Category: Public Private Partnerships
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Perry calls for end to gas tax diversions - Really?
By Terri Hall
October 20, 2012
After starving & raiding the gas tax for his entire administration, Texas Governor Rick Perry has finally decided to get on board with ending diversions of our state gas tax for non-transportation purposes. Conservatives have been crying foul for over a decade to end the raid of our gas taxes for things that have nothing to do with transportation. So while this is a welcome announcement, it’s a bit late in the game.
Gas tax diversions are part of the reason there’s a structural shortfall in funding for roads. Twenty-five percent of the state motor fuels tax goes to public schools per the Texas Constitution, which represents approximately $750 million a year. Perry and the Texas legislature have habitually raided an additional five to ten percent on top of the education diversions for things that have nothing to do with transportation like pensions, enhancing employee benefits in the Attorney General’s Office and for computers in the Comptroller’s Office. These non-education diversions topped $1 billion a year in the last budget.
The state gas tax has not been raised in Texas since 1991, and Perry has refused to consider raising it. Why? Not because he’s a genuine fiscal conservative, but because he’s committed to slapping tolls on everything that moves. Since the way the Texas Department of Transportation (TxDOT) is structuring Texas toll road deals is really a new tax, Perry can outsource the tax increase to local toll authorities. The problem? Toll authorities are unelected boards and toll roads are punitively more expensive than a gas tax funded road system.
Perry’s highway department has been undergoing a fundamental transformation of transportation financing during his 12 years as governor -- a move toward ‘innovative finance’ (think leveraged debt) and public private partnerships (P3s). P3s sell public roads to private toll operators for over a half century and effectively sell-off Texas sovereignty to the highest bidder. Such contracts prohibit or penalize the expansion of free roads and put taxation in the hands of private corporations who charge up to 75 cents a mile in tolls to access public roads.
Politicizing road building
Enter Perry’s cronyism. His former legislative director, Dan Shelley, lobbied for Spanish toll giant, Cintra, then worked as Perry’s liaison in the Texas legislature where he secured Cintra the development rights for the Trans Texas Corridor, then went back to work for Cintra. In addition, he appointed his campaign manager and former chief of staff, Deirdre Delisi, who had no prior experience in transportation, to Chair the Texas Transportation Commission from 2008-2011. Incidentally, she resigned from the Commission to run Perry’s presidential campaign.
Then, TxDOT’s new Executive Director, Phil Wilson, is another Perry political appointment who’s enjoyed five other state posts before heading the agency. Wilson’s former employer, Energy Future Holdings Corp., donated over $1 million to Perry through the Republican Governor’s Association. It’s the first time a lobbyist, rather than a professional engineer, has been tapped to run the highway department. All of the above are committed to P3s without the voters’ consent.
Senator John Carona, former Chair of the Senate Transportation Committee until he began to openly criticize the Governor’s transportation policies, again accused Perry of politicizing the highway department during a recent Texas Tribune panel discussion on transportation. You can see why -- it’s the truth.
By starving the gas tax, TxDOT has been able to repeat the mantra, “we’re out of money for roads, so you HAVE to pay tolls to get your roads fixed.” Perry and his unelected Transportation Commission push tolls and P3s as the ‘solution’ to shortfalls. Perry’s biggest problem with that is Texans know he and the legislature have been habitually raiding the gas tax so his excuse to levy toll taxes falls flat. No one wants to pay higher taxes when their politicians aren’t spending existing tax money for its intended purpose.
Even worse, Perry and the legislature have allowed gas taxes to be used to subsidize toll roads -- a huge double tax. Since most of the tolling occurring across Texas involves existing freeways, Perry’s tolls become a TRIPLE tax to use the same stretch of road. Then, every single P3 in Texas has been awarded to the same company -- Cintra. In fact, Cintra has snagged all six of Texas’ P3 projects, for which Cintra has enjoyed a half a billion dollars in gas taxes to subsidize them.
So it’s against this back-drop that Perry makes his announcement that he’s finally on board with ending gas tax diversions. But the question remains, will he then use the new infusion of highway money to build freeways or tollways? Judging by past history, it’ll be more subsidies for his buddies’ toll roads. But the jury’s still out on that one. With an engaged electorate demanding more truth in taxation and an end to the cronyism that grips Austin and Washington, lawmakers may well rein in the double and triple taxation and limit the use of gas taxes to free roads.
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