Item 5DCity of Southlake, Texas
MEMORANDUM
October 21, 2003
TO: Billy Campbell, City Manager
FROM: Ben Thatcher, Administrative Intern
SUBJECT: Resolution No. 03 -074, Encouraging inclusion of transportation funding in the
scope of the Texas Legislature's study of possible tax reform
Action Requested: City Council approval of Resolution No. 03 -074, encouraging inclusion of
transportation funding in the scope of the Texas Legislature's study of possible
tax reform.
Background
Information: The State tax code is scheduled to be examined by the Legislature in spring
2004 with an emphasis on public school finance. The North Texas
Commission Board of Directors, along with other municipalities, is asking the
Legislature to expand there focus to transportation funding as well.
According to studies prepared by the North Texas Commission, the Legislature
has been allocating 63% of state highway user fee revenues to fund general
government services wholly unrelated to transportation. In the interim,
highway safety and urban mobility needs have become too large to handle with
the current biennial appropriated funds.
Financial
Considerations: N/A
Citizen Input/
Board Review: N/A
Legal Review: N/A
Alternatives: Approve, amend or deny proposed resolution.
Supporting
Documents: Resolution No. 03 -074.
Texas Transportation — Funding & Revenue
Staff
Recommendation: Approve Resolution No. 03 -074
RESOLUTION NO. 03 -074
WHEREAS, additional funding is urgently needed for investment in transportation infrastructure to
reduce urban roadway congestion, to improve highway safety, and to provide statewide connectivity in
Texas' transportation system; and
WHEREAS, revenue generated from current -level state highway user fees and taxes can provide the
additional funding urgently needed for investment in transportation infrastructure; and
WHEREAS, the Legislature appropriated to the state highway fund less than $2.9 billion of the $6.9
billion revenue Texas collected from state highway user fees and taxes in fiscal year 2002; and
WHEREAS, the 78 Texas Legislature requested that the Congress return to Texas for needed
transportation funding 95% of federal highway user fee revenue collected in Texas, while the Legislature
itself allocates only 37% of state highway user fee revenue to fund transportation; and
WHEREAS, good public policy dictates that revenue from user fees and taxes be allocated to
support the public's use of the services and facilities from which the fee /tax revenue flows; and
WHEREAS, select committees of the Texas Legislature are now studying possible tax reform in
anticipation of a possible Spring 2004 called session of the Legislature; and
WHEREAS, broadening the Legislature's tax reform agenda to include replacement revenue for
general government services now funded from highway user fee and tax revenues would be sound public
policy enabling the Legislature to allocate highway user fee and tax revenue to fund needed transportation
improvements.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS:
SECTION 1.
That the Governor, Lieutenant Governor, and Speaker of the House are respectfully urged to expand
the scope of the Legislature's current study of possible tax reform to include replacement revenue for general
government services now funded from highway user fee and tax revenues in order that the Legislature may
allocate annual highway user fee and tax revenue to fund needed transportation improvements.
SECTION 2.
That a copy of this resolution be distributed to state executives and legislators.
SECTION 3.
That this resolution shall become effective immediately upon its passage and approval.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE ON
THIS DAY OF , 2003.
Andy Wambsganss, Mayor
ATTEST:
Lori Farwell
City Secretary
Texas Transportation
Funding & Revenue
Those familiar with Texas' surface transportation system concur that there is a funding
shortage to address needs, whether your interest is urban congestion, connectivity, system
reliability or safety. Additional annual investment is needed to maintain and rebuild our
aging infrastructure and to accommodate growth in population, travel, and heavier
vehicles engaged in commerce and international trade.
Funding to support the higher level of investment needed requires identifying substantial,
new revenue for transportation. Some new revenue may come from increased use of
tolls, moving the point of collection of motor fuels tax from the distributor level to the
terminal rack, and/or an increased return of federal resources to Texas, but an honest,
realistic analysis reveals that the bulk of the new revenue Texas needs for transportation
must come from some combination of two sources:
• Existing transportation - related revenues now allocated to other uses and
• Tax or fee increases.
