How Texas Gets Funds for Roads

[Chrysler375Freeway]

So after many trips to Texas and other states, I've never really understood why Texas among states such as Illinois and Florida use tolls to get roads built. The only things that are tolled here in Michigan are the Mackinac Bridge, Grosse Ile Toll Bridge, Sault Sainte Marie International Bridge, Blue Water Bridge, Ambassador Bridge, and the Detroit-Windsor Tunnel, but other than that, there are no toll roads elsewhere in Michigan. Can anyone clarify why Texas and other states such as Illinois and Florida are content on using tolls instead of rises in state taxes such as sales, vendor, or gas taxes to pay for a road?

[Echostatic]

In the present day, raising gas taxes is political suicide in a red state, and Texas hasn't adjusted theirs since 1991. The value of a dollar has just about halved since then, so they're getting a lot less than they used to - but nobody is proposing to outright double the gas tax on either side of the aisle.

Even with that, Texas' state-level gas tax is less than half of Michigan's. And forget about raising any other type of tax. It's a wonder we pay for any major untolled projects these days.

[MaxConcrete]

See page 10 of this document for a summary of TxDOT's current funding
https://ftp.dot.state.tx.us/pub/txdot/sla/87th-legislative-summary.pdf

TxDOT's annual budget is around $15 billion per year. Funding sources are roughly
$5 billion federal
$5 billion Proposition 1 (oil severance tax) and Proposition 7 (sales tax)
$4.5 state fuel tax
$0.5 billion other

The state gasoline tax in Texas is 20 cents per gallon, one of the lowest in the country. Recent news articles have reported that Texas currently has the lowest-priced gasoline nationwide, around $2.83/gallon.

Texas' highway construction program is probably the most ambitious in the country. This includes very large urban projects like the $1.7 billion LBJ east project, $1.51 billion IH-35 express lanes in San Antonio (contract awarded but work not started yet), $666 million Southern Gateway project, $677 million Oak Hill Y project, $803 million Corpus Christi Harbor bridge (will be the longest cable-stay in the U.S.), $655 million IH-35 in North Dallas, as well as other major ongoing freeway expansions including Loop 1604, SH 170, the Gulf Freeway and IH-35 in Waco. There is also substantial work on IH 69 in numerous places.

Texas is among the fastest growing states and needs lots of new infrastructure to handle the growth. TxDOT's budget has not been sufficient to meet needs, and it is not politically possible to raise the gasoline tax. A modest increase in the gas tax (say 10 cents) would only address a small portion of the unfunded needs. This is why there has been a proliferation of toll roads since the 1990s. Virtually all toll roads in Texas are less than 30 years old,  most are less than 20 years old, and many are less than 10 years old (such as Houston's Grand Parkway, Houston's just-opened SH 249 and Austin's just-opened SH 183).

When Governor Abbott entered office in 2015, he made it a priority to reduce the amount of toll roads being built and instead build the roads as freeways. This has helped greatly, but there's still not enough money to build all needed projects as freeways.

How many new freeways are being built in Michigan, and how many in the last 30 years? I'm thinking none. That should answer your question.

[Chrysler375Freeway]

Tolling has its own pros and cons. When Route 130 was built, the company that tolls it went belly up within a few years because I-35 ran right alongside it to the west. I-35 was siphoning traffic from 130. It's a common thing when tolls are used: free roads nearby siphon some traffic from toll roads.

[Chrysler375Freeway]

See page 10 of this document for a summary of TxDOT's current funding
https://ftp.dot.state.tx.us/pub/txdot/sla/87th-legislative-summary.pdf

TxDOT's annual budget is around $15 billion per year. Funding sources are roughly
$5 billion federal
$5 billion Proposition 1 (oil severance tax) and Proposition 7 (sales tax)
$4.5 state fuel tax
$0.5 billion other

The state gasoline tax in Texas is 20 cents per gallon, one of the lowest in the country. Recent news articles have reported that Texas currently has the lowest-priced gasoline nationwide, around $2.83/gallon.

