Ballot Language:

The constitutional amendment providing for the issuance of general obligation bonds by the Texas Transportation Commission in an amount not to exceed $5 billion to provide funding for highway improvement projects.

SJR-64 History

In 2001, voters approved a constitutional amendment (Proposition 15) that moved away from the traditional pay as you go funding for our transportation system. In 2003, voters approved another constitutional amendment (Proposition 14) that broadly expanded the ability of the transportation department to go into debt. This amendment expands it yet again, without dedicated funds to back the bonds, which are not to exceed $5,000,000,000. That’s a lot of zeros.

The Tyler Morning Telegraph is for it.

That’s why we encourage a “yes” vote on Proposition 12 on the Nov. 6 constitutional amendments ballot. It will help fund safer roads in Texas by allowing issuance of up to $5 billion in general obligation bonds.

“It seems pretty obvious Texas is facing several challenges, one of which is transportation,” Texas Transportation Commissioner Ned Holmes told the Tyler Paper’s editorial board recently.

As a public official, he’s not allowed to advocate the amendment’s passage, but he visited Tyler to “lay out the facts,” he said.

Yeah, sure, just “laying out the facts”.

The San Antonio Express News is for it at the same time they are against debt.

Texas shouldn’t have to sell general obligation bonds and incur debt to build highways.

Citizens already pay a state motor fuels tax and vehicle registration fees that go into a fund designated for transportation infrastructure. Fund 6, along with federal transportation funding, ought to be enough to build and maintain Texas roads.

While voters should support this amendment, they must also send a clear message to the next Legislature. Proposition 12 is a temporary fix. Lawmakers must act responsibly with the resources they have to build the roads Texas needs.

The Corpus Christi Caller Times is for it, even as they acknowledge that it is the wrong way to go about funding transportation needs.

In 2001, Texas voters made a historic break in highway funding, leaving behind its traditional “pay-as-you-go” model and allowed the state to begin, borrowing funds for highway construction. That debt was against future dedicated highway revenue.

Out of general revenue

Proposition 12 takes borrowing for highway construction another step; its debt service would be paid out of general state revenue, which means that money for highways would be competing against all other needs of the state, including schools and health care.

The Editorial Board recommends passage of Proposition 12, because highway needs are critical to the state’s economy.

Pegasus News notes that the Tarrant Regional Transportation Coalition is for the bonds, with a quip and a picture designed to help voters understand the problem.

In other surprising news, the sun will come up tomorrow and I like pizza.

Americans for Prosperity is against more debt on our children.

Reasons: Texans should redirect their gasoline taxes to transportation and highways. Currently, ¼ of our gasoline taxes go to education. These should be re-directed to transportation. As we have more cars on the road, with increased gasoline efficiency, the gas tax does not keep up with road repair needs. However, issuing bonds which will obligate future taxpayers is not appropriate. The state should use dedicated funds, and not obligate future state revenue and taxpayers.

BigJolly says: My eyes are dizzy reading up on this one. It’s amazing to me how badly our legislature has failed the voters regarding transportation funding. The expansion of TxDot’s power in 2003 is widely blamed for their arrogance towards legislators, yet the legislator’s want to give them more rather than do their job and appropriate monies as needed with proper oversight.

Why does 25% of our gasoline taxes go to education? Isn’t that what the lottery was for? Why does TxDot want to privatize our already paid for interstates, turning them into revenue streams? Why does TxDot want to sell right-of-ways garnered through the power of eminent domain to foreign companies?

This argument from the supporters reminds me of unsolicited credit line increases that arrive in the mail:

The Texas Constitution provides that state-supported debt may not exceed five percent of uncommitted general revenue, and the state is well below this limit.

Just say NO to more debt. Even the people for the bonds say it is the wrong way to go about it. Tell our legislators to fix the problems in the next session.

Click to read comments for and against.

From the Texas Legislative Council Summary (note: 131 page pdf file):

Comments by Supporters: The proposed amendment would help the state finance transportation projects. There is not enough money to cover existing and future transportation needs with available funding.

An expanding population has created the need to spend more on transportation projects and maintenance to correct existing and avoid future problems relating to traffic congestion, including congestion at border crossings, deficient roads, and unsafe bridges. This demand has exceeded capacity and the state has not kept up with spending. The state will not meet this demand unless it uses bonding authority to increase its ability to fund projects. Borrowing against future revenue would enable the state to begin and complete transportation projects at a faster pace, which would ease traffic congestion, improve safety, and aid economic development.

In 2001, the voters approved Proposition 15, modifying the state’s “pay-as-you-go” policy for transportation funding to allow transportation officials to borrow money to construct new roads instead of waiting until money to build was appropriated. The Texas Department of Transportation has since moved in the direction of borrowing money to finance transportation projects. In 2003, the voters approved Proposition 14, allowing the department to issue bonds backed by the state highway fund. The proposed amendment would provide a new source of revenue that the state could use to secure bonds for transportation projects.

The bonds authorized by the proposed amendment would not have a significant effect on the state’s fiscal standing because Texas has a comparatively low rate of state debt. The Texas Constitution provides that state-supported debt may not exceed five percent of uncommitted general revenue, and the state is well below this limit. Bonds backed by general revenue would likely have a lower interest rate than those backed by the state highway fund because the bonds are backed by the full faith and credit of the state, not just the money in the state highway fund.

Other states and local governments use general funds to secure bonds for transportation projects. Texas has traditionally used general obligation bonds to fund various types of infrastructure in this state and should use them for funding transportation infrastructure as well. The proposed amendment would help fill the void left by a reduction in available options for funding highway projects. For the construction of toll roads, the state has been relying on two types of contracts: those that allow private entities to build the roads and those that allow state or local tolling authorities to build them. Contracts with state or local tolling authorities allow bonding backed by expected toll revenue. Businesses that enter into an agreement with the state make up-front payments in exchange for expected toll revenue. With the two-year moratorium on certain privately funded toll roads passed during the 80th legislative session, this private option is restricted for the next two years.

Comments by Opponents: Borrowing increases the state’s costs from interest lost on cash balances and interest charges for new borrowing and transfers those costs to future taxpayers and legislatures. The state cannot afford to pay the interest on the bonds authorized by the proposed amendment, even with low rates. The policy of the state has traditionally been to fund transportation projects through dedicated funds and minimize burdens on general revenue for debt service; therefore, the state should continue to pay for the highway construction it can afford rather than encumber scant resources and drive up the cost of already expensive projects.

Some opponents question trusting the Texas Department of Transportation because they believe the agency has not been straightforward regarding its expenditures and it would be irresponsible to provide the agency with even more money not subject to the legislature’s appropriations process.

Transportation projects should be funded through the state highway fund and not general revenue. It is not in the state’s best interest to obligate money to debt service for bonds to build highways when that money may be needed for other state needs or budget certification.

The state should not use already limited resources to incur additional debt but should use other approaches to put more money into the state highway fund such as raising gas tax rates or vehicle registration fees or dedicating other revenue streams to the state highway fund, including motor-vehicle sales taxes or vehicle inspection fees.