(Austin, TX, March 12, 2013) - On Tuesday morning, Texans from across the state converged at the capitol to stress the need for Texas Governor Rick Perry, Lt. Governor David Dewhurst, Speaker Joe Straus, and House and Senate budget writers to prevent the most fiscally sound, long-term road funding solutions from being held hostage to more tolls, debt, and tax hikes.
Activist leaders Terri Hall (TURF) and JoAnn Fleming (TEA Party Caucus Advisory Committee Chair and Grassroots America director) sounded the alarm to Texans that soon every major road will be tolled, and foreign corporations can take over our roadways, driving up the cost of daily travel with unfettered tolling.
"Texans don't take kindly to unelected boards and commissions raising taxes on them, and that is just what these toll agencies can and will do if we don't change course now," warned TURF's founder and director, Terri Hall.
Hall says the word around the capitol is that the bills that would solve the road-funding shortfall by dedicating the existing vehicle sales tax (SB 287/HB 782) to roads -- have been sent to the budget committees to die.
"They don't want to prioritize spending in order to get the money we already pay in taxes over to roads," fumed Hall. "Instead, the Governor (in support of SB 1632) wants Texans to pay back their own tax money with interest through tolls or local tax hikes for all these toll projects that can't pay for themselves without taxpayer bail outs."
"If our leaders insist on dealing with the problem with more tax hikes, more tolls, and more debt, there will be a voter revolt. People are already saddled with higher payroll and income taxes from Washington, DC, and property taxes and local debt are rising around most of the state. Just as we cannot afford more tax and spend from government, we cannot afford more borrow and spend for roads," insists JoAnn Fleming, Executive Director of Grassroots America.
"Some of the folks inside this building are the architects of this debt cliff with their fairy tale, smoke and mirrors budgeting and creative financing - they've maxed out the credit card. We can get out of it, but it will take leadership and somebody standing up for the taxpayers," Fleming said.
She added, "If our wallets are the first solution they will be the only solution that survives the session. We aren't going to give anybody a green light for raising the gas tax or vehicle registration fees until our leaders clear the debris they put in the road, out of the road."
Proposals the Coalition Opposes
Governor Perry's endorsed solution is to redirect federal highway funds into the State Infrastructure Bank (SB 1632) to be used to guarantee toxic local toll road debt and even mass transit projects, (which these funds currently cannot be used to do). Perry's proposal also encourages local taxes and tax hikes to bailout toll projects that can't pay for themselves.
Terri Hall says this won't solve the funding problem in a fiscally-sound, transparent way. "If this is the solution, Texans will not be able to get to work or get their kids to school without paying $10 or more a day to get across town. It's insane, especially when gas prices are going through the roof! How is this not a tax hike?" asks Hall.
Senate Finance Committee Chair Tommy Williams proposes (SJR 38) a similar loan guarantee program for economic development toll road and mass transit projects using the Rainy Day Fund as well as a separate proposal (SJR 39) to increase vehicle registration fees to build new road capacity. Neither solve the long-term road funding shortfalls nor get the state back to pay-as-you-go.
Unsustainable Debt Spiral
Securing a reliable, long-term source of revenue, coupled with operational reforms, are necessary for cost-effective highway planning and the avoidance of more debt; however, the state has no sustainable policy for funding roads. The Grant Thornton audit of 2010 states that our debt path is unsustainable. According to an April 24, 2012, Associated Press account (citing federal data), Texas leads the nation in road debt ($31 billion, principle and interest). This is supported by documents provided by Senator Robert Nichols, which show debt (principle only) to be $23 billion.
Incurring more road debt, whether at the state or local level, is not fiscally responsible, conservative, nor sustainable. Several sources have also indicated that there are no more viable toll projects in the state -- where the tolls could ever hope to pay for the expense of the road without considerable taxpayer subsidies. We must return to pay-as-you-go.
Raising Taxes Not the Answer
"Any tax collected from road users should be going to fund roads first, especially before any politician asks us to dig deeper into our pockets to fund roads with tax hikes and more tolls," contends Hall. "Tolls are taxes the way they're being done in Texas today, since $10 billion in public funds are going to build toll roads, yet they're still charging us a toll to drive on them."
Conservatives feel the state leadership is behaving as politicians in Washington do - holding out for tax increases so they don't have to cut spending and reform TxDOT.
