Sunday, March 13, 2011

Texas toll roads: "...taxes in sheep's clothing and, over time, increasing traffic congestion."

Toll tax: Bill would make road charges perishable


Ben Wear
Austin American Statesman
Copyright 2011

In Texas, tollways, like diamonds, are forever.

State Sen. Steve Ogden would prefer something a little less permanent.

Ogden, a College Station Republican whose district includes Williamson County, is carrying a bill this legislative session that would require tolls on any Texas turnpike to disappear once debt incurred to build that particular road has been paid back. The bill, as even Ogden admitted, has little chance of passing.

"There's too much money involved," said Ogden, who as Senate Finance Committee chairman is in charge of writing the state's $160 billion budget.

But the legislation's precarious prospects don't mean it isn't noteworthy. Ogden, through his bill, is addressing a broader, key question: When does a toll, instead of being a user fee, become merely a stealth tax?

Ogden said that time came in 2003 and he's as much to blame as anyone.

"Today is Ash Wednesday," Ogden said last week when he presented Senate Bill 363 to a committee, "and I'm here to atone for my sins. To make sure that the innocent don't pay for the guilty. And to make sure we have truth in taxation."

Ogden eight years ago was the Senate sponsor of a massive transportation bill that greatly expanded the power of the state and of local toll authorities to build turnpikes, charge tolls on them in perpetuity and use profits from one tollway to help build other roads, including, at least in theory, free roads.

None of this was an accident.

That legislation, carried in the House by then-state Rep. Mike Krusee, a Williamson County Republican and close ally of Gov. Rick Perry, was based on the premise that the Legislature had no taste for raising the state's 20-cents-a-gallon gas tax. Therefore, the only way going forward to pay for roads had to be tolls, with the excess revenue becoming an "economic engine" for expanding the transportation network. And toll charges, officials said, would continue even after each tollway's original cost had been paid off.

Time has borne out that premise about the state gas tax. The levy, last raised by lawmakers in 1991, remains 20 cents a gallon (there's an additional 18.4-cents-a-gallon federal gasoline tax), and toll roads have sprouted all over the eastern half of Texas.

The Austin area, which in 2003 had no tollways, now has five, and a sixth under construction.

Profits from one of those roads, 183-A in Cedar Park, will serve as what amounts to collateral when the Central Texas Regional Mobility Authority attempts soon to borrow several hundred million dollars for the U.S. 290 East tollway in Northeast Austin.

Ogden says that's just wrong, that folks in Cedar Park are being "taxed" to pay for a road more than a dozen miles away that they will seldom use. Similarly, four of the Texas Department of Transportation's Austin-area tollways — Loop 1, Texas 45 North, Texas 45 Southeast and Texas 130 — function as a system, with their money pooled. The heavy traffic on Texas 45 North in Round Rock is basically propping up the much lighter use of Texas 130 near Mustang Ridge.

"We continue to run this state basically on hidden taxes," Ogden told that committee last week.

Ogden's bill, aside from snuffing tolls on a paid-off road, would not allow surplus revenue from one road to be used for another road.

Here's the problem, though: A toll road's costs don't end when its bonds are paid off.

There are still annual maintenance costs, the day-to-day expense of collecting and processing the tolls, and the big hit of major reconstruction every 40 years or so.

And another, larger problem: That stagnant gas tax will produce declining revenue as cars become more fuel-efficient, and what it generates now is already inadequate to build new roads and maintain the ones in place.

Ogden is carrying separate legislation, a potential constitutional amendment, that would allow the gas tax to rise by up to 5 cents a gallon. Each cent now raises about $150 million a year.

The extra gas tax money could be used to make debt payments for tollway bonds issued since 2003 (under that bill Ogden carried) — now about $270 million a year and likely to be nearly $410 million annually by 2013 — freeing up existing gas tax money to build or repair roads.

From road advocates' point of view, the worst-case scenario would be for Ogden's first bill to pass, making toll roads all but impossible to finance, and his second measure to die, meaning no extra gas taxes.

If neither becomes law — the most likely scenario — we get the status quo: taxes in sheep's clothing and, over time, increasing traffic congestion.

If any legislators are looking for something to give up for Lent, magical thinking about transportation finance might be a good candidate.

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