As to the level of funding need:
Both the House Committee on Transportation and the Senate Committee on State Affairs
filed interim reports to the 7e Texas Legislature stating that TxDQT has resources to
fund only approximately one third of its identified highway project needs. Comptroller
Strayhorn's January 2003 issue of Window on Stag Government, GG 23 Use Innovative
Financing Techniques to Build Texas Roads, confirms this finding and states that Texas'
need for new roads greatly exceeds its ability to pay for them.
The Comptroller's report also notes that more Texans are finding themselves stuck in
traffic for longer periods. Drawing from Texas Transportation Institute (TTI) data, she
reports that San Antonio, Dallas -Fort. Worth and Austin rank among the top six cities in
the nation for highest average annual delays due to traffic. The average annual delay for
a road traveler in Dallas -Fort Worth climbed from 47 hours in 1994 to 74 hours in 2000;
in San Antonio, from 11 hours in 1994 to 43 hours in 2000; and in .Austin, from 31 hours
in 1994 to 61 hours in 2000. Data from TTI's 2002 Urban Mobility Report illustrate
Texas' rising roadway congestion trend over the last decade.
Measure
1991 -2000 Rate of Increase
AUSTIN
DFW
HOUSTON
SA
Travel Time Index
108%
74 %fl
52%
229%
Annual Delay
221%
136%
132 %
272%
Hours of Congestion
44%
25%
17%
120%
Percent of Congested Travel
77%
48%
23 %q
174 %
Congested Lane Miles
53 %
43 %
15 %Q
96%
Annual Lane -miles Needed
7 %
31%
70%
30%
Congestion Cost
321%
198%
1 193 %
375%
-2-
Measure in 000s
AUSTIN
DFVV
HOUSTON
SAN ANTONIO
1991
2000
1991
2000
1991
2000
1991
2000
Travel Time Index
1.13
1.27
1.19
1.33
1.25
1.38
1 07
1.23
Annual Delay (Person - Hours)
6,420
20,640
59,710
141,125
52,200
120,945
6,850
25,505
Hours of Congestion
5.0
7.2
5.6
7.0
6.0
7.0
10
6.6
Percent of Congested Travel
35
62
40
59
53
65
19
52
Congested Lane Miles
38
58
35
50
48
55
23
45
Annual Lane -miles Needed
58
62
232
305
114
194
56
73
Congestion Cost ($million)
95
400
885
1 2,640
1 780
2,285
100
475
The Comptroller's report states that Texas' transportation needs clearly exceed the ability
of the state's traditional pay -as- you -go funding methods to support highway projects and
that at least 38 of the 50 states use debt financing. She further notes that TTI estimates
the total cost of traffic congestion in Texas cities at $5.2 billion in 2000. As indicated in
the (to be) attached list of major unfunded capacity projects, the cost of addressing the
urban congestion problem in Texas will exceed $25 billion over the next ten years.
Annual debt service on a $25 billion bond issue would be approximately $2.5 billion- -
less than half the annual cost of the congestion. Fixing the problem makes economic
sense.
As to revenue sources to fund the transportation needs:
The two possibilities are (i) to use all existing transportation - related revenues for
transportation or (ii) to continue the current diversion of such revenues and to increase
substantially the rate of transportation fees and taxes. Doubling the current state tax on
motor fuels, from 20 cents to 40 cents, would provide less additional revenue for
transportation than would allocating; all existing transportation - related revenues for
transportation. The latter however would produce huge funding shortages for other state
government services. Texas ranks relatively high in the amount of highway user fees
diverted to non - transportation uses - -third out of the 50 states according to the interim
report of the Senate Committee on State Affairs. The significant diversions of
transportation - related revenues in Texas include:
■ $2.769 billion from the Motor Vehicle Sales and Use Tax to General
