Tuesday, August 09, 2005

Ric Williamson on federal highway bill: "We got hosed."

State's highway funds to surge

But rate of return from gasoline taxes tied for last among states

The Dallas Morning News
Copyright 2005

A new national highway bill promises billions more dollars for Texas projects. But no state has a worse rate of return from the federal highway trust fund, as Texans continue to pay far more in federal gasoline taxes than they get back.

President Bush plans to sign the bill Wednesday at a Caterpillar Inc. plant near Chicago.

Starting in 2008, Texas will be guaranteed 92 percent of all federal gas taxes it pays into the system, up from the current rate of as high as 90.5 percent. Early estimates show that the modest percentage increase will add up to significant dollar amounts for Texas.

The boost to a 92 percent return in the bill will bring an additional $346 million to Texas by 2009.

Still, the numbers pale in comparison with 21 other states that receive more federal gas tax revenue than they collect.

The funding differences illustrate the skirmishes common to many budget battles in Congress. One group of states fights to keep what it has, while another fights to carve the funding pie into what it believes are more equitable shares.

Massachusetts Sen. "Teddy Kennedy ain't going to cut the pie in Massachusetts for Texas," said Ric Williamson, Texas Transportation Commission chairman.

The fight involved many states virtually unwilling to budge on the gas tax rate of return.

"They were locked. They were locked on that issue," said U.S. Rep. Eddie Bernice Johnson, D-Dallas, the senior Texan on the House Transportation and Infrastructure Committee.

Representatives of states that receive more highway money than they collect in gas tax revenue make several potent arguments, said Ms. Johnson, a 13-year veteran of Congress and the Transportation Committee. First, residents of many of those states pay more in income taxes to the federal government. Second, many of those residents also live in dense urban areas where mass transit is more widely used.

"It's usually states that have quite a bit of rural territory" that don't get back all their gas tax revenue, Ms. Johnson said, adding that the interstate nature of many transportation projects make it almost impossible for all states to get back as much as they send to Washington. "So many projects that are needed all over the country run through more than one state."

Since the early 1990s, Texas has fought what it perceives to be a historical inequity in highway funding. The state has gone from a 78 percent rate of return to the current 88 percent to 90.5 percent (the exact percentage is in dispute). While the boost to 92 percent in a few years will leave Texas in a slightly better position, the amount of "lost" money over the years adds up to billions for Texas.

But when looking at highway funding, the rate of return on the gas tax is only part of the equation.

In raw dollar terms, it would be hard to argue that Texas got shortchanged overall. Texas' annual share of the spending pie will grow by $788 million. That's more than any state but California, which will see an $876 million increase annually, and more than the third- and fourth-place states (Florida and Ohio) combined.

By contrast, Alaska – despite its chart-topping rate of return ($5.27 for every dollar sent to Washington) received an extra $99 million a year for highway projects through 2009.

Only four states saw their slice of the pie grow at a higher rate than Texas, whose funding increase tops 37 percent. Colorado sets the pace with 47 percent growth.

But despite these gains, Texas ranks at the very bottom for rate of return. It's one of 21 states that will see just 92 cents for every $1 it sends Washington. One of the biggest reasons Texas saw any improvement in its rate of return may be House Majority Leader Tom DeLay, R-Sugar Land. Mr. DeLay has pushed legislation that would require a 95 percent minimum return for all states, and he's introduced legislation to carve that benchmark into federal law, though it hasn't made much progress this year.

"This has always been a big issue for Mr. DeLay," said DeLay spokesman Kevin Madden. "Texas has lost $5 billion over the last 20 years because of formula problems."
Early last year, the Senate passed a transportation bill that would have guaranteed a 95 percent return for all states by 2009. Backers of that plan sidestepped opposition from rate-of-return winners such as New York, Pennsylvania and Wisconsin by ensuring higher funding, even if their shares dipped. The problem: The price tag was far higher than what the House or the Bush administration would accept.

Texas also fared poorly in competition with other states for funding of high-priority projects in the transportation bill. Those projects receive specific funding from Congress before states get their share of the highway funds. Texas and five other states got $50 million for work on a future Interstate 69, but that was all.

"We got hosed," Mr. Williamson said.

Even though state transportation leaders knew there was room for improvement in the rate of return, they focused more of their energy on other goals that they say will pay even greater dividends.

"Increasing the rate of return is one of our goals, but it's not the primary TxDOT goal since [Gov.] Rick Perry took over," Mr. Williamson said. "Our focus shifted from the rate of return to a change in the law that will reduce the cost of environmental clearance and engineering."

Such a provision could mean a cost savings of more than $1 billion on a multibillion-dollar project such as a proposed Trans-Texas Corridor route from Mexico, around Houston and through East Texas, Mr. Williamson said.

Federal officials named Texas one of five states that will be able to pick one major project and then combine the approval process for environmental and design work, rather than stagger those processes consecutively. The state also will be responsible for final approval of the project's environmental plans, rather than federal officials. The project still must meet all federal requirements and be subject to federal review if challenged.

E-mail thartzel@dallasnews.com
and tgillman@dallasnews.com

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