Legislature Adjourns, Governor Praises Passage of Highway Funding, Others Raise Doubts

For the first time since January 8, the Texas legislature is not in session or on the verge of a special session, having adjourned Monday night upon final passage of a proposed constitutional amendment to divert a portion of oil and gas revenue from the Rainy Day Fund to the state highway fund.

Gov. Rick Perry greeted passage of the proposal, which will go before Texas voters on the November 2014 ballot, with this statement: “Today’s action by the Texas Legislature moves our state closer to securing a strong economy well into the future by providing more resources for building and maintaining a transportation system that will keep our economy growing and our population moving. Just as important is the fact that we are increasing funding for transportation without raising taxes, which sends an incredibly strong message that Texas is committed to keeping the wheels of commerce turning, while protecting taxpayers.”

Others see the issue quite differently. House Speaker Joe Straus last week said of the proposed diversion from the Rainy Day Fund for highways: “Diverting a capped amount of money from the Rainy Day fund to repair roads is much like using a Band-Aid to cover a pothole; in the end, you still have a pothole and you’ve spent a lot of money without solving the fundamental problem. Legislators know that Texas needs a much more comprehensive approach to funding our growing state’s growing transportation needs….Until members are free to consider real optionsbeyond simply shuffling taxes from one purpose to anotherwe will not find a responsible solution to this issue.”

Rep. Senfronia Thompson (D-Houston) yesterday signaled that supermajority final votes in the House and Senate for the constitutional amendment and its enabling legislation don’t necessarily portend smooth sailing for the proposal at the ballot box next year. Thompson said before the House vote that highway projects “shouldn’t have preferential treatment” over other state priorities, including education, health care, and human services.

The Senate Finance Committee at the last minute did strip from the enabling bill an additional diversion of dollars, for the benefit of highway projects alone, from state motor-vehicle sales taxes. But the proposed constitutional diversion of half the oil and gas revenue now flowing into the Rainy Day Fund remains intact. The main qualifiers are two. The first is that a special House-Senate committee must define a “sufficient balance” that must be in the Rainy Day Fund before half of amounts above that level can be diverted for highways. (The House and Senate by majority votes could override the committee’s decision and set a different “sufficient balance” as the trigger for the highway-funding diversion.) Secondly, the enabling bill also puts a 2025 expiration date on the ability to divert money from the Rainy Day Fund for highways.

Legislative budget experts have calculated that starting in fiscal 2015 the constitutional amendment would mean a probable loss to the Rainy Day Fund and a corresponding gain to the highway fund of about $900 million to about $1 billion per year. The dedication of this funding for highway projects unquestionably would put a tighter squeeze on future financial resources available for such purposes as compliance with any court-ordered spending improvements for education in the pending school-finance lawsuit against the state.

We will have lots more time between now and the November 2014 election to assess the highway-funding constitutional amendment. For now, perhaps the best thing about the recent special sessions is what did not happen. Some of the bad education-policy ideas of the 2013 regular session were recycled in bills filed during these summer sessions, including several measures to funnel taxpayer dollars to private schools via vouchers and voucher equivalents. But the governor did not add these items to the agenda.

Lt. Gov. David Dewhurst said Monday night before adjournment that senators can expect to receive their interim chargescommittee study assignmentsin September and October. Dewhurst earlier this week promised a pro-voucher crowd that their issue would be high on his agenda for 2015, assuming he wins re-election.

Upcoming Hotline messages will report on all the legislative action that lies ahead. As the start of the new school year approaches, we also will recap the notable education-related laws enacted in the 2013 legislative session.