Texas' highway construction program is probably the most ambitious in the country. This includes very large urban projects like the $1.7 billion LBJ east project, $1.51 billion IH-35 express lanes in San Antonio (contract awarded but work not started yet), $666 million Southern Gateway project, $677 million Oak Hill Y project, $803 million Corpus Christi Harbor bridge (will be the longest cable-stay in the U.S.), $655 million IH-35 in North Dallas, as well as other major ongoing freeway expansions including Loop 1604, SH 170, the Gulf Freeway and IH-35 in Waco. There is also substantial work on IH 69 in numerous places.

Texas is among the fastest growing states and needs lots of new infrastructure to handle the growth. TxDOT's budget has not been sufficient to meet needs, and it is not politically possible to raise the gasoline tax. A modest increase in the gas tax (say 10 cents) would only address a small portion of the unfunded needs. This is why there has been a proliferation of toll roads since the 1990s. Virtually all toll roads in Texas are less than 30 years old, and most are less than 20 years old.

When Governor Abbott entered office in 2015, he made it a priority to reduce the amount of toll roads being built and instead build the roads as freeways. This has helped greatly, but there's still not enough money to build all needed projects as freeways.

How many new freeways are being built in Michigan, and how many in the last 30 years? I'm thinking none. That should answer your question.

Michigan had many bypass plans around tourist magnets in the north such as Traverse City because of increased traffic, in addition to around Grand Haven. But it didn't go well because the cities feared it would siphon business from the downtown areas.

[brad2971]

In the present day, raising gas taxes is political suicide in a red state, and Texas hasn't adjusted theirs since 1991. The value of a dollar has just about halved since then, so they're getting a lot less than they used to - but nobody is proposing to outright double the gas tax on either side of the aisle.

Even with that, Texas' state-level gas tax is less than half of Michigan's. And forget about raising any other type of tax. It's a wonder we pay for any major untolled projects these days.

What do South Carolina, South Dakota, Georgia, Utah, Wyoming, and (most recently) Missouri have in common. All are red states that have had no political trouble at all raising the gas tax. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiR6fuyitPzAhVmk2oFHUN6AfkQFnoECCYQAQ&url=https%3A%2F%2Fapnews.com%2Farticle%2Fbusiness-politics-ap-top-news-us-news-ohio-ee2dfef46f0644bbab5ccc7866f98c62&usg=AOvVaw3DOSsndha0L-btsU2QaRDp

[edwaleni]

In the early 1950's before the Federal Highway Trust Fund was established, many states were loathe to raise their sales taxes to cover highway build outs but needed highway capacity fairly quickly. Illinois was one of those states.

So the ISTHA was established to be able to build them without the use of tax dollars. ISTHA is something much different today than it was when it was founded.

Those roads were to be turned over to IDOT when the bonds were paid off, but IDOT notified the state that they would need a massive statewide gas tax increase to remove the tolls.

That didn't play well in less traveled southern Illinois. So ISTHA was reorganized legally from a bond limited road building entity into a permanent state entity of its own. This allowed them to refinance their entire bond debt into 1 big pot, whereas before only certain sections or expansions were financed individually previously. This gave ISTHA the leverage to use their most profitable section of highway (I-294 Tri-State Tollway) to subsidize loss leading sections (I-88 DeKalb to Rock Falls)

As for Florida, it was in a unique situation. Most of the traveling in the 1950's was to the far south, but the travelers came from the far north. Also many of the urban centers had created their own freeway authorities. (For example the Jacksonville Transportation Authority (JTA), used to called the Jacksonville Expressway Authority (JEA)) So they raised funds regionally to help pay for local highways except the largest bridges which they had to sell bonds and charge a toll for. (Tolls since removed) Certain parts of I-10 & I-95 were orginally built by the JEA.