"Texans are fed-up with out-of-control government that never gets its priorities straight, and keeps asking us to pay more when the taxes already collected aren't going for their intended purpose," reiterated Fleming.
Gas tax a source of diminishing funding
The state gas tax, the primary source of revenue for TxDOT, has been unchanged for 20 years. This has caused a reliance on toll roads to bridge the funding gap, which costs Texans prohibitively more than a tax-funded road (1-2 cents a mile vs. 15 - 75 cents a mile for tolls).
We cannot expect to build today's roads with a 20-year-old revenue source. This structural shortfall must be addressed without more tolls, more debt, and more taxes.
Between 1990 - 2012, Texas state spending rose 310%, while population growth plus inflation totaled only 132%. [Source: Texas Public Policy Foundation analysis of Legislative Budget Board documents]. Lawmakers should refocus on the core constitutional functions of state government.
Comprehensive transportation package needed
The proper pay-as-you-go funding of road construction can be done with a comprehensive transportation package, which should include:
- State government restructuring to eliminate overlapping, duplicated effort;
- Phase-out of funding for budget items beyond the core constitutional responsibilities of state government;
- TxDOT operational reforms;
- Reigning in flagrant waste (documented) via "local control" RMAs, MPOs and COGs spending millions on "enhancements";
- Refocus on building highways to relieve traffic congestion - not funding light rail, street cars, biking/hiking trails, parks and roads for economic development (the "build it and they will come" scenario);
- Ending diversions;
- Dedicating vehicle sales and use tax revenue to highway construction (the Nichols Plan - SB 287);
- Early debt retirement, if approved by the people (the Eltife Plan - Constitutional Amendment via SJR 47)
State leaders should work together on this commonsense, taxpayer-friendly transportation package by first actively supporting Nichols' bill (SB 287) which phases in the dedication of vehicles sales/use tax to roads. A dedicated vehicle sales tax revenue stream will keep pace with inflation on its own and help meet the growing transportation needs of Texas.
The vehicle sales tax currently represents $3.3 billion a year (and growing), and coupled with ending gas tax diversions, which the Governor estimates is $650 million a year, it gets the State very close to the $4 billion it needs to build and maintain our state highway system. The Nichols' phase-in facilitates long-range TxDOT construction planning, and it does not provide a sudden shock to general revenues, since the vehicle sales tax is growing so rapidly.
Summary of solutions
The conservative activist leaders admit their recommendations are not easy, but insist they are workable, sustainable solutions a majority of voters will support to end the current "borrow and spend" cycle:
- Return to pay-as-you-go; no more public road debt (state or local).
- No more Public Private Partnerships (P3s), handing control of our Texas infrastructure to private, even foreign, corporations. This applies to roads and other public facilities such as the Capitol Complex. No more use of eminent domain for private gain.
- No more public subsidies, credit enhancements, or loan guarantees for any type of toll project.
- Comprehensive financial audit of TxDOT prior to the agency's next sunset review in 2015 to gain efficiencies and end practices that drive-up costs, e. g., Design-Build CDAs, P3s, and multi-million dollar "enhancements" that have nothing to do with moving traffic.
- End diversions of all road user fees (motor fuel tax, vehicle sales tax, tire sales, auto parts sales tax) to non-transportation uses.
- Phase-in motor vehicle sales/use tax revenues to the Highway Fund, consistent with Nichols' SB 287.
Constitutional restrictions on the use of New Revenues
- No diversions: May only be used for planning, design, construction of new state highway system road capacity and the maintenance of this new capacity once built.
- Not Used for Toll Roads: May not be used on comprehensive development agreements or projects involving the construction of toll lanes.
- No Debt: Shall be used for pay-as-you go projects and may not be used as backing for new debt financing (whether at the state or local level).
- No non-road expenditures: None of these funds may be used for any expense related to bike trails, transit or pedestrian walkways.
Hall emphasized, "Implementing these reforms, securing all existing transportation-related taxes, and dedicating these taxes to a 'roads-only priority plan' will restore an affordable, pay-as-you-go, pro-taxpayer, pro-freedom transportation policy for all Texans."
"Since we believe the people are taxed enough already, and we know other solutions exist to fund needed road construction, we promise two things: 1) we will work with the leaders on the transportation package; and 2) we will make ending the 'innovative financing' gimmicks, waste, and debt spiral a campaign issue in the next election cycle," concludes Fleming.