Bloomberg News

Texas Drivers Stuck in Traffic as State Rejects Taxes for Roads

August 08, 2013

Gary Hinze’s truck route delivering car-wash detergent, paint and engine parts in Austin, Texas, often takes two hours a day longer than when he started 13 years ago -- the result of worsening bumper-to-bumper traffic.

Hinze, 57, a driver for Central Freight Lines Inc., tries to avoid Interstate 35, the often congested north-south route through the capital city, though he still winds up stuck as he stops at more than a dozen businesses to drop off products.

“They are years behind in Austin in building roads,” Hinze said as he drove his 48-foot (15 meters) truck on a recent day. “They aren’t anywhere near keeping up with the growth.”

From Houston to El Paso, companies, drivers and political leaders are complaining that roads haven’t kept pace with growth. Traffic overload threatens Governor Rick Perry’s efforts to lure companies to Texas.

Texas added 5.21 million residents from 2000 to 2012, making it the second-largest state behind California with a population of 26.1 million.

Texas lawmakers on August 5 agreed to let voters decide whether to spend more money on transportation by diverting oil-and natural gas-tax revenue from a reserve account. Under the proposal, transportation funding would rise about $1.2 billion, or 12 percent, in 2015, from the prior year, according to state estimates.

Opposing Tax

Perry, 63, who opposes new taxes to pay for roads, praised the transportation-funding legislation. He hasn’t yet signed it.

Even with that increase, spending would still fall short of the $15 billion a year the state Transportation Department says is needed, mostly for road construction and repair. Texas now spends about $10 billion annually on transportation.

Deciding how to pay for transportation in Texas, with about 80,000 miles of state and interstate highways, has split Republican leaders, with some calling for new taxes or fees to pay for roads, and others saying spending must be cut to pay for transportation.

“You’d think that a Republican legislature that is backed overwhelmingly by the business community would listen to business leaders,” said Tom Terkel, founder of Four T Realty LLC in Austin, a real-estate investment and asset management company. “It’s an absolute, complete failure on the part of the Texas Legislature to provide alternatives.”

‘Band-Aid’

Texas spent $427 per person in fiscal year 2011 on highways, behind the U.S. average of $490, according to the most recent available data from the Tax Policy Center in Washington, which researches tax and budget matters. That includes state, local and federal money. California spent $391 per capita.

Spending state reserves -- known as the rainy day fund -- is a “Band-Aid,” said Senator Robert Nichols, a Republican who leads the transportation committee. “Everyone knows this is not a long-term fix,” he told reporters on June 30.

Nichols wanted taxes on the sales of cars to be used for roads. Other lawmakers objected, saying that plan would have taken money from schools, said Steven Albright, chief of staff for Nichols.

Texas lawmakers earlier this year agreed to let voters decide whether to use $2 billion from the same reserve fund to create a bond bank to pay for water projects after droughts hurt farms and reduced drinking water supplies.

Most Traffic

The stretch of Interstate 35 in the Austin area ranks among the 16 most congested roads in the U.S., trailing highways in Los Angeles, New York and San Francisco, according to a study this year by INRIX Inc., a research firm in Kirkland, Washington. A separate report by Texas A&M University last year named the state’s two largest cities, Houston and Dallas, as among the 12 most congested U.S. metropolitan areas.

A decade of lobbying by business groups that support increasing road spending hasn’t resulted in adequate funding, said Russell Laughlin, president of the 35W Coalition in Fort Worth, a transportation-advocacy group. Members include Burlington Northern Santa Fe LLC; BBVA Compass bank, a unit of Banco Bilbao Vizcaya Argentaria SA; and FMR LLC’s Fidelity Investments.

“We’re worried that we may get to a crisis and lose our competitive advantage,” said Laughlin, senior vice president of Alliance Texas, a 17,000-acre mixed-use development in Fort Worth.

Seeking Money

Business groups supported legislation this year that would have increased annual vehicle-registration fees by $30 to raise more than $600 million annually for transportation, said Representative Drew Darby, a Republican and the bill’s sponsor.

