Legislature’s Smoke and Mirrors Charade with Gas Tax Identified

TexPIRG

AUSTIN, TX—According to an analysis by Texas Public Interest Research Group (TexPIRG) of the Legislative Budget Board’s Recommendations to the House Appropriations Committee, Texas is set to direct more than $2 billon in dedicated transportation funds from the Texas Department of Transportation (TxDOT) to 13 other state agencies.

“State budget writers are relying on a smoke and mirrors approach to balancing Texas’ budget, shifting $2 billion in dedicated transportation taxes to plug holes in the budget. This has left insufficient reserves for basic road repairs and much-needed maintenance. Funds available for road maintenance drop dramatically from $1.1 billion in 2012 to $360 million in 2013.

“This is not a one-time emergency measure. It occurs routinely and results in a systematic shortfall of revenue that encourages state officials to seek short-sighted methods to fund road projects. By starving transportation revenues, Texas budget writers are fueling the state’s dependence on unpopular private toll road deals.

“Private toll roads use controversial financing arrangements called Comprehensive Development Agreements (CDAs) or Public-Private Partnerships (PPPs). Referring to private toll roads as Public-Private Partnerships is misleading to taxpayers and misrepresents the deals. While private toll road investors make large upfront payments to jumpstart private toll road projects, the economics of these deals are such that these payments are unlikely to match the long-term value of the rising tolls that will be paid by future generations and not collected for public uses.

“Once completed, taxpayers in Texas will be paying 75 cents per mile for the next 52 years to use 13 miles of privatized toll lanes in Tarrant County. Toll revenue generated by the project, called the North Tarrant Express, will go towards retiring the bonds and covering the higher transaction costs and legal fees. The budget for this biennium has allocated $1 million per biennium to review private toll road contracts.

“While privatization deals offer public officials a hard-to-resist “quick fix” for budget and transportation challenges, private toll roads are ultimately more expensive for Texas while the long-term costs will ultimately be absorbed by the public. Private toll road financing is characterized by the same leveraging of debt, conflicts of interest and reckless shifting of risk that caused the financial crisis.

“Taxpayers will continue to pay high toll rates even after the bonds and interest are paid off. But that money won’t go into General Revenue or into a dedicated transportation fund so lawmakers can invest it in the future of Texans. All the toll revenue generated from the North Tarrant Express will be go to line the pockets of private toll road investor’s who in turn will be able to pay generous returns to their shareholders.

“While surely there is no easy solution for Texas’ budget woes, one thing is certain. The taxpayers of Texas will pay for transportation infrastructure in Texas one way or another. It is up to their elected officials to ensure that their constituents understand where their money is going.

“When lawmakers return to their districts at the end of the 82nd legislative session they will be able to tell their constituents that they didn’t raise taxes this year because instead, they raised toll rates for the next 52 years. They can also share with their constituents the fact that they didn’t touch the Rainy Day Fund to balance the budget. Instead they used the state gas tax.”