1986-08-11 Regular Meeting - Laserfiche WebLink

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-3- If the user fees produce more revenue than is needed (which has never been the case), they should be reduced. The fact is that the needs are much greater than the revenues available. Huge balances have been built up in the funds by red tape. These trust fund balances only distort the budget deficit by making it appear smaller than it really is. Some otherwise intelligent Congressmen have suggested increasing the federal fuel tax up to 50d a gallon to reduce the deficit in the federal budget. Meanwhile, the Texas Legislature is preparing to meet in January in what may be one of its most difficult and challenging sessions. Facing a revenue shortfall of $1.3 to $3 billion, lawmakers will be struggling to make ends meet. The choices are to cut the budget, increase taxes, or do some of both. There is a~common misconception among the public and members of the Legislature that the state highway fund has a huge surplus which can - and should - be tapped to solve the current crunch in the state budget. There is a balance in the fund of $700 to 800 million, as revenues from the increased user fees are paid. As the revenues flow in, contracts are awarded to upgrade and improve the state's roads. The balance in the fund builds up until the work is completed and actually paid for. At any given point in time, obligations against the state highway fund will exceed the balance. We should also be aware of the fact that the State Treasurer utilizes the state highway fund balance in managing the state's cash flow. The dollars are never just sitting idle. In 1985, the Department of Highways and Public Transportation awarded $1.4 billion in highway construction contracts. That was a new record in dollar volume. The De- partment's goal is to award $2 billion in contracts in 1986. These contracts average 30 to 36 months to pay out. When the pay out occurs about three years from now, the so called "surplus" will vanish. Part of the bad news is that while highalav funding fias been increased,available revenues still lag far behind the needs. When we say a new record of $2 billion in highway construction contracts will be awarded this year, we are not saying more highways will be built than ever before in our history. As a matter of fact, if you convert the $2 billion to constant dollars, you will find that Texas was actually building more highways back in the 1960's and 1970's than it is now. In 1983 the Department said it needed $3 billion a year to meet the needs. The Legislture provided $2.5 billion, so there was a shortfall of 25~ to begin with. While the highway funding situation in Texas is vastly improved over what it was in 1983, it is still inadequate. According to a report published in the May 11,1986, Austin American Statesman, Texas ranks 37th in per capita spending on highways. Can Texas expect to have the best highways in the nation when 36 other states spend more per capita than Texas does? Not likely. We started out in 1984 with a shortfall of 256 in highway funds. Texas has al- ready lost $28.7 million in federal highway funds due to Gramm-Rudman - and may lose $300 million more if some deficit reduction measures are adopted by Congress. And some members of the Legislature say they will raid the highway fund next year to bal- ance the state budget.