Tolling is a Critical Funding Tool for Texas

Over the last two years, a groundswell of opposition has arisen to tolling in Texas. A number of groups including Toll Free Texas and Texans Uniting for Reform and Freedom have been lobbying to eliminate all tollroads in the state. Several Texas State Representatives and Senators have filed multiple bills to prioritize non-tolled roads and make building tolled roads much more challenging. Certain bills such as HB 856 that requires MPOs to stream, record and publish meetings are not anti-tolling. Other provisions such as one in HB/SB 1834 that ensures tolls are used to repay the cost of the road are a positive. But as a whole, the package of bills that requires elected officials to affirm support for a toll project multiple times and requires the conversion of tolled roads to non-tolled roads within 20 years is troubling.

The frustration with tolling is understandable. Nobody wants to pay any more than they have to. But everybody agrees having a quality roadway network is critical. Surface transportation policy in Texas and across the country has long been based on a users-pay/users-benefit principle. The users payment system has several advantages. First, it is fair. Those who pay the users fees receive the benefits. Second, it is proportional. Those who driver farther pay more. Third, it is self-limiting. A user tax that can only be spent on a certain purpose prevents officials from increasing taxes. Fourth, it is predictable. A user fee does not have to worry about economic downturns or political whims. Fifth, it is an investment signal. It answers the question of how much infrastructure to build.

Historically, the best user fee was the gasoline tax. People traveling longer distances used more fuel; heavier vehicles that damaged the road consumed more gasoline than light duty cars. However, the gas tax is no longer a good proxy for highway use. The emergence of electric and hybrid vehicles means some people pay dramatically more to drive than others. Now, the folks who pay the most are very often rural drivers despite the fact that rural roads are some of the cheapest to maintain.

And if that is not bad enough, there is the question of diversions. The federal government diverts about 30% of its gas tax funding to transit, biking, walking and invasive species removal. Certain environmental groups got all bent out of shape when the latest surface transportation bill, Moving Ahead for Progress in the 21st Century (MAP 21), outlawed the use of gas tax revenue for transportation museums. Oh the horror! But the policy changes fixed a fraction of the problems. The changes said “no” to gas tax funding for a transportation museum in Illinois but allowed funding to continue for recreational trails in Oregon.

Texas also has a statewide gas tax. But similar to the federal gas tax, it diverts money to projects that have nothing to do with roadways. By law, 25% of motor fuel tax proceeds are diverted to education. Education is clearly important, but using gas taxes to fund education is a clear violation of the users-pay/users-benefit principle. Some in the Texas legislature hope to end the education diversion but such a change is extremely unlikely to pass. So neither the federal nor state gas taxes are true user fees.

Texas policy makers have floated a number of other transportation funding ideas, none of which is a good user fee. With sales taxes there is no link between how much someone buys and how far they travel. Throughout the country there has been tremendous pressure to charge more in sales tax than is needed for a specific program and then use the excess taxpayer revenue to support non-transportation improvements.

Last year, Texas voters approved spending 50% of the royalties from oil and gas drilling on highways. While voters and policy makers were understandably looking for a good political solution, there are several reasons why this is not the best long-term option. The link between transportation and increased drilling is weak. More troubling, with the price of oil lower, hydraulic fracking no longer makes economic sense in some Texas communities. Any decline in fracking will lead to less revenue.

So while it might not be popular tolling is the most realistic solution for funding large parts of Texas’ transportation system. Unlike the gas tax, it is 100% dedicated to roadways. Unlike the gas tax, an increase in electric and hybrid vehicles will not affect its viability as a funding source. Unlike the gas tax, it can be increased during peak hours and decreased during off-hours to improve mobility. Unlike fracking it provides a stable revenue source. Unlike a sales tax it is a good proxy for road usage and can serve as a signal to investors when it is time to invest in a facility. Put simply, tolling has to be part of the solution.


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