The measure failed to win support after Perry opposed it, Darby said.

“I’ve talked to them about the need for more money until I was blue in the face,” he said, referring to Perry and Lieutenant Governor David Dewhurst, a Republican who is running for re-election. They won’t support the measure because they oppose new taxes and fees, he said.

Perry favors tapping the state’s reserves, redirecting some tax collections on vehicle sales to roads and issuing bonds with maturities as long as 100 years, spokeswoman Lucy Nashed said. That would help Texas spend $41 billion on transportation projects over the next 20 years, Perry said in a April speech in Austin.

Perry’s push for bond sales hasn’t won support in the legislature as lawmakers said they wanted to cut debt instead of adding more. Measures supported by the governor would provide a “long-term revenue stream for transportation,” said Josh Havens, a spokesman.

Toll Roads

Reduced highway funding has prompted Texas to turn to regional transportation authorities and private construction firms to build toll highways or lanes in Austin, Houston, Fort Worth and other cities.

Among the most recent is a $3 billion toll road planned in north Houston less than a mile south of the future North American headquarters of Exxon Mobil Corp. (XOM:US), the world’s largest publicly traded oil company.

Texas has issued more than $19 billion in highway-related bonds over the last 12 years, said Stephen Minick, vice president of governmental affairs at the Texas Association of Business, based in Austin. Texas is spending about $850 million annually on repaying debt, according to a state report.

Yogi Berra

“Once you pay for maintenance and debt service, we don’t have any money for new roads, except by building toll roads or borrowing more money,” Minick said.

Congestion may hurt the state’s ability to lure businesses and attract jobs, Perry said in an April speech in Austin.

“We don’t want to become another example of the wildly successful restaurant Yogi Berra once criticized, ‘Nobody goes there anymore. It’s too crowded,’” he said.

It’s already too crowded, some say.

“In five years, we’re going to be in total gridlock, and we already are in some sections of town,” Cathy Coneway, an Austin real-estate agent.

Driving to a recent event at a suburban subdivision during evening rush hour took 75 minutes from downtown Austin, triple the time it would have taken 10 years ago, said Coneway, chairwoman of the Austin Board of Realtors.

Coors Drivers

Several truck drivers at Coors Distributing Co. of Fort Worth start their routes at 3 a.m. or 4 a.m., two hours earlier than five years ago, to avoid interstate delays and meet 11 a.m. delivery deadlines, said Larry Anfin, president of the closely held company. Its plant abuts Interstate 35 on a section rated the most congested in Texas by the state Transportation Department.

“Fort Worth is growing much faster than the roads and infrastructure,” Anfin said. “We’re playing catch up.”

Leaders of Texas’s biggest companies aren’t publicly pushing for more spending, though lawmakers are receiving phone calls and e-mails from executives and business-backed trade associations promoting expanded roads, said Representative Joe Pickett, a Democrat and a bill sponsor.

Spokesmen for four large Texas-based companies -- David Eglinton of Exxon Mobil, Daphne Avila of J.C. Penney Co. (JCP:US), Gail Chandler of Texas Instruments (TXN:US) Inc., and Jack Todd of Trinity Industries Inc. (TRN:US) -- declined to comment.

In Austin, Hinze starts his route at a freight terminal, driving a truck loaded with palettes of products. He usually heads out at 8 a.m., immediately hitting traffic on Interstate 35.

He sometimes spends 30 minutes to an hour stalled or barely moving in traffic, he said.

When he started working in Austin 13 years ago, Hinze said he could count on finishing his route in about 7 hours. These days, it takes him as long as 10 hours.

As he inches along, Hinze listens to talk radio -- news or sports, it doesn’t matter. It gets his mind off the road, he said.

“I listen to anything to keep my mind occupied,” he said. While the traffic is frustrating, “It doesn’t do any good to be aggravated. You just need to keep your cool.”

To contact the reporter on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net

To contact the editor responsible for this story: William Glasgall at wglasgall@bloomberg.net


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