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The House Transportation Subcommittee on Long-term Infrastructure Planning met on September 10th, 2015 to discuss long-term transportation infrastructure planning, including Proposition 7. The House Select Committee on Transportation Planning met in the afternoon to discuss similar issues.

  • Meeting to discuss HB 13 and its related proposition 7, designed to ensure a “more certain” revenue source derived from certain sales taxes

 
Overview of Major Transportation Funding Actions by 84th Legislature
Proposition 7 – Constitutional Amendment for Transportation Funding
Analyses of Proposed Constitutional Amendments for the November 3, 2015 Election
Funding Needs and Potential Sources, TxDOT

  • Includes HB 1 transfers and Prop. 7 funding, as well as fines and taxes
  • HB 1 discontinues State Highway Fund Appropriations to agencies aside from TxDOT
  • $8.8 billion appropriated in 2016-17 biennium
  • Prop. 7 will be submitted to voters in November of 2015, to continue through 2032, appropriates percentages of certain tax revenue above $28 billion for the State Highway Fund
    • $28 billion figure was reached because legislature was interested in at least $3 billion in appropriations, estimated appropriations tacked at $31 billion
  • Revenue derived this way is capped at $2.5 billion
  • Includes a 35% of revenue from motor vehicle sales and rental taxes above $5 billion
  • Legislature could adopt resolutions to reduce allocations from these sources and funnel into GR, up to $1.25 billion
  • Some DRP and $30 dollar state highway fines revenue allocated largely to GR, amounts above  $250 million would go towards Texas Mobility Fund
  • Combined collections from DRP and fines is $130 million, still $120 million from total allocations threshold
  • Rep. Walle comments that this legislation would not increase transportation funding, would simplify transportation funding efforts and give control to appropriations
  • Option is to reduce motor fuel timely filer discount from 2% to .5%, comments that this simply brings discount into line with the rest of the timely filer discounts
    • This tax involves more reporting than general sales tax, etc., and thus could justify higher discount
    • Counter to this is to reduce some of the overhead required for reporting this tax and discount and allow reduction

 
Sources and Uses of Clean Air Account and TERP Account

  • Annual transfer of $500,000 from TERP to Clean Air
  • Appropriations, in 2016-17, $81.3 million from LIRAP
  • TCEQ allocation increase is primarily due to LIRAP
  • Clean Air Account is expected to have $246 million by the end of 2016
  • Money may only be used for Clean Air Account purposes, LIRAP dedications can only be used for specific things
  • LIRAP amounts to around $40 million per year in revenue
  • Rep. Simmons asks what the original purpose of LIRAP was, what the benefit to counties was for participating in the program
    • Unsure, some counties have attempted to withdraw
  • Process for dedication of Certificate of Title fees has been simplified, entire amount is dedicated to Mobility Fund, same amount then transferred from Highway Fund to TERP
  • Some proposals have been formed to create new uses of TERP that are mobility-oriented, but none have succeeded so far
  • Rep. Israel asks after local transit programs and if they can be or are assisted by TERP
    • Local governments are eligible recipients of TERP funds, can apply to program and receive grants
  • Committee requests materials be presented at least 48 hours beforehand for proper review

 
Texas Transportation Institute
Transportation Funding and Finance Legislation Database
State Transportation Funding
State Funding Initiatives Report, Transportation Investment Advocacy Center, July 2015

