Wednesday, July 11, 2012

Texas Facing Major Road Funding Woes

By 2015, Texas may be all out of money to keep highway construction abreast of population and job growth, according to Texas Department of Transportation CFO James Bess, who describes the perilous fiscal status of his agency as “entering into an era of uncertainty.” El Paso State Representative Joe Pickett echoes the concerns of Bess. “People don’t believe there’s a crisis because there are plenty of orange barrels. … How long before the borrowed money dissipates and we don’t have any more money to build?”

Apparently, the answer is the end of 2014. The Texas legislature has authorized TDOT to borrow $17.3 billion for transportation projects, but repayment will cost as much as $31.1 billion over 25 to 30 years. Nevertheless, TDOT will spend morrow than it is authorized to borrow in the next two years: $10.5 billion this year, and $9.3 billion next year. Of that total $19.8 billion, $6.7 billion is from one time sources that won’t be available in the future.

Texas motor fuel tax revenue – the state’s major funding source for road building – generates $2.6 billion annually, but the state needs $14 billion per year to keep up with population growth. Part of the problem has been the penchant of legislators over the years to raid highway funds for fire and police salaries and operating expenses, and now that big chicken is coming home to roost. One proposal is to raise auto and truck license plate fees by $50 per year, but that would hardly fill the budget gap. Even in Texas there aren’t half a billion cars and trucks.

If you plan to drive through Texas in the future, make sure you have a good spare tire. You will probably run into lots of potholes.

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