Proposed constitutional amendment in Texas addresses highway funding

In February 2013, The Texas Tribune reported that the state was just two years away from a severe drop in roadwork funding. At that time, the chairman of the Texas Department of Transportation (TXDOT) told the Senate Finance Committee that it was at a “crucial turning point,” because large state bond programs were set to hit their limit by 2015. The state was “maxed out,” meaning it was running out of capacity to issue debt to fund transportation infrastructure.

The Texas Tribune explained that the TXDOT had accrued close to $13 billion in debt after peak spending in 2009 reached $9 billion in highway contracts for that year. Without new revenue, the agency anticipated that funding would drop to less than $3 billion in highway projects in 2016, though the state requires approximately $4 billion annually—25 percent of the annual spending goes toward maintenance, and the rest toward the expansion of the transportation network. The natural gas drilling boom further exacerbates the need for adequate funding, because the truck traffic has caused unexpected damage to the roads and bridges, resulting in billions of dollars of repairs in recent years.

By the end of April 2015, annual spending increased to $5 billion, according to The Dallas Morning News. Beyond the ever-growing maintenance needs, the state gas tax has remained unchanged, at 20 cents per gallon, since 1991. And even though lawmakers approved a ballot measure that shifted $1.7 billion of tax revenue in 2015 from oil and gas production to transportation and eliminated the diversion of transportation funding to other agencies, there is still a shortfall.

The legislature has responded by passing SJR 5, a joint resolution that seeks voter approval, at the Nov. 3, 2015, election, to amend the Texas constitution to require a credit to the state highway fund of $2.5 billion of the net revenue derived from the sales and use tax on businesses and certain services, like certain amusement, entertainment, recreation, and cable television. If approved, this provision will take effect on Sept. 1, 2017, and expire on Sept. 1, 2020.

SJR 5 also calls for a credit to the state highway fund in the amount of 35 percent of the taxes above the first $5 billion that are imposed on the sale, rental, and use of motor vehicles. This provision would take effect on Sept. 1, 2019, and expire on Sept. 1, 2020.

Deposits from both of these provisions may only be put toward construction and maintenance of non-tolled public roads, and to repay the principal and interest on certain general obligation bonds.

SJR 5 establishes the ballot language requiring a yes or no vote as follows: "The constitutional amendment dedicating certain sales and use tax revenue and motor vehicle sales, use, and rental tax revenue to the state highway fund to provide funding for non-tolled roads and the reduction of certain transportation-related debt.”