• Alliance Backs Nichols Plan to Dedicate Vehicle Sales Tax Revenue

December 6, 2012

The Board of Directors of the Alliance for I-69 Texas has voted unanimously to endorse a major change in highway funding proposed by Senator Robert Nichols, who will serve as chairman of the Senate Transportation Committee in the upcoming session of the Texas Legislature.

The Nichols plan would not raise current fees.  Over a period of 10 years it would gradually shift all state sales tax revenue from new and used vehicle purchases to a fund dedicated to the construction and maintenance of the state highway system, and to pay off general revenue transportation related debt.  The sales taxes paid by Texans now go into the General Fund.

Chairman Nichols proposes to make the change through adoption of a constitutional amendment by the voters which will prevent future legislatures from diverting these transportation funds to other non-transportation uses.

He has said that Texas needs transportation sources that are predictable, constitutionally dedicated, transportation related, independent of fuel source and continually adjusted for inflation.

The enabling legislation for the proposed Nichols amendment would incrementally dedicate the sales tax by 10% each year starting in 2016.  That very slow process would allow time for the General Fund to adjust to the removal of the vehicle sales tax increments.

The state now collects more than $2.6 billion a year in vehicle sales tax revenues and the amount will climb as the economy recovers.  That means that about $300 million would be available in 2016 to help make payments on Proposition 12 and Proposition 14 bond debt.  Required payments on that debt will be about $718 million each year after 2016.  By the fourth year of the transition process (2019) the dedicated fund would be producing approximately $1.2 billion a year, leaving about $600 million for highway construction and maintenance.  By the tenth year the revenue will be near $3 billion with a debt payment of $718, leaving a net of about $2.2 billion for transportation.  For comparison, TxDOT contract lettings have totaled about $4 billion each year over the past decade.

Nichols offered the same proposal in 2011 but it did not gain traction in a year of extreme stress in state financing.

He argues that it just makes sense to dedicate vehicles sales taxes to the one thing those vehicles and motorists depend on – safe and adequate highways.  Nichols predicts that the public will back such a measure because it makes intuitive sense.

Nichols said raising the vehicle registration fee is also worth considering but that it might be a tougher sell. “I think the big question is whether raising the vehicle registration fee is going to be considered a new tax or raising a tax,” he said.

Senator Nichols comes to this discussion with a unique set of experience.  He is an engineer by training and served as a member of the Texas Transportation Commission from 1997 to 2005.  During that tenure he established a reputation for pushing increased efficiency while maintaining quality in TxDOT operations.

Nichols has served on the Senate Transportation Committee since 2007 and played a major role in major revisions to transportation policy during those years, particularly during the TxDOT Sunset process the past two sessions.  He was named chairman this fall.

“The issues facing this committee are critical to keeping the Texas economy moving.  A top priority of mine is to ensure we have adequate resources to build a first class highway system and maintain the existing infrastructure to the level Texans expect and deserve,” Nichols.

“I hope to draw on my experience and that of my colleagues to come up with innovative ideas to solve the state’s transportation problems,” Nichols said. “Transportation is a critical issue facing this state, and I look forward to working on solutions to get people and goods moving.”
Nichols was first elected to the Texas Senate in 2006. In addition to Transportation, Nichols sits on the Senate Natural Resources, Health and Human Services, and Nominations Committees. He also serves as Vice Chairman of the Senate Committee on Intergovernmental Relations and the Texas Sunset Advisory Commission.

His Senate District 3 includes 19 East Texas counties including the cities of Conroe, Livingston, Silsbee, Jasper, Lufkin, Nacogdoches, Jacksonville and Palestine. A total of approximately 155 miles of the I-69 routes are within his district.


Senator Robert Nichols
Chairman - Senate Transportation Committee


The Dallas Morning News on Dec. 9th reported that Texas lawmakers hope to tackle long-term highway funding. Read the DMN story by Tom Benning HERE.