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Financing our way out of Gridlock

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The first state gasoline tax was imposed in 1923. It was for one cent, and 25 percent went to the school fund. In 1929 it went to five cents. With the Interstate Act, 1956, it was three cents, and then increased to four cents in 1959. In 1967, when we had a state fuel tax of five cents and a federal tax of four cents, our lettings here in Texas were 330 million dollars per year. The next increase came on the federal level in 1982 and was for an additional five cents with one cent going to mass transit. Then, the state tax was increased from 5 cents to 10 cents in 1984.

These increases let Texas elevate the program to 1.7 billion dollars in 1985. The state fuel tax was increased to 15 cents in 1986 on a temporary basis and was made permanent in 1987. And in 1990 under President H.W. Bush, the federal tax was raised 5 cents with 2.5 cents going to highways and 2.5 cents going to the deficit.

In 1993 under President Clinton, the federal tax increased 4.4 cents, with the .4 going to underground storage tank remediation. In 1991 the state sales tax on fuel was increased 5 cents for the last time, which made the total state tax 20 cents. In 1997 Congress redirected the federal gas tax that was going to deficit reduction to the highway fund for construction. These combined revenues allowed TxDOT to let between 3.5 and 4.3 billion dollars.

In 2001 George Bush moved into the White House. He instructed his budget experts to discontinue any diversions of our federal highway fund and to pay back all borrowed funds. This pushed our federal allocation of money to well over 2 billion dollars a year. At the same time, TxDOT had visions of expanding the Texas plan by making grants to cities and transportation entities. The legislature supported borrowing money rather than paying as you go. At the same time, they engaged in diversions of our constitutional funds and replaced them with borrowed money.

In 2001 the legislature developed a constitutional amendment, which approved the Texas Mobility Fund, providing over 6 billion dollars in a revolving fund of borrowed money. It would be paid for by dedicating a revenue stream outside of the highway fund revenue. This gave us sufficient money to maintain the 4 billion dollar program.

As the department funded additional regional projects, the need for money grew. The legislature passed the Proposition 14 bond initiative, which provided for an additional 6 billion dollars, but assigned the debt to our highway fund. Now for the first time, our constitutionally protected funds must pay over 400 million dollars a year to satisfy the debt requirement.

The highway commission chair was Ric Williamson and he was Governor Perry’s closest friend. They were successful in changing the funding of highways in Texas by creating a system called pass through tolls, which had nothing to do with tolls. The program would let counties sell bonds for area projects and TxDOT would pay them back plus additional funds over a period of time. The program will cost our highway fund over 240 million per year to satisfy the debt.

Williamson and Perry then paved the way for comprehensive development agreements. There are three Dallas projects that have a debt requirement of 325 million dollars a year. The current cost to our highway fund for debt retirement approaches one billion dollars per year.

In 2009 we were saved by the 2.25 billion dollars in stimulus money that President Obama sent us. With the realization of where we were headed, in 2007 we encouraged the legislature to pass an additional 5 billion dollars in general obligation bonds to be paid for out of the general fund. That program is keeping our current program healthy and satisfying our debt. TxDOT let almost 4 billion dollars last year and will do so again this year.

On the federal level, we have exhausted all of the impounded funds and Congress needs to decide whether to limit the federal reimbursement to the amount of fuel taxes being collected (about 30% less than we are receiving), raise the fuel tax (not likely), or obtain additional funds currently being collected for other purposes (very likely).

The Texas Transportation Institute was appropriated up to 3 million dollars to identify the top congested areas in the state. In addition, they are developing a laundry list of measures that will fund these projects. The current appropriation provides for 300 million dollars to start the planning process on the most congested areas.

We have 3 basic programs on the table:


• One is by the Lt. Governor which will provide a mechanism for the voters in a specific area to sell bonds like school bonds to pay for the project and then pay from the bonds with a combination of revenues like removing the sales tax exemption on fuel tax in that area, toll roads, etc.

• The second approach was introduced by Senator Tommy Williams, which would increase the registration fees by $50.00. That would provide 1.2 billion dollars, which could provide for 15 billion dollars in construction if the money is leveraged.

• The third approach is by Senator Nichols, which would shift the sales tax on automobiles to the highway fund over a ten-year period. This would provide about 2.5 billion dollars a year when completed.


The future could be bright for road construction because the need is so great and the supporters of transportation continue to expand with the realization that we are paying the price for delays in increased cost of productivity and that cost is far greater than the cost of building our way out of gridlock.

The chapter leadership is committed to finding a solution to our transportation problem.



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