Study to eliminate Texas toll roads

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Texas lawmakers ponder eliminating some toll roads
By Terri Hall
April 1, 2016

In a complete about face from the Rick Perry years of toll roads and public private partnerships (P3s), a marked shift away from tolling is taking place in Texas and was on display this week at the Texas capitol. No less than four transportation hearings took place over two days, and each addressed toll roads in some way. The one that made the headlines, however, was the hearing held by the House Transportation Committee on the elimination of toll roads.

The road lobby donned Cheshire cat grins once they heard the ‘number’ - the amount of money it would take to completely remove tolls from the toll systems built with any state money. The number is staggering - a whopping $21 billion in principle or $38 billion with interest. If the bonds were paid off as of September 1, 2017, Texas Department of Transportation (TxDOT) Executive Director James Bass estimated it would take $30 billion.

It’s obvious that the special interests believe the point of House Bill 2612, the bill to study the elimination of tolls, was an exercise in how to neutralize anti-toll ranks. The ‘number’ would be so enormous that any sane person would recognize removing tolls anytime soon isn’t realistic. However, grassroots groups like Texans Uniting for Reform and Freedom (TURF) and Texans for Toll-free Highways among other groups, didn’t actually ask for all tolls to be removed immediately.

Toll cessation not necessarily early toll pay-off
In contrast, taxpayers expected the legislature to pass Senator Lois Kolkhorst (Senate Bill 485) and Rep. Matt Shaheen’s bill (HB 1734) to remove tolls once a road is paid for. The bill would have also prevented agencies from endlessly refinancing a toll road pushing out the pay-off date further and further, resulting in perpetual taxation. The goal was to implement an end game for current toll projects and to secure the needed funding to prevent any more toll roads (especially those that cannot pay for themselves without taxpayer subsidies) from coming online moving forward.

After this week’s hearings, it’s also clear any toll reforms must include passing a bill to protect the state gasoline tax from being used to subsidize or otherwise support toll roads, which was carried by Senator Don Huffines last session. It must also include extending House Transportation Committee Chair Joe Pickett’s bill, House Bill 122, to stop issuing more debt from the Texas Mobility Fund and continuing to block those funds from going to subsidize and support toll roads.

Double taxation
Senator Robert Nichols, who chairs the Senate Transportation Committee, was the major roadblock to protecting the state gasoline tax from being used on toll roads last session. At his hearing on TxDOT funding Tuesday, Nichols explained to Senator Joan Huffman how $5 billion a year in gasoline taxes is still available to fund toll projects in Texas. Charging Texans a toll to use a road paid for with their gas taxes is clearly a double tax — one that the Senate Chairman promotes to his colleagues.

In recent years, all the new funding passed with it a prohibition on those funds from being used on toll projects, even if the project includes free lanes and only has toll elements (like inside ‘managed’ toll lanes). This has proven to be a real impediment to getting new toll projects off the ground in Texas. However, the prohibition on the new money is not a big enough road block considering the largest pot of money collected for the state highway fund, the gasoline tax, is still available for toll projects. Indeed, TxDOT even cited the statute to the Senate Committee which allows the Department to dole out gasoline tax and registration fees to toll projects.

Take ‘em down
Notable exceptions to the list of projects where tolls could be eliminated were the Houston Metro High Occupancy Toll (HOT) lanes and Texas’ five remaining public private partnerships (P3s). Officials have no business charging the taxpayers tolls on HOV lanes that have been converted to toll lanes because there is no debt to repaid and therefore no need to charge a toll. They’re paid for and should be eliminated immediately. Nichols and others argue that tolls need to stay in place permanently to pay for maintenance and operation. However, that’s what the gasoline tax in supposed to cover. The remaining P3s all include state money and should also be considered for elimination.

The toll projects like Interstate 10 (Katy Freeway) managed lanes and segments of the Grand Parkway around Houston, the DFW Connector, Interstate 30 managed lanes, and SH 360 (under construction) in Dallas, and the MoPac toll lanes (under construction) in Austin are also already 100% paid for and should not be tolled. Lawmakers also need to know about tolls roads like 45 SE in south Austin that were built with gas taxes and were made into toll roads to generate revenue to cover the debt service on the other toll roads in the Central Texas Turnpike System that weren’t collecting sufficient toll revenues to cover the debt payments.

Then, TxDOT went and issued debt on 45 SE when it refinanced its other toll roads and now the taxpayers owe debt for a road that was once paid for. They tied it into a ‘system’ and explained at the hearing how difficult it would be to extricate such projects because it now effects the whole ‘system.’ It should be unlawful to take a road that’s paid for and open it as a toll road simply to soak the public and bail out TxDOT and lawmakers for their bad decisions. This is no way to run a highway system. Texas went from a freely accessible public road system paid for in cash pay-as-you-go to one governed by complex contracts and bond investors.  

Such abuse of taxpayers is to be expected when there is no statutory prohibition on the use of gas taxes for toll roads, no requirement to take tolls down once the road is paid for, and nothing in statute to prevent toll agencies from continuously refinancing a project or ‘system' to keep these roads from ever being 'paid for.’ Anti-toll groups say they will continue to press the legislature and Governor Greg Abbott, who campaigned against toll roads, that it’s necessary to bind all toll authorities, including TxDOT, with these common sense reforms.