  • Future funding needs
    • Need for additional $5.7 billion has been discovered for transportation costs, assumes 5% construction cost inflation per year in Texas and is based upon 2010 mobility level, assumes mobility needs are met 40% by local government and 60% by state
    • Rep. Simmons would like to know exactly what a 2010 mobility figure is
      • Can find out the specifics
    • Increased fuel efficiency leads to decreased fuel tax revenue
    • Rep. Simmons asks after exploration of inverse properties of those topics
      • Can find out
    • Decline in tax revenue forthcoming, fuel tax decline to begin in 2018
    • .20 cents spent on construction now is worth roughly .07 cents due to inflation
    • Rep. Simmons comments that purchasing power of .20 cents has been effectively reduced by 2/3, compensated for some of this by increasing raw dollar collections
    • Highway Cost Index increases at a faster pace than Consumer Price Index generally
    • Rep. Simmons comments that this difference appears around 2004, wonders if there is an explanation as to why
      • Unsure, TTI will look into this
    • Rep. Simmons comments that sometimes this will lead to people taking advantage, wants to ensure State will keep costs under control, not feasible to increase taxes at twice the rate of inflation to compensate
    • Rep. Israel comments that material and labor prices have gone up substantially
    • Rep. Simmons comments that paying for projects now could potentially save costs compared to waiting to fund projects
      • Yes
    • Rep. Burkett comments that it costs four times as much to pay for roads via tolls than outright, asks what the difference in price is due to and if tolls are truly cheaper than paying for projects
      • TTI can return with an answer
  • Strategies from Other States
    • Increased gas tax, increased state registration fees, increase in other fees
    • Also some state dedicate additional funds out of GR
    • Rep. Simmons comments Georgia increased the gas tax, wants to know how transportation revenue compares truly between states and what other sources of funding states have
    • TTI has explored potential options available to Texas to increase funding based on other State models

 
Collin County Sales Tax Reinvestment Plan
Keith Self, Collin County Judge

  • Collin county is at the forefront of effort to find other methods to build highways aside from tolls, county has many highways passing through it and several toll roads
  • If toll roads are expanded, 85% of property value in Collin county will be ringed with toll roads
  • Retail sales along the US 75 corridor add up to around $10 billion dollars, Collin county looking to rebuild this corridor
  • 3% increase in tax revenue over 20 years would throw off a large amount of money
  • NTTA is looking at how they will share revenue with member counties
  • Collin county has allocated $50 million for local match
  • Sales tax reinvestment from retail sales will allow Collin county to seriously look at US 75 rebuild, this revenue diversion would eventually return to the State
  • Standard local matching requires 10% matching funds, Collin county is likely close to 40% match
  • Collin county was the county that asked TCEQ to write rules governing departure from LIRAP, LIRAP funds have dropped significantly recently, but last session $2.6 million allocations have made up for the loss of funds
  • Rep. Simmons asks for clarification that Collin county is looking to use the state portion of the sales tax, and comments that use of this will be a cost to appropriators
    • Collin county is talking about a portion of the increase in sales tax going to road reconstruction
    • Current estimate for US 75 cost is $2.6 billion, rebuild for entire 12 miles inside Collin and Dallas County crossing 6 municipalities
  • Rep. Israel asks if this is within one MPO
    • All within one MPO
  • Rep. Israel asks if there is any discussion with the MPO or if it is too early
    • Too early, but this a key piece

 
Texas Transportation Commission 
2016 Unified Transportation Program, Texas Transportation Commission, August 13, 2015
Texas Transportation Plan 2040, TxDOT
Transportation Funding Options, LBB
Tyron Lewis, Chair

  • Funding for Transportation is an investment issue, money funneled into infrastructure builds wealth in the long-term
  • Dedicated funding is very important, allows agencies to plan on certain funds to help build and develop projects in the long-term

 
Victor Vandergriff, Commissioner

  • Texas is not leading the way as in other states in areas such as driverless cars and other transportation initiatives

 
James Bass, CFO, TxDOT
Semi-Annual Issuer Report (Debt Service Update)

