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TOLL ROAD DEBATE POPS UP AGAIN IN AUSTIN - POTENTIAL SERIOUS NEGATIVE EFFECTS FOR METROPOLITAN MOBILITY

Posted By ACEC Texas, Wednesday, November 22, 2017

Controversy over toll roads and toll strategies has been a staple of recent Texas transportation policy at least since 2003 when the state's leadership began to push public-private partnerships and toll options in lieu of traditional funding.  The issue has become higher profile again in the last month as the Texas Transportation Commission considers revisions to the state's ten-year Unified Transportation Program (UTP).

 

TxDOT's planning staff initially laid out a proposal that would integrate managed lanes into several projects, including IH-635 in Dallas, IH-35 in Austin and San Antonio, Loop 1604 in San Antonio, the Southeast Connector in Tarrant County, and several Houston projects.  A number of grassroots and Tea Party groups responded with a letter expressing strong objections on several grounds.  Their arguments were that Governor Abbott had promised to build roads without fees, taxes, tolls, or debt and that since Props 1 and 7 provided $5 billion in new funding, toll roads are not needed.  In the face of this criticism, Governor Abbott and Lt. Governor Patrick called on TxDOT to delete the managed lanes projects, which the agency leadership has at least initially said they would do.

 

This anti-toll push mis-characterizes recent legislative history and seriously threatens metropolitan mobility.

Proposition 1 and Proposition 7 limited the use of new severance tax and sales tax revenue to non-tolled projects.  However, it was never argued by anyone in this discussion that the revenues were sufficient to forego toll options. TxDOT receives billions more in other funding and the Legislature put no limits on the use of these other funds in toll projects (other than the requirement in the TxDOT Sunset bill that toll equity investments must be repaid).  Furthermore, the Legislature put no limits on the ability of local toll authorities to continue to develop projects and put no limits on the use of toll managed lanes (although several amendments to the Sunset bill to do that were submitted).

There are consequently no statutory or constitutional impediments to the use of toll strategies, including toll managed lanes, provided that no Prop 1 or Prop 7 funds are used to construct them.  Nor are there stautory barriers to the integration of toll components into a larger highway improvement project, provided that funding streams are segregated.

We believe it is important for state leaders to take a clear-eyed look at what the Legislature has done (and not done) in recent years.

In 2010, a blue-ribbon committee of Texans looked at transportation funding needs and concluded that, in order to maintain 2010 highway and mobility conditions Texas needed about $5 billion in additional annual investment (in 2010 dollars) and continued aggressive use of toll strategies.  In the 2013-15 period, Texas legislators and voters took steps to address this shortfall.   The Legislature ceased diversions of dedicated highway fund revenue to non-highway uses and voters approved Propositions 1 and 7 dedicating portions of oil and gas severance taxes, sales taxes and motor vehicle sales taxes to the construction of non-tolled projects.

However, in 2017 the Legislature took several steps backward, allocating $300 million of this new revenue to pay debt service on already-constructed projects and limiting the use of toll equity grants and comprehensive development agreements.    In sum, the total of new funding – with additions and subtractions – is approximately $3.5 billion annually.  But if the leadership chooses to limit the use of toll strategies and leveraging, this removes tools that have generated at least $2 billion annually in metropolitan projects. 

The end result of these steps forward and backward, combined with the end of previously authorized debt-financed projects, means that the state’s Unified Transportation Program over the next ten years forecasts basically the same level of spending that took place over the previous ten years.  The color of money has changed positively, in the sense of sustainable hard dollars substituting for debt, but the overall level of funding has not changed materially.

At bottom, tolling is just a revenue option for funding roads.  It can be foregone, but not without significant alternative revenue.  As one commentator put it this week:  If not taxes or tolls, then what?  The state's leadership doesn't seem to have an answer for that, except that they think they've done enough.

 

 

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