The gasoline tax diversions
Sun December 5, 2010 12:14 pm

The Quorum Report today has an interesting article on the briefing for freshman legislators concerning transportation funding. The villain in these discussions is always the diversions from Fund 6, which is the revenue from the state's gasoline tax.

Should budget writers end the diversions from the gasoline tax? Of course they should. Why don't they? The answer is the same reason for why they divert the funding: There isn't enough revenue to fund the basic services of state government. Budgeting is a continuous shell game, shifting money here and there, from TxDOT to agency A to agency B.

Here is the list of diversions:

Attorney General - Mineral Rights Litigation $ 1,700,000

Health and Human Services Commission $ 20,000,000

Texas Education Agency $ 100,000,000

Texas Transportation Institute $ 14,317,605

Department of Public Safety $ 1,245,108,574

Texas Workforce Commission - Client Transportation $ 13,658,704

Gross Weight Axle Fees $ 10,800,000

Commission on the Arts $ 1,340,000

Historical Commission $ 1,000,000

State Office of Administrative Hearings $ 6,736,396

Lufkin Tourist Information Center $ 150,000

Salary Increase for Schedule C $ 22,291,710

Regulation of Controlled Substances $ 804,972

Silver Alert for Missing Children $ 224,990

Client Transportation Services $ 22,363,606

Medical Trans - Medicaid Match $ 85,381,725

Auto Theft Prevention $ 27,558,755

TOTAL $ 1,573,437,037

The problem with ending the diversions is that many of these line items are used to plug other holes in the budgets. The biggest diversion is for the Department of Public Safety. But if budget writers were to decide that TxDOT should keep all of the gasoline tax money, how would we fund DPS? The truth is, budget writers are doing everything they can to stretch the money that they have.

Those who call for ending the diversions conveniently overlook that the problem is not the diversions; it's why we have to divert, which is that the state's revenue stream is inadequate to fund the services that the state provides. Sure, we ought to end the practice of diverting gasoline tax revenue to fund DPS. That $1,234,108,574 would buy a lot of concrete. But the moment that you end the diversion to DPS, you are confronted by the problem of how to fund the state's law enforcement agency.

There is no magic solution to that problem. I have had this conversation with friends at the Texas Public Policy Foundation, who are strong advocates for ending diversions. But they know that it you end diversions, there is no money to fund DPS. Thus, when they say "end diversions," what they really mean is "starve the beast." When there is no new revenue, spending cuts are all that is left.

I don't think this is necessarily bad -- if the budget writers were to make the right cuts. DPS has $130 million of new construction in the 08-09 budget. Construction is empire building; that's a good place to start cutting. It's rarely a priority, except at the crumbling infrastructure of state hospitals. The Texas Department of Criminal Justice has $140 million in new construction. We don't need any new prisons. What are they building? State health services has a program that regulates food and drugs. Compliance is left to the self-reporting of food and drug companies. That's $54 million wasted. Railroad Commission inspections of 108,000 oil and gas facilities are budgeted for hundreds of millions of dollars, and the 87 inspectors couldn't do them in a lifetime. The state levies all sorts of fees against big companies; most are earmarked for certain activities only (emissions fees, for example). The Legislature could, and should, erase the earmarks, treat all of the funds as general revenue, and then prioritize what it wants to spend. I like Parks & Wildlife's magazine, but is there a better use for that $2 million or so? These questions NEVER get asked in budgeting. Never. The budget provides a little more money for a line item one year, a little less the next.

What should have been done, as the dimensions of the current fiscal crisis became known, is that the governor should have convened, or the Legislature should have created by statute, a blue-ribbon committee on state fiscal policy. It should have examined our practice of dedicating funds that are tied up forever (the gasoline tax revenue is one such fund); it should have examined the efficacy of zero-based budgeting; it should have looked at the structural deficit in the budget and determined whether there is a need for new revenue. But this governor doesn't care about public policy. There is so much more to be gained by attacking Obamacare and becoming a national figure. The looming problems at home get ignored. Well, there's nothing new about that.

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