  • TxDOT has been trying to aggregate different funding plans for easier consumption
  • Budget for 2016-17 is just over $23 billion, consumption of bonding programs has decreased recently
  • Federal reimbursements for highways are about 36% of funding for TxDOT
  • Rep. Simmons asks how this split occurs
    • 80 cents of each fuel tax dollar sent to the government goes to transportation, states receive 95% of this amount back for transportation programs
  • State Highway Fund also constitutes about 36% of funding for transportation, state motor fuels tax and vehicle registration contributes
  • Prop. 1 funds constitute next largest portion, followed by Texas Mobility Fund, GR, and then other funds (maintenance insurance fees, etc.)
  • Most of funding goes to awarding projects starting prior to this biennium, much of the budget TxDOT has is already committed
  • Maintenance is the next largest commitment, used for replacement or expansion of current roads
  • Next is debt service payback on Prop. 12, 14, and Texas Mobility Fund, around 10%
  • Project development planning and other modes and services, including small rural funding commitments
  • Administration and support makes up 2.2%, however, many employees are included in the maintenance price
  • Entire overhead cost for TxDOT is 5.75% of total budget, around $1.3 billion, some of this comes directly from Highway Fund
  • Utilities, Consumable Supplies, Buildings compromise around 17% or 18% of total budget
  • Texas Mobility Fund plays a large part in determining bonding capacity of TxDOT, HB 122 restricted bonding dedications from the Mobility Fund
  • Total payments equal roughly $14.2 billion
  • Rep. Simmons asks, given Prop 14 funds taken to build a hypothetical road for $6 billion, if TxDOT waited until it had gathered entirety of the cost, the true cost would be much higher
    • Large variables would be actual advance on project, i.e. 2 or 10 years and the quality of life improvements garnered from finishing the road project
  • Rep. Simmons asks why cost of repayment on Mobility Fund is so much higher than other bonds
    • Has to do with time of issuance and length of time for the bond, TMF was first bond fund issued and bond issuance cost decreased over time
  • TMF has 100% usage, Prop 14 has $700 million left to issue, Prop 12 has $2.1 billion left to be issued
  • Prop 14 expected to be issued completely by end of calendar year, Prop 12 first issuance will likely be in March or April of 2016

 
Mark Williams, Director of Planning, TxDOT

  • LBJ Express 635 project is an example of long-term funding, example of a concession agreement, TxDOT enters an agreement wityh developer to undertake design and maintenance, private company bring in some amount of financing and private company has ability to recapture costs through road revenue
  • Private activity bonds allow private corporations to invest in public works to borrow at tax exempt interest rates
  •  Rep. Simmons asks if there are other methods that TxDOT does not take advantage of that could be useful
    • Each project is different, overall Texas is fairly consistent with other states and has set the standard in  some areas
    • Kentucky and Indiana have formed public-private corporation to finance projects, a unique model
  • Oftentimes real estate developers will invest in transportation projects to ensure access to real estate developments
  • TxDOT’s Unified Transportation Program categories, total $35 billion over next ten years (most to Preventive Maintenance and Rehabilitation, Structural Replacement Program, and Safety Program), category formulas 2, 5, and 7 go towards MPOs
  • Rep. Simmons comments that TxDOT needs to present ideas as well as status, State needs to think outside the box to accommodate demands of transportation problems



Afternoon Session

 

  • Rep. Pickett wants tangible long-term plans and the ability to preserve allocations to contribute towards long-term project planning and development. I.E. given a $50 million project, wants the ability to forgo use of $5 million allotment to use at a later date
  • Match funding, allocations will be considered and examined against existing projects to find workable solutions for long-term funding solutions for Transportation
  • “Shouldn’t be any losers” in funding, should fund all local projects relating to transportation and should have ways to do so

 

