While stuck amid flashing brake lights and construction barriers on Interstate 35, the chairman of the Alamo Area Metropolitan Planning Organization described $10 billion worth of congestion-relief projects around the city that long have lacked the funding needed to break ground.
Some of that could change if Proposition 7, a constitutional amendment that would set aside some sales and vehicle tax revenue for highway funding, passes in November.
Its approval could enable the MPO to expand part of U.S. 281 without tolls and begin work on a number of highway projects that would improve traffic conditions throughout the city and other parts of the organization’s study area.
Passing a Prop. 7 billboard alongside the I-35 backup, Lopez acknowledged that if the measure passes, it will raise questions about whether the MPO can fund a further expansion of that highway and others without using tolls. But Prop. 7 could change more than just the area’s toll plan, he said.
“I think we will be able to craft a comprehensive plan (if Prop. 7 passes),” Lopez said. “It would enable us to kick-start that plan and hopefully have a better funding approach that will help us over the course of the next decade.” Prop. 7 will appear on the ballot just a year after the passage of Prop. 1, a constitutional amendment that sets aside some oil and gas severance tax revenue for highway projects. With the start of early voting Monday, Texans again will decide whether the state can use a greater portion of tax revenue to fix and expand a sprawling highway system that becomes more congested as the population grows. “We have some serious problems in the community that we have to address regarding transportation, and it’s more than just building roads,” Lopez said.
Shift in Legislature
Both Prop. 1 and Prop. 7 are part of a broader plan within the Legislature to maintain the highway system and build more capacity without raising the gas tax or deepening the state’s transportation debt.
The funding needs are great: The Texas Department of Transportation has identified more than $60 billion worth of projects that could reduce traffic and improve connectivity in the state’s urban areas, and it’s already short on cash. The department has estimated it needs $5 billion more each year for baseline maintenance and congestion relief projects, a TxDOT report states.
For more than a decade, lawmakers have tried to meet the state’s growing transportation needs by issuing bonds to supplement the gas tax and vehicle registration fee revenue traditionally used to build highways. At the end of last year, the state had amassed $18.2 billion in debt that will cost $32 billion to pay back, according to a 2014 report to the Legislature, prompting lawmakers to reallocate existing funds for future road projects through mechanisms like Prop. 1 and Prop. 7.
Starting in 2018, Prop. 7 would add about $2.5 billion to the State Highway Fund each year, and after 2020, it would add another $430 million in vehicle sales tax revenue. Prop. 1 is expected to add $1.1 billion to the fund this fiscal year, a recent Texas comptroller report states, though future payouts could be far less if crude oil prices don’t rebound.
“A great part of this is funding a gap that for years was filled by debt and toll roads,” said Vic Boyer, president and CEO of the San Antonio Mobility Coalition. The propositions “will certainly be a net increase in what is available in the future.”
In addition to placing Prop. 7 on the ballot, legislators last session capped the Texas Mobility Fund, the state’s last source of bonds for highway building. They also voted to stop using some gas tax and vehicle registration fee revenue for nonhighway spending — a move that will add $650 million to the State Highway Fund each year — and passed a bill meant to improve TxDOT’s planning process.
“Last year, we spent more on the debt payment then we did on new construction,” said Sen. Robert Nichols, R-Jacksonville, chairman of the Senate Committee on Transportation. “We’ve got to solve this problem, and we can’t keep borrowing more to fix it.”
Congestion levels have been rising in Texas for years. Last year, drivers in San Antonio spent 44 hours in traffic, says a study by the Texas Transportation Institute, up from 39 hours in 2009. And drivers in Houston, Dallas and Austin each lost more than 50 hours to traffic.
Texas is not alone in its effort to boost construction with little money to spend. Highway funding needs are growing across the nation, leaving Congress scrambling to extend a transportation funding bill set to expire at the end of the month.
“The states that are not feeling quite as much of a crunch are the states that are not growing,” Nichols said. “Their congestion isn’t getting as bad.”
