Transportation Infrastructure Funding

Conferees have agreed on transportation infrastructure funding via agreement on how to dedicate state tax revenue for future road construction and maintenance.

The agreement requires voters to amend the constitution (November 2015) to dedicate $2.5 billion of the general sales tax to the highway fund upon approval, as well as a portion of future motor vehicle sales taxes beginning in 2020.

The motor vehicle sales tax dedication would transfer 35 percent of the growth of that revenue source beyond $5 billion beginning in 2020; currently, the approximately $4 billion annually collected goes into the state's all-purpose general revenue fund.

Both funding streams contain thresholds to address downturns in the economy. The sales tax revenue dedication would cease if annual sales tax revenue is less than the $28 billion currently collected.

Some elected officials have advocated dedicating the vehicle sales tax to road construction and maintenance, insisting it is a more stable funding source which reflects inflation and the state's population growth. While other elected officials have advocated the sales tax is even more stable, concerned the motor vehicle sales tax revenue is unpredictable and excludes Texans who do not purchase automobiles but utilize the state road system.

The state budget writers have also increased TxDOT funding by mostly ending approximately $1.3 billion in so-called diversions, whereby gas tax money was going to pay for other items. Budget writers also allocated $2.5 billion from funds raised through Proposition 1, the constitutional amendment supported by TTIA as part of the Move Texas Forward coalition which Texas voters passed in November of 2014 dedicating portions of the oil and gas severance tax for transportation infrastructure funding.

Event Trust Fund Programs

A total of 16 bills (10 House bills, 6 Senate bills) have been filed this session related to some aspect of the event trust fund program. 

SB 293 by Senator Nelson was signed by Governor Abbott which clarifies certain site selection organizations are immediately eligible to receive funding from the major events trust fund including ESPN, the National Association for Stock Car Auto Racing (NASCAR) and the Ultimate Fighting Championship.

The House co-author for SB 633 (Rep. Isaac) guided the omnibus bill through the House process, the bill contains:

• The transfer of oversight from the Comptroller's office to the Governor's Office of Economic Development and Tourism
• Granting the Governor's office rulemaking authority to administer the program once transferred
• Renaming the Trust Fund program to the Reimbursement Fund program
• Expanding the definition of events eligible to include 10 new events
• Expanding the definition of site selection organization eligible to include 6 new organizations
• Eliminating the Special Event Trust Fund, which according to the Comptroller's office has not been utilized since 2009
• Harris County-Houston Sports Authority language (HB 3402 by Rep. Wayne Smith) authorizing the sports authority to act as endorsing entity on behalf of the city and county in seeking to attract games and events

It is anticipated that Senator Fraser, the Senate author of SB 633, will concur in the House amendments and Governor Abbott will sign the bill into law.

HB 46 by Rep. Chen Button includes, among other items, the same provisions as SB 633, but addresses other economic development incentive programs.

Tax Relief Efforts

Although the Governor, Lt. Governor and the Speaker announced agreement of a $3.8 billion tax relief package, the House unexpectedly added a provision to SB 1 seeking to keep in place school districts' local exemptions; the amendment was estimated at $400 million.

The amendment would freeze school districts' local exemptions requiring the state to cover part of the costs of the lost property tax revenue for those districts.

The Senate refused to concur in this provision and has asked for a conference committee appointing Senator Nelson as conference chair and Senators Bettencourt, Hinojosa, Huffman and Nichols as fellow conferees. The House responded by appointing its own conferees, including Rep. Dennis Bonnen as conference chair and Reps. Darby, Martinez Fisher, Parker and Springer as fellow conferees. 

Apart from the $400 million amendment, the tax relief plan seeks a 25 percent reduction to the business margins tax and a $10,000 increase in the homestead exemption starting this year - subject to voter approval of a constitutional amendment likely to appear on the November ballot.

It is estimated more than half of the $400 million would likely be used by five urban/suburban school districts, which offer homeowners an additional 20 percent exemption. Those districts include: Houston ISD, Cypress-Fairbanks ISD, Spring Branch ISD, Dallas ISD and Highland Park ISD.