The Impact of New Texas Laws, Part 2: Transportation

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Travis Kelly

Government Affairs

Maintaining strong, dependable sources of state transportation funding is perhaps more important than ever. Federal transportation funding – including both formula and discretionary programs – is expected to contract significantly in 2024 compared to 2023, making state and local sources of project funding even more critical. In Texas, transportation initiatives can expect to see more funding opportunities soon, even without major bills during the spring legislative session. Highways and port infrastructure will be the main beneficiaries.

Expanded Funding for Port Infrastructure Projects

Senate Bill 1499 makes additional types of projects eligible for funding from the Port Access Account Fund. Eligibility now extends to the construction or improvement of wharves, docks, structures, jetties, piers, storage facilities, cruise terminals or facilities necessary or useful in connection to maritime port transportation or economic development. The new law takes effect Sept. 1.

The Port Authority Advisory Committee administers the fund, which received $40 million for the 2024-25 biennium in House Bill 1, the main appropriations bill.

Highway Funding Extensions

House Bill 2230 gives the state highway fund an additional eight years of infusions from state surplus funds. When Texas has surplus money, it primarily goes to an account popularly known as the Rainy Day Fund. In 2014, voters approved Proposition 1, a constitutional amendment that called for transferring half of the surplus to the state highway fund until 2034. After HB 2230 takes effect Sept. 1, those transfers will now last until 2043. According to the Texas Department of Transportation, the significant growth in Proposition 1 revenue accounts for much of the $15 billion increase in the Unified Transportation Plan, set to be approved by the Transportation Commission in its August meeting.

Senate Continuing Resolution 2 gives the state highway fund an additional 10 years of revenue from state sales taxes, motor vehicle sales and rental taxes. In 2015, voters approved Proposition 7, a constitutional amendment that added two sources of highway funding: Each year, the state highway fund receives $2.5 billion state sales and use tax revenues and 35% of motor vehicle sales and rental tax revenues if they exceed $5 billion. Those two provisions had different expiration dates, but both will last an extra 10 years once SCR 2 takes effect on Sept. 1.

New Electric Vehicle Registration Fee

Senate Bill 505, which takes effect Sept. 1, creates a $200 annual registration fee for electric vehicles (EV) that will be paid into the state highway fund. Traditional vehicles pay into the fund through state and federal fuel taxes assessed at the gas pump. Because electric vehicles don’t use gasoline or diesel, the state needed another means for them to contribute to the maintenance of roads.

How Freese and Nichols Can Help You

As a full-service engineering/planning/architecture firm, we are dedicated to helping our clients plan and provide for their communities’ infrastructure needs. In addition to offering wide-ranging technical expertise, we monitor state and federal legislation from conception to law so we can understand available resources and match projects with potential funding sources. Our holistic approach can guide you with these and other funding options to successfully complete any size project.

Learn more about our services:

For questions, contact Travis KellyTravis.Kelly@freese.com214.709.8417, or your Freese and Nichols project manager.

Look for future articles in this series that discuss legislative changes affecting local authority and major regulatory agencies.

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Travis Kelly helps municipalities and other public entities navigate legislative and regulatory processes affecting their projects. He is based in Fort Worth.