GAS TAXES: BROKEN PROMISES? Grassroots fume over lawmakers failure to END gas tax diversions

Perry, Dewhurst, Straus all promised to end diversions this session

(Austin, TX, March 25, 2013) – Texas Governor Rick Perry, Lt. Governor David Dewhurst, Speaker Joe Straus, and House and Senate budget writers have so far failed to end diversions from the gas tax and help fix the structural road funding shortfall in the budgets passed last week. Perry, Dewhurst, and Straus all promised to end diversions of the gas tax in an effort to enact truth in budgeting — to ensure taxes collected for a specific purpose actually go to fund that purpose.

The Texas Constitution restricts the use of state gas tax revenues to “…the sole purpose of acquiring rights-of-way, constructing, maintaining, and policing such public roadways…” Yet lawmakers continue to raid the gas tax to fill holes in the budget for non-road purposes like funding public pensions and benefits for state agencies other than the Texas Department of Transportation (TxDOT).

Meanwhile, lawmakers boosted funding for schools and Medicaid and continue to hold the most fiscally sound, long-term road funding solutions hostage to more tolls and debt rather than discipline the use of the taxes already paid by road users.

Activist leaders Terri Hall (TURF), JoAnn Fleming (TEA Party Caucus Advisory Committee Chair and Grassroots America director), and Jeff Judson (San Antonio Tea Party) warned of the road funding ‘fiscal cliff’ before the 83rd legislature convened, and lawmakers seem to be aware of it, yet continue to do nothing. Existing transportation funding sources end in 2015 leaving TxDOT with no funding for new capacity and barely enough to maintain existing roads. In fact, in last the biennium budget, lawmakers borrowed money to maintain roads.

Judson notes, “It’s good that Senate Finance Chairman Tommy Williams acknowledged the transportation ‘fiscal cliff’ when the Senate adopted the budget last week, but he and his colleagues have got to act fast or TxDOT will truly run out of money to build new roads before we have time to fix it next session.”

“It looks an awful lot like truth in budgeting is all talk, no action,” asserts TURF’s founder and director, Terri Hall.

Bills that would solve the road-funding shortfall by dedicating the existing vehicle sales tax (SB 287/HB 782) to roads and the constitutional amendments to end gas tax diversions (HJR 29/SJR 31) have yet to get a hearing.

“If our leaders insist on dealing with the problem with more tax hikes, more tolls, and more debt, there will be a voter revolt. Just as we cannot afford more tax and spend from government, we cannot afford more borrow and spend for roads,” insists JoAnn Fleming, TEA Party Caucus Advisory Committee Chair.

“Some of the folks inside this building are the architects of this debt cliff – 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.

“Texans expect lawmakers to do their jobs and properly fund roads, a core function of government just like education. We wouldn’t dream of failing to fund schools, so why would they think it’s okay to not fund roads?” asks Hall. “After all, without roads, many students, faculty, and staff couldn’t get to school to fulfill their mission. We’ve got to stop asking TxDOT to fulfill its mission with debt (whether state or local) and without adequate funding. It’s creating a reckless, unsustainable debt spiral the next generation cannot possibly repay.”

Proposals the Coalition Opposes
Governor Perry’s endorsed solution is to put Rainy Day 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.

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. Perry backs another bill, HB 3363, authored by Rep. Bill Callegari, to create a whole new class of bonds, called century bonds, that take 100 years to re-pay — outlasting the useful life of the road. None of these solve the long-term road funding shortfalls nor get the state back to pay-as-you-go.

Unsustainable Debt
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 Texas’ 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).

“Incurring more road debt, whether at the state or local level, is not fiscally responsible, conservative, nor sustainable. We must return to pay-as-you-go,” declares Hall.

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 more debt 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 those roads.”

Conservatives feel the state leadership is behaving as politicians in Washington do – looking to tax increases rather than allocating existing taxes on road users to solve the funding shortfall.

“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 and more debt.

Between 1990 – 2012, Texas state spending rose 310%, while population growth plus inflation totaled only 132%, according to the Texas Public Policy Foundation analysis of Legislative Budget Board documents. Lawmakers should refocus on the core constitutional functions of state government.

State leaders should work together on this commonsense, taxpayer-friendly transportation package by first actively supporting Senator 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 TxDOT needs to build and maintain our state highway system. The Nichols’ phase-in of these revenues over time, facilitates proper TxDOT construction planning, and it does not provide a sudden shock to general revenues, since the vehicle sales tax is growing so rapidly.

TURF is a non-partisan, grassroots, all-volunteer group defending citizens’ concerns with toll road policy, public private partnerships, and eminent domain abuse. TURF promotes pro-taxpayer, pro-freedom, & non-toll transportation solutions. For more information or to support the work of TURF, please visit http://www.TexasTURF.org.

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