Texas Transportation Commission 

Transportation Funding Sources and Categories

Categories, Codes, and Levels

HB 20 – Initial Report, Texas Department of Transportation, September 1, 2015

Victor Vandergriff, Commissioner and Mark Williams, Director of Planning, TxDOT

  • TTC has a Core Strategy Team that is working on services rendered by TxDOT
  • Coordination between TTC, LBB, and TxDOT is crucial to ensuring transportation within the state of Texas, cross-agency  effort to seriously examine the problems facing transportation
  • Part of the process is developing performance metrics for TxDOT and establishing what services are crucial for TxDOT to perform
  • Performance measures are due in December of 2015 to provide time for official reporting
  • Planning Organization Stakeholder Committee involves MPOs and district directors from across the state designed to allow interested parties a voice into transportation problems and reports
  • Customer Stakeholder Committee validates assumptions and plans put for by the Strategy Team
  • Rep. Pickett asks for what TTC has done so far and what these teams have done so far
    • These teams have defined the core values that TxDOT should be focused on
  • Rep. Pickett stresses the need for performance measures and tracking, also focuses on the need for legislative voice in the actions of TxDOT and transportation planning
  • HB 20 report contains all of the different transportation funding categories used by TTC and TxDOT
  • Safety risk assessments have drawn a lot of comments from MPOs as to how they are derived and what the effect is
  • Rep. Pickett comments that it seems State districts nominate projects within areas and TTC staff evaluates safety projects on several criteria, asks when TTC has last looked at and updated safety criteria
    • This is one area TTC would like to cover through the HB 20 process, will work with Planning Organization Stakeholder Committee to find adjustments that need to be made to make the process more “responsible”
    • Potential planning problems with local MPOs and projects being reviewed, if a project is taken off the list the next project up is not necessarily from the same district
  • Rep. Walle asks how State is going to plan without a current federal highway bill
    • Rep. Pickett answers that the State keeps two sets of books based upon what Texas expects compared to what Texas actually has
    • TTC says it is a very difficult process, plans must follow financial constraints and must follow federal regulations, so projects are prepared while attempting to cover for differences between expected and actual funds, planned projects are not necessarily assured, but rather prepared on an “if this happens…” basis
  • Rep. Walle asks what happens if the federal government does not pass a highway bill
    • Currently there is no highway bill, Map 21 has expired and TTC/TxDOT is operating federal extension plans
  • Rep. Simmons asks if the 12 funding categories are still appropriate for allocating funds
    • Depends, some categories potentially lack funding allocations
  • Funding Categories
    • 1. Maintenance and Rehabilitation Program
    • 2. Metropolitan and Urban Area Corridors
      • MPOs and districts work together for this category
    • 3. Non-traditional funding, Prop 12, Prop 14, Transportation Mobility Fund, local funds
    • 4. Statewide Connectivity Corridors
      • Mostly Prop 1 funding, previously funded from Commission decision
    • 5. Air Quality Program
      • Can only be spent in air quality non-attainment areas, some of the money allocated is difficult to use
    • 6. Structure/Bridge Replacement Program
    • 7. Metropolitan Mobility
    • 8. Safety Projects
    • 9. Transportation Alternative Program
      • Rep. Pickett asks id State can use TAP funds to traditional funding
        • MAP 21 allows the State to do so, but it is difficult to take funds to add to other projects
      • Rep. Walle asks if transportation museums have been funded via this
        • Not recently, nationally some have been
      • Rep. Pickett is this usable for Safe Route to Schools
        • Yes
    • 10. Supplemental Transportation projects
      • Category that may be reaching the end of its useful life
    • 11. District Discretionary Projects
      • Rider 11 (b) allows funds to be allocated for projects along the Texas border
    • 12. Strategic Priority Projects
      • Commission selected projects that address a wide variety of projects
  • Rep. Pickett comments that flexibility is needed in funding between categories and ability to go to Commission for UTP plan funding, criticizes Commission for changing UTP after votes have occurred on UTP
    • UTP changes have been reviewed by staff before being presented to the Commission
  • Rep. Pickett comments that staff might need a check that allows them to differ to a different party in allocating/refusing to allocate funding, wants to take pressure off the staff
  • Rep. Simmons comments on usefulness of meeting with Water Board to discuss potential new strategies for Transportation, wants to be able to find funding for deserving funding, i.e. determine projects in need and leave it to the legislature to find the funding required

 

Ashby Johnson, Exec. Director of Texas Association of MPOs

  • Looking forward to funding discussions in the future, has had good discussions with TxDOT
  • Each of the 12 categories are funnels, but the decision on how much to fund each category is still made by TxDOT, has had discussions with TxDOT over the logic behind these decisions
  • Rep. Pickett comments that he has been involved with this discussion, wants someone from TxDOT to explain these decision at the next meeting
  • Federal regulations still constrain funding flexibility in MPOs and MPOs must fund salaries and overhead largely from federal money
  • Rep. Pickett asks what additional state money would be needed to implement a 10 year plan for MPOs
    • Nothing at the moment, but performance measure implementation is very time and resource intensive
  • Rep. Pickett encourages close work with MPOs in other representative’s districts

 

Lon Dixon, Himself

  • Public is bothered by public money being funneled into toll roads
  • Toll roads are essentially a double tax on the public

 

Closing Discussion

  • Rep. Larson asks how often the transportation committees are planning on meeting
    • Commissioner Vandergriff responds that a timeline is forthcoming, should be presentable at work group meeting on Sept. 16th
  • Rep. Pickett would like the work group material as soon as possible
  • Rep. Larson stresses importance of communicating with the Texas populace and making them aware of the process by which transportation decisions are made