■ Revenue Fund 001 (the GR Fund)
■ $695 million from the Motor Fuels Tax to the Available School Fund
■ $160 million from the Motor Vehicle Rental Tax to the GR Fund
■ $140 million from the Vehicle Registration Fee to the GR Fund (1992 "switch" of
county funding)
■ $114 million from the Driver License Fee to the GR Fund
■ $70 million from the State Highway Fund to support non - transportation- related
DPS services such as Capitol security [$370 million total to DPS]
• $70 million from the Motor Vehicle Inspection Fee to the GR Fund
■ $50 million from the Driver Record Information Fee to the GR Fund
■ $27 million from the Motor Vehicle Certificates Fee to the GR Fund
■ $16.4 million from the Oversize /Overweight Permit Fee to the GR Fund
As to the relative tax burden on Texans:
■ U.S. motorists are under -taxed relative to the rest of the industrialized world .... if
the tax on motor fuels in Texas were raised 50 -cents per gallon (from 38.3 to 883
cents), the price of motor fuel and the tax thereon would still be less than half that
of most other countries
Motor Fuel Price - Global Perspective (Dollars per Gallon, January 2000)
COUNTRY
GASOLINE
DIESEL
United Kingdom
$5.13
$4.77
Sweden
$4.22
$3.51
France
$4.01
$3.05
Germany
$3.78
$2.90
Japan
$3.65
$2.89
Canada
$2.04
$1.68
United States
$1.47
$1.36
Motor Fuel Tax - Global Perspective (Cents per Gallon, June 2001)
COUNTRY
GASOLINE
DIESEL
United Kingdom
316
318
Netherlands
275
166
France
258
177
Germany
256
183
Italy
242
182
Belgium
235
147
Japan
193
121
United States -Texas
38
44
■ The State tax on motor fuels in Texas is $.20 per gallon; 28 states have a higher
rate than Texas; some states (e.g_, Florida) allow for a motor fuel tax add -on by
local option and levy a portion of the fuel tax on a percentage basis
Motor Fuel Tax in U.S - Excluding Federal Tax (Highway Statistics 2000)
United States
GASOLINE
DIESEL
High rate
$0.32
$0.31
Mean rate
$011
$0.21
Median rate
$0.21
$0.22
Low rate
$0.08
$0.08
■ Texas has a relatively low state tax burden
• State tax revenue per $10001 of personal income is 70.9% of the 50 -state average
• State tax revenue per capita is 70.4% of the 50-state average
• Of the 15 most populous states, Texas ranks dead last in these two indicators
of relative state tax revenue
-4-
State Tax Revenue -15 most populous states - Calendar Year 1999
Source: US Census Bureau, State Government Finances ('Washington, DC,
1999); appears as Table 35 in the Texas LBB's Fiscal Size -up 2002 -03.
Current Level Transportation Revenues and Expenditures:
State Highway Fund Revenue - Fiscal Year ending 08/31/02
Tax Revenue
$2
As Percent of
Motor Fuel Tax
Per $1,000
Tax Revenue
State - local Tax
$ 781,100,000
Personal Income
Per Capita
1997 -98
Michigan
$78.84
$2,215.84
73.1%
California
73.15
2,184.96
69.0
North Carolina
71.43
1,886.90
71.2
Washington
70.55
2,143.29
68.1
Massachusetts 67.15
2,385.65
66.2
Pennsylvania
62.89
1,800.96
61.3
New York
62.74
2,126.81
47.1
Indiana
62.63
1,638.27
62.5
Ohio
59.44
1,614.93
56.3
Georgia
58.56
1,600.08
58.0
New Jersey
58.37
2,078.54
53.6
Florida
56.69
1,574.89
591
Virginia
56.47
1,68236
59.1
Illinois
56.17
1,748.90
55.9
Texas
47.74
1,280.95
52.2
50 -state Average
$67.30
$1,819.13
641%
Texas as % of
Average 70.9%
70.4%
81.4%
Source: US Census Bureau, State Government Finances ('Washington, DC,
1999); appears as Table 35 in the Texas LBB's Fiscal Size -up 2002 -03.
Current Level Transportation Revenues and Expenditures:
State Highway Fund Revenue - Fiscal Year ending 08/31/02
Federal Reimbursements
$2
40%
Motor Fuel Tax
$2,078,100,000
36%
Vehicle Registration Fee
$ 781,100,000
14%
Other Reimbursement
$ 370,700,000
06%
Sales Tax on Lubricants, Title Fees, etc.