Most people don't realize that Florida is mostly rural, even today. Florida in the 1950's didn't have the urban tax base to support large scale road building. Florida doesn't sell highway bonds. Florida law to this day still allows for local, regional and statewide toll highway authorities. So while FHA covered their share of I-75, I-10, I-95 and later I-4 from the Trust Fund, the most direct route to Miami (and the most profitable) was from NE of Tampa to Miami and that is the Florida Toll Highway today. (Before the toll road was US-41 Tamiami Trail, very indirect)

Florida has a long list of toll roads and toll bridges, some completely inexplicable, that still dot the state because a local town wants to promote development. And Florida spends a lot of money on promoting development.

Illinois and Florida don't have ongoing tax revenue from oil like Texas does. Illinois used to but most wells have been dried up since the late 80's and the green rules on fracking are the most stringent in the US (even though they allow massive strip mining for coal)

So 2 states and 2 different approaches to highway funding.

[edwaleni]

In the present day, raising gas taxes is political suicide in a red state, and Texas hasn't adjusted theirs since 1991. The value of a dollar has just about halved since then, so they're getting a lot less than they used to - but nobody is proposing to outright double the gas tax on either side of the aisle.

Even with that, Texas' state-level gas tax is less than half of Michigan's. And forget about raising any other type of tax. It's a wonder we pay for any major untolled projects these days.

What do South Carolina, South Dakota, Georgia, Utah, Wyoming, and (most recently) Missouri have in common. All are red states that have had no political trouble at all raising the gas tax. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiR6fuyitPzAhVmk2oFHUN6AfkQFnoECCYQAQ&url=https%3A%2F%2Fapnews.com%2Farticle%2Fbusiness-politics-ap-top-news-us-news-ohio-ee2dfef46f0644bbab5ccc7866f98c62&usg=AOvVaw3DOSsndha0L-btsU2QaRDp

Missouri passed it, but only after they offered the "Opt In Rebate". Send in your receipts and they will rebate the tax difference to you. No kidding.

[jeffandnicole]

Tolling has its own pros and cons. When Route 130 was built, the company that tolls it went belly up within a few years because I-35 ran right alongside it to the west. I-35 was siphoning traffic from 130. It's a common thing when tolls are used: free roads nearby siphon some traffic from toll roads.

I-35 has existed for many decades. It didn't siphon anything away from 130, which didn't exist until recently.

[bwana39]

Tolling has its own pros and cons. When Route 130 was built, the company that tolls it went belly up within a few years because I-35 ran right alongside it to the west. I-35 was siphoning traffic from 130. It’s a common thing when tolls are used: free roads nearby siphon some traffic from toll roads.

I-35 has existed for many decades. It didn't siphon anything away from 130, which didn't exist until recently.

I think siphon is a misplaced term. The fact is that traffic did not desert I-35 to use 130 Toll is more apt. Then there is the issue that at the southern end it doesn't fit neatly back to I- 35. Right now the time from north of 130 toll to San Antonio is almost identical. It is 12 miles farther on 130Toll.  It is pretty much commit to 130 Toll for the duration.

[MikieTimT]

In the present day, raising gas taxes is political suicide in a red state, and Texas hasn't adjusted theirs since 1991. The value of a dollar has just about halved since then, so they're getting a lot less than they used to - but nobody is proposing to outright double the gas tax on either side of the aisle.

Even with that, Texas' state-level gas tax is less than half of Michigan's. And forget about raising any other type of tax. It's a wonder we pay for any major untolled projects these days.

What do South Carolina, South Dakota, Georgia, Utah, Wyoming, and (most recently) Missouri have in common. All are red states that have had no political trouble at all raising the gas tax. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiR6fuyitPzAhVmk2oFHUN6AfkQFnoECCYQAQ&url=https%3A%2F%2Fapnews.com%2Farticle%2Fbusiness-politics-ap-top-news-us-news-ohio-ee2dfef46f0644bbab5ccc7866f98c62&usg=AOvVaw3DOSsndha0L-btsU2QaRDp

Arkansas did it too.  In addition to extending a sunsetting sales tax in perpetuity (voter approved).  It adjusts annually from that point forward as well, so will be adjusting upwards slightly going forward as well.

