TURF, pro-taxpayer groups applaud Texas Governor's call to end gas tax diversions, but reject Rainy Day Fund raid(Austin, TX - January 30, 2013) In his State of the State speech yesterday, Texas Governor Rick Perry announced his support for ending gas tax diversions for non-road purposes. Ending diversions is part of the Governor's truth in taxation plank in his Budget Compact, which means taxes collected for a certain purpose should go only to that purpose. Perry's leadership to end gas tax diversions, estimated to be $1.3 billion per biennium, is much needed and very helpful. But that alone isn't sufficient to properly fund our state highways without higher taxes (aka tolls).
The Governor also asked Texans how they'd like to see tax relief implemented in the current legislative session. The grassroots call for eliminating toll taxes and using our existing road taxes (including the motor vehicle sales tax) to expand our freeways without tolls. Unfortunately, the Governor's web site, http://www.gov.texas.gov has no option for toll tax relief.
TURF and other taxpayer groups are opposed to Perry's proposal to tap the Texas Rainy Day Fund for $1.7 billion for roads. This opposition is based on four principles: (1) this meager amount of funding will not make up the structural funding shortfall, (2) it will only fund more leveraged toll roads, (3) it will create the need for more debt in order to keep pace with road needs, and (4) it is another one-time infusion that frustrates efficient long range transportation planning.
Tolls are taxes
By starving road funds, it's forced a reliance on debt and toll roads, particularly controversial toll roads that require taxpayer bailouts. Tolls are a tax when all Texas taxpayers are subsidizing them, and it's the most expensive way to fund roads. So claims by state leaders that they're not raising taxes and being fiscally responsible is not entirely accurate, to say the least. When one considers that all congestion relief in the future is planned to be tolled, tolls no longer are optional, and we will be paying a lot more.
"It isn't fiscally conservative to use our money to build the toll road and then charge us again to drive on it. Nor is it fiscally conservative when un-elected toll agencies plan to keep the tolls in place in perpetuity (HB 1112/SB 19 from 82nd legislature). So tolls have become a new tax on driving," declares Terri Hall, Founder/Director of Texans Uniting for Reform and Freedom (TURF).
When taking a gas tax funded road is 1-2 cents a mile versus a toll road that costs 15 cents up to 80 cents per mile, paying tolls is like adding $10-$15 to every gallon of gas you buy. With gas still above $3/gallon, now more than ever politicians need to prioritize spending and properly fund the basics like roads. Texans just can't afford this punitive taxation any longer.
Texas' own fiscal cliff
Perhaps most disturbing is the Legislature's trend in relying on borrowing and debt to fund roads, rather than dedicate existing road taxes to highways. With the State now $31 BILLION in debt for roads, we're on an unsustainable trajectory that's more aptly called a debt bomb.
"Texas leads the nation in road debt. We're creating our own fiscal cliff for our kids and grandkids, so adding more debt is not the way to get us off the cliff," JoAnn Fleming, Executive Director of Grassroots America and also Chairwoman of the Texas Legislature's Tea Party Caucus Advisory Committee.
The 2010 Grant Thornton Audit also called the borrowing 'unsustainable' and laid the blame on the Texas Legislature for increasing TxDOT's baseline budget with debt that's now eating up more and more of our money for 'free' roads with debt service. In fact, the highway department is having to open fully paid for roads (SH 45SE) as toll roads to try and cover the debt on failing toll roads.
"When the Texas Constitution prohibits such uses of the gas tax, we applaud the Governor for his leadership on this issue and finally putting an end to these abuses," notes Hall. "However, the state needs to address the long-term funding shortfall, and another short-term band aid which will lead to more leveraged debt is NOT the answer."
"Ending diversions of road funds is a great start and the Rainy Day Fund money will help in the short term. But this is still at least $3 billion short of solving our long-term structural shortfalls in road funding. Our growing population and congestion requires $4 billion annually in order to get away from the reliance on toll roads and debt to build needed capacity," contends Jeff Judson, a director of the San Antonio Tea Party.
Vehicle sales taxes should go to roads
TURF and pro-taxpayer groups support Senator Robert Nichols' and Representative Linda Harper-Brown's bill to dedicate the vehicles sales tax revenues to roads. This gives our state a reliable, long-term source of revenue to build and maintain our roads.
"This is in keeping with the Governor's truth in taxation mandate. Taxes collected on vehicles should be going to fund roads, not dumped into general revenue," states Hall.
Vehicle sales taxes represent $3 billion/year in road funds that aren't getting to roads. This coupled with ending gas tax diversions will get TxDOT the $4 billion it says it needs to properly build and maintain our state highway system - which can be done with existing taxes.
Reverse the spending spree
State spending as a percentage of population has nearly tripled in the last 20 years and doubled under Perry. It's time to fund the basics first, not tap the Rainy Day Fund to pay for essentials.
So TURF and pro-taxpayer groups want not only an end to using road taxes (both gas tax and vehicle sales tax) for non-road purposes, but also an end to the borrow and spend debt spiral.