Third Special Session Concludes:  Third Time WAS the Charm for Some Transportation Funding

Legislators were finally able to at least partially address the state’s transportation funding problems.  In the third special session, two bills - S.JR. 2 and H.B. 1 - passed and both houses promptly adjourned sine die.

The general idea all along has been to amend the Texas Constitution to divert some of the state’s oil and gas tax revenues from the rainy day fund for transportation purposes.  However, legislators hadn’t been able to agree on certain details, specifically whether the rainy day fund should retain a minimum balance before money can be diverted for transportation purposes.  In the second special session, different versions of two bills passed the House and the Senate.  The bills then went to a conference committee, but the conference committee version failed to pass either chamber.

The legislation that ultimately passed during the third special session provides for about $1.2 billion in new funding annually.  That amount is far less than the $4 billion needed, but it is a start.  It also provides that the funding mechanism will end in 2025, unless reauthorized by the legislature.  Here are summaries of the two bills: 

  • S.J.R 1 (Nichols/Pickett) – Transportation Funding:  proposes an amendment to the Texas Constitution to provide that: (1) if, in the preceding year, the state received from oil and gas taxes a net amount greater than that received in 1987, the comptroller shall transfer an amount equal to 75 percent of the difference between those amounts (25 percent continues to go to general revenue), with one-half to the rainy day fund and the remainder to the state highway fund; (2) the legislature by general law shall provide for a procedure by which the allocation of the amount transferred may be adjusted if revenue is less or greater than expected; and (3) revenue transferred to the state highway fund may be used only for constructing, maintaining, and acquiring rights-of-way for public roadways, other than toll roads.  (Effective if approved at the election on November 5, 2014.)  
  • H.B. 1 (Pickett/Nichols) – Transportation Funding:  provides that: (1) not later than September 1 of each even-numbered year until 2024, the speaker and the lieutenant governor shall appoint a select committee to ensure that the state’s rainy day fund has an appropriate balance, based on several criteria; (2) the select committee shall determine and adopt for the next state fiscal biennium a sufficient balance of the fund; (3) when the select committee has adopted the amount of the sufficient balance of the fund for a state fiscal biennium, the matter of approving that amount shall be presented to each house of the legislature in a concurrent resolution during the next succeeding regular legislative session; (4) the amount must be approved by a vote of a majority of the members of each house, and must be finally approved by each house not later than the 45th day of that legislative session; (5) before the comptroller makes transfers for a state fiscal year in accordance with S.J.R. 1 (above), the comptroller shall ensure that the balance in the rainy day fund meets the minimum amount, or adjust any transfers accordingly; (6) amounts transferred to the state highway fund under S.J.R. 1 (above) must be used and allocated throughout the state by the Texas Department of Transportation consistent with existing formulas adopted by the Texas Transportation Commission; (7) on or before August 31, 2015, the department shall identify and implement savings and efficiencies that result in a total savings of at least $100 million in state funds appropriated to the department, to be used for reducing the principal of and interest on bonds and other public securities issued and bond enhancement agreements;  (8) the commission may use money from the Texas Mobility Fund to provide funding, including through a loan, for certain port security projects, port transportation projects, or similar projects; (9) to serve as a transition committee, the speaker and the lieutenant governor shall appoint a select committee to determine the appropriate rainy day fund balance for the next biennium; (10) by November 30, 2013, the speaker shall appoint nine members to a House Select Committee on Transportation Funding, Expenditures, and Finance and the lieutenant governor shall appoint nine members to a Senate Select Committee on Transportation Funding, Expenditures, and Finance; and (11) the two committees appointed under (10) shall separately or jointly, review, study, and evaluate the future reliability of all current state transportation funding sources and similar criteria.   (Effective immediately, but only if S.J.R. 1 is approved by the voters in November 2014.)

It appears that the governor and lawmakers are satisfied with the compromise reflected in the two bills.  But the lack of full funding probably means that completely fixing the state’s transportation funding problem will continue to be on the table in future sessions.


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