[Bobby5280]

Oklahoma raised its gasoline tax recently. It was a modest increase. Still plenty of people did a whole lot of griping about it. To make the situation even more laughable, the gasoline tax was not increased to fund Oklahoma's roads. It was to boost teacher pay. That's because public school teachers in Oklahoma have been among the absolute worst paid (and worst treated) in the nation. When teachers started packing up and heading to other states (like Texas) for an instant pay raise of $20K per year or more the "law makers" here started to get into a panic. But rather than give the teachers an actual raise via increased public education funding they just hiked fuel taxes instead. Stealing from Peter to pay Paul.

[thisdj78]

Tolling has its own pros and cons. When Route 130 was built, the company that tolls it went belly up within a few years because I-35 ran right alongside it to the west. I-35 was siphoning traffic from 130. It's a common thing when tolls are used: free roads nearby siphon some traffic from toll roads.

I-35 has existed for many decades. It didn't siphon anything away from 130, which didn't exist until recently.

I think siphon is a misplaced term. The fact is that traffic did not desert I-35 to use 130 Toll is more apt. Then there is the issue that at the southern end it doesn't fit neatly back to I- 35. Right now the time from north of I30 toll to San Antonio is almost identical. It is 12 miles farther on 130Toll.  It is pretty much commit to 130 Toll for the duration.

I live right off 130 and I can tell you that the primary challenge early on was that 1) There wasn't much development along 130 when it opened and 2) No direct connections to 71W and 290W when it opened, so for those who wanted a short bypass of I-35 (for example folks from east Pflugerville wanting to get to downtown Austin), it wasn't worth it at the time.

Now those things have changed significantly and traffic has picked up substantially....to the point where they recently had to upgrade 130 from 4 to 6 lanes south of Pflugerville. It's not uncommon for me to look out my window and see traffic backed up on 130 (it's still 4 lanes on the segment I live by).

[Bobby5280]

I think the toll cost of driving the full length of TX-130 and a portion of I-10 to use as a bypass for I-35 around Austin is a little steep, especially compared to the cost of turnpike tolls here in Oklahoma. The cost is $7.84 with a compatible electronic tag and more if paying by plate.

If I was going to be driving on I-35 thru Austin close to rush hour I'd consider paying the premium and take 130 to save time and headaches. However if it was an off-peak time I'd definitely stay on I-35 and save a few bucks. Usually I try to time my drives where I'm not going thru a major city at rush hour.

[SkyPesos]

In the present day, raising gas taxes is political suicide in a red state, and Texas hasn't adjusted theirs since 1991. The value of a dollar has just about halved since then, so they're getting a lot less than they used to - but nobody is proposing to outright double the gas tax on either side of the aisle.

Even with that, Texas' state-level gas tax is less than half of Michigan's. And forget about raising any other type of tax. It's a wonder we pay for any major untolled projects these days.

What do South Carolina, South Dakota, Georgia, Utah, Wyoming, and (most recently) Missouri have in common. All are red states that have had no political trouble at all raising the gas tax. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiR6fuyitPzAhVmk2oFHUN6AfkQFnoECCYQAQ&url=https%3A%2F%2Fapnews.com%2Farticle%2Fbusiness-politics-ap-top-news-us-news-ohio-ee2dfef46f0644bbab5ccc7866f98c62&usg=AOvVaw3DOSsndha0L-btsU2QaRDp

Missouri passed it, but only after they offered the "Opt In Rebate". Send in your receipts and they will rebate the tax difference to you. No kidding.

That sounds like the same as no gas tax increase, if everyone submits their receipts, because free money yay.

[GaryV]

In the present day, raising gas taxes is political suicide in a red state, and Texas hasn't adjusted theirs since 1991. The value of a dollar has just about halved since then, so they're getting a lot less than they used to - but nobody is proposing to outright double the gas tax on either side of the aisle.

Even with that, Texas' state-level gas tax is less than half of Michigan's. And forget about raising any other type of tax. It's a wonder we pay for any major untolled projects these days.

