State Highway Fund Expenditures

Amend the Transportation Code so that expenditures from the State Highway Fund (SHF) are used only for right-of-way acquisition, construction and policing of public roadways, and prohibit expenditures by any non-transportation agencies.

Despite the clear constitutional provision that Motor Fuels Taxes “shall be used for the sole purpose of acquiring rights-of-way, constructing, maintaining, and policing such public roadways,” significant appropriations from the SHF are directed to agencies other than TxDOT and the Department of Public Safety. The majority (81 percent) of appropriations from the SHF over the past decade have gone directly to the Texas Department of Transportation (TxDOT). However, other amounts are diverted to seven other agencies, including the Health and Human Services Commission (HHSC) and the Texas Education Agency (TEA).

As noted above, Article VIII, Section 7a of the Texas Constitution reads as follows:

Subject to legislative appropriation, allocation and direction, all net revenues remaining after payment of all refunds allowed by law and expenses of collection derived from motor vehicle registration fees, and all taxes, except gross production and ad valorem taxes, on motor fuels and lubricants used to propel motor vehicles over public roadways, shall be used for the sole purpose of acquiring rights-of-way, for constructing, and maintaining, and policing such public roadways.

Similarly, Section 222.001(a) of the Transportation Code states that revenue from the State Highway Fund may only be used as follows:

(1) to improve the state highway system; or
(2) to mitigate adverse environmental effects that result directly from construction or maintenance of a state highway by the department; or
(3) by the Department of Public Safety to police the state highway system and to administer state laws relating to traffic and safety on public roads.

This section should be amended by adding a new subsection (c) to read as follows:

(c) Except as otherwise provided by this code, money in the state highway fund that is not described by Subsection (a) may be used only to improve the state highway system.

This reform would ensure that the State Highway Fund is not used to fund other agencies of government. For instance, in the 2014-15 biennial budget , more than $800 million was appropriated to non-transportation related agencies, including the Office of Comptroller, the Veteran’s Commission, and the Department of Insurance. Prohibiting such appropriations would make an additional $400 million per year available for transportation spending from the State Highway Fund. This is achieved without affecting State Highway Fund appropriations to TxDOT, DPS, the Department of Motor Vehicles (DMV), the Texas Transportation Institute, or the appropriations to the Office of the Attorney General for litigating right-of-way acquisitions on behalf of TxDOT.

Non-transportation agencies that lose State Highway Fund appropriations under this reform could have that revenue made up from the General Revenue Fund, or the functions that are funded from the State Highway Fund could be transferred to other agencies. This reform is predicated on the notion that expenditures from the State Highway Fund should be used for constructing, maintaining, and policing roadways: expenditures that do not meet this standard should be funded from General Revenue.