The maintenance and congestion problems that plague Texas highways began developing in the early 1990s, when a sharp increase in population and cross-border trade put more cars and trucks on the road. By 2000, a quarter of Texas interstate highways had nearly reached capacity, a House Research Organization report states. During the same period, gas tax revenue began to shrink. In 1992, the year after the state approved the current rate of 20 cents a gallon, the gas tax accounted for 10.4 percent of all state taxes. By 2000, inflation and fuel efficiency improvements had driven that percentage down to 8.4.
With less cash on hand for transportation, legislators established the Texas Mobility Fund in 2001 and authorized a $6 billion bond program through Proposition 14 in 2003. Voters approved both measures, allowing TxDOT to issue bonds for the first time. “The Legislature had no appetite to increase the gas tax,” said Rep. Joe Pickett, D-El Paso, who chairs the House Transportation Committee. “The only thing we did was borrow money. That was a big deal. We had never borrowed for transportation before.”
But the amount available through the new funds wasn’t enough as more drivers took to the road and spent a smaller percentage of their paychecks on gas tax.
“We were bringing in less money than it cost to preserve the system,” Nichols said.
In 2007, legislators asked for voter approval for another bond program: Proposition 12. The measure allowed TxDOT to issue $5 billion in bonds, some of which were used to complete Wurzbach Parkway and start the ongoing construction on I-35 near the San Antonio Military Medical Center.
But the cost of maintaining the system continued to outpace available funding. As the state’s bond debt stacked up, inflation eroded the purchasing power of the gas tax and pushed construction costs up more than 150 percent, a 2014 report to the Legislature states.
“In Texas, we’ve been blessed that we have a lot of materials readily available to use, like rock, cement and steel,” said Rudy Rivera, president of RJ Rivera Associates, a San Antonio-based transportation engineering firm. “I think (construction costs) have gone up significantly because of the cost of fuel. Salaries keeping up with inflation has increased them as well.”
By 2013, TxDOT had exhausted Prop. 14 and Prop. 12 funds. As transportation debt deepened and funding sources shrank, the Legislature looked for a way to boost funding without issuing more bonds or raising the gas tax, an unpopular idea Nichols said had no political traction.
“The Legislature was coming to a fiscal cliff again as the bond money was about to be spent, and TxDOT was about to shut it down as far as road building,” Nichols said. “When we said we’re not going to borrow any more money, (other options) became a priority.” Lawmakers found an answer to the problem in Prop. 1, which contributed $1.74 billion to the State Highway Fund last fiscal year. But the state has borrowed, on average, $1.65 billion each year since 2005, according to the 2014 report to the Legislature. The first round of Prop. 1 funds only replaced that annual figure.
“Prop. 1 kept us from coming up to a cliff and kept us even, which was important,” Pickett said. “If we didn’t have it, everyone would have felt it around the state. Prop. 1 kept us status quo, and now Prop. 7 can get us a little bit further.”
More funding needed
With or without Prop. 7, the state’s transportation funding needs will keep growing. Texas continues to attract new residents who push traffic levels up, and it is losing tax revenue to fuel efficient vehicles that save their drivers money.
“In 1994, I drove a Ford pickup,” Rivera said. “It got 11 miles to the gallon. Today in my Tundra, I can go a solid 17 or 18, and there are others that are far more fuel efficient.”
Last year, the gas tax made up just 4.9 percent of the state’s total taxes, and Nichols said it’s not likely to change. Pickett said there are other funds the Legislature might be able to tap. He suggested the Texas Emissions Reduction Plan, which receives $100 million from the State Highway Fund each year.
“There are things out there that still won’t require a discussion about tax increases, but at some point, we’re going to be done with constitutional amendments,” Pickett said.
It hasn’t been determined how much San Antonio will receive if Prop. 7 passes. Lopez estimated the region could get up to $800 million each year. But it wouldn’t be enough to cover every project within the MPO’s study area, which includes parts of Guadalupe, Comal and Kendall counties.
“It sounds like a huge number, but bridges and overpasses costs tens of millions of dollars,” he said.