What do South Carolina, South Dakota, Georgia, Utah, Wyoming, and (most recently) Missouri have in common. All are red states that have had no political trouble at all raising the gas tax. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiR6fuyitPzAhVmk2oFHUN6AfkQFnoECCYQAQ&url=https%3A%2F%2Fapnews.com%2Farticle%2Fbusiness-politics-ap-top-news-us-news-ohio-ee2dfef46f0644bbab5ccc7866f98c62&usg=AOvVaw3DOSsndha0L-btsU2QaRDp

Missouri passed it, but only after they offered the "Opt In Rebate". Send in your receipts and they will rebate the tax difference to you. No kidding.

That sounds like the same as no gas tax increase, if everyone submits their receipts, because free money yay.

But many people won't bother.

Clipping coupons (whether physical paper or electronically) is also "free money".  But many forgo it as too much bother.

[J N Winkler]

So after many trips to Texas and other states, I've never really understood why Texas among states such as Illinois and Florida use tolls to get roads built. The only things that are tolled here in Michigan are the Mackinac Bridge, Grosse Ile Toll Bridge, Sault Sainte Marie International Bridge, Blue Water Bridge, Ambassador Bridge, and the Detroit-Windsor Tunnel, but other than that, there are no toll roads elsewhere in Michigan. Can anyone clarify why Texas and other states such as Illinois and Florida are content on using tolls instead of rises in state taxes such as sales, vendor, or gas taxes to pay for a road?

Adding a little detail to others' answers:

*  Texas has, if memory serves, a constitutionally mandated funding split for revenue from motor fuel taxes:  25% to education and 75% to highways.  Texas is also among the seven states with no income tax (as is Florida).  Fuel tax raises are therefore not tied solely to the needs of the highway system and have the potential to unbalance the tax structure.  Moreover, states that have no income tax are typically very reluctant to transition to income taxes for fear of becoming less attractive for inward investment and other forms of economic development.  (Nebraska, which introduced an income tax in the 1960's after not having one for decades, is an exception that proves the rule.  Norbert Tiemann lost re-election as governor as a direct result.)

*  Texas is also fairly unusual in having a high percentage of rural voters, while the vast bulk of the inward migration and the resulting highway needs are in the cities.  Forcing the cities to resort to toll roads, managed lanes, etc. thus protects rural voters from costs over which they have little control.  (This is not to say that rural roads in Texas are adequately funded.  Compared to peer agencies like Kansas DOT, TxDOT relies more heavily on pavement preservation work such as chipsealing, which in turn translates to a lesser degree of control over motorist costs such as suspension wear and tear and paint damage due to flying chips.)

Tolling has its own pros and cons. When Route 130 was built, the company that tolls it went belly up within a few years because I-35 ran right alongside it to the west. I-35 was siphoning traffic from 130. It's a common thing when tolls are used: free roads nearby siphon some traffic from toll roads.

While the siphoning effect does exist, I wouldn't necessarily use SH 130 to prove "tolls don't work" because it is a bit of a special case.  It was originally built under a comprehensive development agreement that was structured in a way that gave funders a perverse incentive to jack up tolls (thus reducing wear and tear, making it easier to meet contractually mandated standards for good repair, but also making it hard to meet interest charges).  This forced the concession operator to declare bankruptcy and allow the investors to walk away with a profit.  Macquarie Infrastructure Group (now Atlas Arteria) has become especially notorious for this.

Generally speaking, a toll road that is not encumbered by "I win, you lose" funding arrangements will be seen by motorists as more of a value proposition and will attract more usage (especially when the free alternative is congested), though not necessarily to the degree that it is able to operate at a profit.

How many new freeways are being built in Michigan, and how many in the last 30 years? I'm thinking none. That should answer your question.

It's certainly true that Michigan, unlike Texas, has experienced little population growth since 1990 (just 8% versus 71%) and generally doesn't struggle to meet urban mobility needs.  However, there has been some new-location freeway development over the past thirty years, notably M-6 near Lansing (finished in the mid-noughties) and ongoing construction of the US 31/I-94 missing link just to the east of Benton Harbor.