Gas prices are at the lowest they’ve been on average in about seven years, according to AAA. Today crude oil prices are near 2003 lows – under $27 a barrel – and lower gas prices will follow.
While this is great for fueling up our cars, trucks, mopeds and motorcycles, it’s not the best news for the roads we have to drive on. That’s because a big chunk of the money used to fix those roads comes from the Rainy Day Fund, which is partly funded through taxes charged on the production of oil and gas in Texas.
Back in 2014, Texans voted on sending half that money to the State Highway Fund. It was approved overwhelmingly, because people were thinking, “Oh, more money for roads and I don’t have to pay more taxes out of my pocket? Sounds like a good deal.”
The one thing we didn’t expect in 2014 – when oil prices were above $100 a barrel – was that oil prices would come tumbling down to where they are now, about a quarter of that value.
State Comptroller Glenn Hegar says today oil and gas is roughly 14 percent of the state’s economy, but the lower amount of tax money coming off of oil and gas production means less money going to fund transportation statewide.
In the state’s revenue estimate report for the next few years, Hegar says the state collected $1.1 billion in 2015 for the 2016 Rainy Day and State Highway Funds. For 2017, there will be about half that – $594 million – to spend on roads.
Hegar says that a couple of years ago, the state wasn’t transferring money from the Rainy Day Fund to help fund transportation. Back then, oil and gas prices were recognized as volatile, so they weren’t viewed as a stable supply of money.
“This funding stream didn’t even exist until literally two years ago,” Hegar says. “It was more or less the ‘cream on top.’”
At the time the law was passed to use this Rainy Day Fund money for transportation, Hegar says the money was just seen as a bonus to what went into the State Highway Fund already.
“There is no type of tax that’s a guaranteed stable supply. Economies do better, they do worse,” Hegar says. “In 2016 we’re tied… to an extremely connected national and global economy.”
So why isn’t there a modest surcharge on gasoline to help out our road conditions? Hegar says he leaves that up to the policy-makers in the legislature, but Texans should keep our roads in perspective.
“If you drive through other parts of our nation, and especially other countries, we still have a better highway system than others,” Hegar says. “Does that mean that we need to try to do better? Absolutely. Absolutely. But also to try to keep it in perspective as well.”