Thursday, December 23, 2010

"Texas legislators, like a lot of people, wanted what they couldn't afford. So they borrowed."

Borrowing won't solve transportation problems in Texas


Fort Worth Star-Telegram
Copyright 2010

Like a storm at the far end of a West Texas highway, it's easy to see the approaching problems for state transportation funding. Already, there's a good chance that maintenance on that highway has been deferred and its bridges aren't up to modern-day standards.

The storm is unavoidable. The Texas Department of Transportation is asking the Legislature to put almost $4.5 billion in highway improvement projects in the 2012-13 state budget but has another $3 billion on its list of needs that could be addressed if funding were available.

Meanwhile, motor fuel tax revenues, the primary income source for the State Highway Fund, actually declined last year and for at least the first six months of this year. The Federal Highway Trust Fund, supported mainly by federal fuel tax revenue, would have been flat broke long ago if not for the infusion of more than $44 billion from the general fund since 2008.

State motor fuel tax revenue hasn't even kept up with maintenance spending since at least 2002, state transportation officials say, much less provide money for new roads to address congestion. During the last 25 years, the Texas population increased 53 percent, most of it in urban areas, and road usage more than doubled. Road capacity grew only about 10.6 percent.

The state gasoline tax rate of 20 cents per gallon hasn't changed since 1991, and the 18.4 cent federal tax was last increased in 1993.

There is no chance of a brighter outlook for transportation anytime soon -- in fact, just the opposite. Following what they see as the mandate from November's elections, both state and federal lawmakers will go to work next month determined to cut government spending, not increase it.

Still, the needs don't evaporate just because they're not politically correct.

The multi-year federal transportation spending authorization act expired on Sept. 30, 2009, but Congress essentially has put off facing the big-ticket problem by passing a series of short-term resolutions. The latest was approved Tuesday and holds spending at current levels until March.

In recent sessions, Texas legislators have tried to straddle the transportation fence. They knew there was no money to build roads or provide for mass transit or meet other transportation needs. But like a lot of people, they wanted what they couldn't afford. So they borrowed.

In 2003 and 2005, they authorized a slew of privately owned roads to be paid for with future toll revenues. By 2009, toll roads were politically unpopular in parts of the state, so lawmakers backed away from most of them.

The state Transportation Department borrows money for its short-term needs. A year ago, the operating balance of the State Highway Fund was $68 million and the department's short-term debt stood at $285 million.

The department can issue up to $6 billion in bonds secured by future Highway Fund revenue (Proposition 14 bonds), has another $6.3 billion in debt secured by the Texas Mobility Fund authorized by voters in 2001 and can access another $5 billion in state general obligation bonds approved by voters in 2007 (Proposition 12).

In 2009, the Legislature ordered the department to issue $1 billion in Prop 14 bonds and use the money to start $2 billion in road projects. Next year, lawmakers must either authorize the extra $1 billion in bonds or tell the department to cut that amount from other projects to make up the shortfall.

And debt has to be repaid. Once the Prop 14 bonds are all issued, the debt service on those bonds alone will be nearly $500 million a year through 2026, the department says.

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