$ 210,400,000
04%
$5,759,100,000
100%
State Highway Fund Disbursements - Fiscal Year ending 08/31/02
Highway Research, R/W, Design & Construction
$3,511,200,000
63%
Hilghway Maintenance
$ 988,700,000
18%
Administration, Support, Safety, Aviation, Pub Transp
$ 648,600,000
12%
Department of Public Safety
$ 375,800,000
07%
$5,524,300,000
106%
Revenue Metrics:
State Highway Fund 006 revenue metrics:
o $140 million annual revenue from one -cent tax on sale of motor fuel
$1.04 million to State Highway Fund
$ 35 million to Available School Fund
$ 1 million to Comptroller
- 5 -
o $151 million annual revenue from 5 -cent increase in tax on diesel fuel
■
$111 million to State Highway Fund
■ $ 37 million to Available School Fund
■ $ 1.5 million to Comptroller
o $74 million from $5 increase in vehicle registration fee for all vehicles
o $25 million from $5 increase in vehicle registration fee for trucks
100% of Tax Revenue
Annual
Revenue
Stream
Bond Issue
Amount
Annual
Debt Service
Amount
Remainder for
Pay -As- YOU -Go
$.02/gal motor fuels tax
$280 million
$1.4 billion
$140 million
$140 million
$.101gal motor fuels tax
$1.4 billion
$7.0 billion
$700 million
$700 million
$.20/gal motor fuels tax
$2.8 billion
$14 billion
$1.4 billion
$1.4 billion
75 % of Tax Revenue
Rhode Island
$.02/gal motor fuels tax
$210 million
$1.05 billion
$105 million
$105 million
$.10 /gal motor fuels tax
$1.015 billion
$5.25 billion
$525 million
$525 million
$.20/gal motor fuels tax
$$2.1 billion
$10.5 billion
$1.05 billion
$1.075 billion
2 % motor vehicle sales tax 1 $887 million 1 $4.435 billion 1 $443.5 million 1 $443.5 million
State & Local Motor Fuel Tax Rates (Dollars per Gallon, 2000)
State
Gas
State
Diesel
1.
Connecticut
.320
Florida
.3140
New York
.293
Pennsylvania
.3080
Oregon
290
Oregon
.29070
Rhode Island
.2901
Rhode Island
29070
5.
Hawaii
.288
Hawaii
2880
Wisconsin
.273
New York
.2795
Montana
.270
Montana
.2775
Florida
.264
Nevada
.2775
Pennsylvania
.259
Wisconsin
.2730
10.
West Virginia
.2535
Arizona
.2700
Idaho
.250
West Virginia
.2535
Nevada
2475
Idaho
.2500
Nebraska
245
Vermont
.2500
Utah
.245
Nebraska
.2450
15.
North Carolina
.242
Utah
.2450
Maryland
.235
Maryland
2425
Washington
.230
North Carolina
.2410
Delaware
.230
Washington
.2300
Maine
.220
Maine
.2300
20.
Illinois
.220
Kansas
.2300
Ohio
.2203
Iowa
.2250
South Dakota
.220
Delaware
.2200
Colorado
.220
Illinois
.2200
Arkansas
.215
Ohio
.2200
25.
North Dakota
.210
South Dakota
.22003
Kansas
.210
Arkansas
.2150
Massachusetts
.210
North Dakota
.2100
Tennessee
.210
Massachusetts
.2100
Iowa
.200
Colorado
.2050
30.
Louisiana
.200
Louisiana
.2000
Minnesota
200
Minnesota
.2000
-6-
Texas
.200
Texas
.2000
Vermont
.200
NawHmmpshirc.1HSD
New Hampshire. 185
New Mexico
.1950
35.
Michigan
.190
A|obmnmm
.1900
New Mexico
.185
Connecticut
.1800
Mississippi
.184
Tennessee
�1800
Arizona
180
California
�1800
Alabama
'180
Missouri
.1700
40.
California
.180
Virginia
.1800
Virginia
175
South Carolina .1600
Missouri
178
Wyoming
.1600
Oklahoma
�170
Indiana
.1800
Kentucky
.194
Michigan
.1500
45.
South Carolina .190
Mississippi
.1440
Wyoming
160
Oklahoma
.1400
Indiana
.150
New Jersey
.1350
New Jersey
.105
Kentucky
.1340
Georgia
.105
Georgia
.1050
50.
/\|omko
.DBO
Alaska
.0800