Texas Transit Association

To state leaders and legislators today, relying almost solely on state gas taxes to maintain and pay for roads is no longer enough — and they have set their sights on the 21st-century technology of electronic tolling.

But recent studies and some North Texas leaders are raising questions about whether the new technology can ever match the traditional power of pay-at-the-pump taxes.

By Tony Hartzel, The Dallas Morning News Knight Ridder/Tribune Business News Feb. 23, 2004

Feb. 21 - Model T’s were still rolling off the assembly line when Texas first started collecting a gas tax in 1923.

To state leaders and legislators today, though, relying almost solely on state gas taxes to maintain and pay for roads is no longer enough — and they have set their sights on the 21st-century technology of electronic tolling.

But recent studies and some North Texas leaders are raising questions about whether the new technology can ever match the traditional power of pay-at-the-pump taxes.

And a Dallas Morning News analysis of state gas-tax collections and other data shows that raising the state gas tax by pennies would pump more money into North Texas for road construction than building or adding several tolled highway lanes. For example, The News found that as many as eight new toll-lane segments would have to be built to raise the same amount of money for the region as increasing Texas’ 20-cent-a-gallon gasoline tax by a nickel.

Recent studies by state transportation agencies of two projects that would contain some tolled lanes show those lanes can’t raise enough money to cover their costs:

–In Houston, the toll lanes (called managed lanes) on the Katy Freeway (Interstate 10) are expected to raise $12.5 million a year — enough to pay off the bonds issued to build the toll section but not to operate or maintain the lanes.

–In North Texas, managed lanes on State Highway 183 would raise $12.9 million a year — enough to cover their operation and upkeep but only one-fourth of their construction cost.

But those studies don’t tell the full story, said Ric Williamson, chairman of the Texas Transportation Commission. The toll road revenue estimates probably are conservative, and the state would probably be able to issue bonds from some of the revenue, giving Texas a new source of road construction money, he said.

“Whether we like it or not, the majority of consumers are not interested in general tax increases at all,” he said.

The debate about how to fund Texas’ future transportation needs is taking shape as the state adds population and tries to maintain its aging highways.

Highway funding has reached “a critical need,” said Harris County Judge Robert Eckels, who also serves as a co-chairman of the Texas Urban Transportation Alliance, a lobbying group representing Texas’ five-largest urban areas. “The highway system and transportation funding have been neglected for many years, and it’s catching up with us.”

Texas ranks in the bottom third of all states when it comes to raising money for its roads, according to The News’ analysis of federal statistics. In 2001, the state ranked 42nd in fuel tax raised per capita, and it ranked 39th in fuel tax raised per lane mile of highway.

“We are a low-tax, low-service state. It is what we are,” said Mr. Williamson. “It’s why we’re Texas.”

State leaders say raising the gas tax — which hasn’t been done for a decade — is politically unacceptable.

Therefore, construction of toll roads and managed toll express lanes in the middle of rebuilt highways is expected to grow. The Texas Department of Transportation recently adopted regulations requiring that all new highway projects be reviewed as possible toll roads before they are built. The department also has passed new rules allowing regions to place tolls on state highways to raise money for other road projects.

Gas taxes and sales taxes can be raised only so high before they start slowing economic growth, Mr. Williamson said, adding that toll roads are a way to keep money in the region for transportation projects.

“What assurances do consumers have that Airport Freeway will have a nickel gas-tax increase to build two lanes? The average consumer who uses that freeway has zero confidence in me or anyone else to build that lane,” Mr. Williamson said.

Tolls have benefits to the state’s bottom line other than immediate cash flow, supporters argue. Texas only has enough gas-tax revenue from state and federal sources to pay for about one-third of its highway construction needs.

If a highway is converted to a toll road, the state no longer has to devote gas-tax revenue to pay for its upkeep. That money then could get converted into new highways or new toll projects.

In addition, tolls appeal to many policy makers because only those who use the toll road will help pay for its construction and upkeep. In many cases, state leaders say, managed lanes or toll roads will have a nearby nontoll alternate route.

But some question whether placing tolls permanently on a highway makes sense when the quarters and dollars that are collected cover only a fraction of the total highway cost.

Toll roads that generate only about 30 percent of their costs cannot be built without other funding sources, said Ginger Daniels Goodin, an associate research engineer for the Texas Transportation Institute who has studied managed toll lanes placed on highways.

On the Katy Freeway, for example, tolls will raise about $125 million in construction bonds — enough to build its toll lanes but only 10 percent of the total cost to rebuild one of Houston’s busiest highways.

In Dallas, revenue projections for toll tunnels under LBJ Freeway are not complete. Early estimates indicate that tolls will raise almost half of the lanes’ $600 million construction cost, which does not include rebuilding the existing lanes.

“For the people of Texas, where is the leverage?” asked Collin County Judge Ron Harris, who supports managed toll lanes in certain areas, including LBJ Freeway and possibly including the median of Central Expressway north of LBJ Freeway.

“Show us this works before you throw the whole system into convulsions,” said Mr. Harris, co-chairman of the Dallas Regional Mobility Coalition.

Dallas-Fort Worth has a history of extensive toll road construction that should serve as a model for the state, but it also doesn’t mean that new managed lanes will be feasible throughout the region, said Michael Morris, director of transportation for the North Central Texas Council of Governments, the regional planning agency.

“The only express lanes that are going to be significant are going to be on horribly congested freeways,” he said, naming LBJ Freeway and Highway 183 as the only examples.

Toll roads still will play a vital role in North Texas transportation but primarily on newly constructed highways, Mr. Morris said.

In the future, North Texans may get to decide the issues.

State lawmakers have unsuccessfully floated the idea of allowing a local fuel-tax increase to raise money for transportation projects in the same area. Several bills allowing a local-option transportation tax failed to gather support in the Legislature, but local leaders want them to be filed again next year.

Although not currently allowed under state law, the process conceivably could operate like a bond election. A county could call an election, identify projects that would be funded and ask for voters’ support to raise the gas tax in a certain county by 5 or 10 cents.

A study by the North Texas Commission shows that a 10 cents-per-gallon increase could raise almost $270 million for local road and transit projects.

Raising taxes requires careful consideration, and it should only be done to improve the common good, said Mr. Williamson, the transportation commission chairman. But he did hold out one carrot for North Texas leaders to consider as they discuss ways to improve roads and also fund a regional rail network.

“If leaders from a large region that’s not just four counties, but more like 18 counties, want to advance their gas tax for the region and pair with a regional transit authority, people might be surprised at how the governor would react.”