total State Highway Fund of $5.6 billion. In effect, Texas could increase highway funding by 63 percent.

An additional $3.5 billion compares to the current $2.2 billion for the CAMPO plan for Central Texas. Adding in Dallas and Houston projects, as well as maintenance costs, would likely not rule out toll roads, but the reliance upon them by TxDOT would be considerably diminished. Of course, any funds transferred from general revenue to TxDOT would have to come from a presumed surplus, or cuts in other programs.

Jennings’s anti-121 tolling website lists a “hall of shame” and “hall of fame” of toll road supporters and opponents. The elected official conspicuously absent on the supporters’ list is Gov. Rick Perry . But on the “hall of fame” list is Comptroller Carole Keeton Strayhorn and Sen. Hutchison, who have both expressed strong opposition to the toll road expansion plan of HB 3588, which Perry backed heavily.

Given the speculation that either or both women may challenge Perry for governor in 2006, and the scope of the growing taxpayer revolt, toll roads – barely on the radar screen several months ago – could become one of the more important issues of the upcoming session. O

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