Appropriations for Article VII are driven mostly by road maintenance and construction and, like health care and education, squeeze the rest of the discretionary budget. The Texas Department of Transportation (TxDOT) is the primary recipient of Article VII All-Funds appropriations, receiving $26.6 billion or 83.5 percent of the total $31.8 billion for the 2018-19 biennium. Of TxDOT’s share, GRR represented less than 3.7 percent of the total.
Federal and “other” funds (mostly State Highway Fund appropriations) accounted for about 95 percent of annual Article VII appropriations from fiscal 1996 through 2019, rising at 4.6 percent and 6.2 percent annually, respectively (Exhibit 11). Total All-Funds appropriations for Article VII rose by an average 5.5 percent annually. The highway construction cost index rose by 6.2 percent annually, mirroring All-Funds appropriations and exceeding growth in personal income (5.5 percent).
|Fiscal Year||All-Funds Appropriations Index||Appropriations Index||Highway Construction Cost Index||Personal Income Index|
Note: Data for vehicle miles traveled and the IHS Markit index for 1996, 2018 and 2019 are estimated.
Sources: IHS Markit and Texas Comptroller of Public Accounts
In recent years, lawmakers and Texas voters have amended the state constitution to substantially boost the amount of state revenue dedicated to highway funding. Starting in fiscal 2013, a portion of revenue from oil and natural gas production taxes was dedicated to the State Highway Fund. Then, beginning in fiscal 2018, up to $2.5 billion in annual state sales tax revenue has been dedicated to the State Highway Fund; starting in fiscal 2020, some motor vehicle sales tax revenue also will be added to the fund. Because these sales tax funds used to be GRR, the change will reduce discretionary funding for the rest of the budget.