The Virginia Legislature drew national headlines this week after lawmakers there passed the state’s first overhaul of transportation funding in more than 25 years. The measure cuts the state’s taxes on gas and raises sales taxes.
Texas legislators are working on their own fix to the state's transportation budget woes, but the similarities with their Virginia counterparts ends there. Lawmakers and transportation advocates involved in the discussions say Texas is likely to leave both its 20-cent gas tax and 8.25 percent sales tax rate alone and hunt for money from other sources instead.
“What may be good for a state like Virginia, which has significantly less population, less size, I don’t think it has some real practical applications in Texas,” said state Rep. Drew Darby, R-San Angelo, a member of the House Appropriations Committee who is working on transportation issues. “We just don’t need more sales tax dollars.”
The landmark Virginia bill replaces the state’s 17.5-cent gas tax with a 3.5 percent wholesale tax on gasoline, a 6 percent tax on diesel fuel and an increase in the sales tax from 5 percent to 5.3 percent. It also creates a new $100 registration fee for electric cars and hybrids. The end result for Virginians will be lower gas bills and higher bills on most other purchases. Once it’s fully phased in, it is expected to raise $880 million annually for transportation projects. The measure’s passage is being touted as outgoing Republican Gov. Bob McDonnell’s lasting legacy on the state, though it has drawn criticism from some conservatives.
“Our business rankings have gone down because of transportation infrastructure,” McDonnell said on MSNBC on Tuesday. “It’s a national problem. I fixed it.”
Over the last decade, both Texas and Virginia have increasingly relied on debt to cover their growing transportation costs. TxDOT officials said earlier this month that the agency has approximately $13 billion in debt. As of June, the Virginia Department of Transportation’s debt stood at $2.9 billion, agency spokeswoman Shannon Marshall said.
Texas needs to raise $4 billion annually in new revenue to avoid a severe slowdown in road projects after 2015, a situation that has been described as TxDOT’s “fiscal cliff.”
Among the discussions in the Legislature, three key proposals to boost TxDOT’s budget have emerged: raising the registration fee on vehicles, dedicating the sales tax already collected on vehicle sales to transportation, and ending billions of dollars in diversions of the gas tax, which mostly go toward public schools and the Department of Public Safety. Gov. Rick Perry has endorsed the latter proposal as a way for the state to be more transparent in its spending.
"Bleeding that money off to other projects puts us at a disadvantage,” Perry said last year. “Committing to the core conservative value of truth in budgeting will maintain our national economic standing." Perry has also called for tapping some money from the Rainy Day Fund for infrastructure spending.
Key to the success of the Virginia measure, supporters say, is that it reduces the state’s reliance on the gas tax, which hasn’t kept up with inflation and is likely to keep bringing in less revenue as cars become more efficient. None of the leading proposals in Texas involve lowering the state’s 20-cent gas tax. In fact, two Republican lawmakers recently raised eyebrows for calling for increasing the gas tax in Texas.
State Sen. Kevin Eltife, R-Tyler, a longtime critic of the state's use of debt to build roads, said at a TxDOT conference in Austin last week that raising the gas tax is the conservative approach to funding the state’s transportation infrastructure.
"We have got to look at taxes to get out of this hole," Eltife said.
At a Tribune symposium on public education at Rice University on Monday, state Rep. Jimmie Don Aycock, R-Killeen, said he backed Eltife’s proposal.
“There’s no free lunch,” Aycock said at the event.
Both Eltife and Aycock acknowledged that more lawmakers will need to share this perspective before a gas tax hike can gain traction. Under the Texas Constitution, tax bills must originate in the House. Aycock said he had no plans to file a bill raising the gas tax.
Speaking at last week’s TxDOT conference, House Transportation Chairman Larry Phillips, R-Sherman, said increasing the state's reliance on the gas tax was likely a nonstarter in the House this session.
“The gas tax to me is not my favorite choice just because it’s a declining revenue. … I don’t see with the volatility of gas prices that that’s something the House is going to move on,” Phillips said.
State Rep. Linda Harper-Brown, R-Irving, a member of the House Transportation Committee, said legislators are trying to balance what can raise enough money for roads and still draw the needed political support. She said she has suggested lowering the gas tax in concert with ending some diversions and raising fees.
“Right now, we’re more or less throwing things out there and seeing what sticks to the wall,” she said.