Use State Highway Funds to Help Higher Education and State Agencies Maintain, Construct and Police Roads

The state should use the resources of the State Highway Fund to help higher education and state agencies maintain, construct and police roads, reducing the demand on general revenue for these transportation-related activities.


Background
The State Highway Fund (Fund 006) receives money allocated by law to promote public road construction and maintenance, and to police the state highway system. Highway Fund revenues from motor vehicle registration fees and t axes on motor fuels and lubricants are used only to acquire rights-of-way, construct, maintain and police public roadways, and to administer the state traffic and safety laws on such roads. 1

However, various institutions of higher education and certain state agencies incur public road-related expenses and pay for them out of the General Revenue Fund and other appropriated funds, not the Highway Fund. Some improvements that could have been fund ed out of the State Highway Fund have been paid with general obl igation bonds, which will require future appropriations to retire. Using the Highway Fund instead of appropriated state funds for these expenditures is appropriate and will reduce the growing demand on the General Revenue Fund.

Precedents already exist for paying state agencies road construction and maintenance costs out of the Highway Fund. Several state agencies already use the fund for that purpose.

For example, in fiscal 1992, the Texas Department of Criminal Justice was appropriated $6 million from the Highway Fund for road, bridge, and parking lot construction and repair. The Texas Department of Mental Health and Mental Retardation has received Highway Fund money for similar purposes: $1,876,000 in fiscal 1989 and $2,000,000 in fiscal 1990. 2

In addition to road construction and maintenance are the costs of policing and supervising road traffic and safety, which by state law can and should be legitimately charged to the State Highway Fund. For example, in fiscal 1992 and 1993, the Texas Departm ent of Public Safety (DPS) was appropriated $361 million from the fund, comprising 84 percent of DPS budget.

The Texas higher educational system employs numerous campus security employees, and part of their duties involve policing and supervising safety and traffic on public roads. Out of the 51 state university campus locations identified by the Texas Higher Edu cation Coordinating Board, the Texas Performance Review staff examined eight of the larger institutions. Estimates of their patrolling and policing co sts as a percentage of their total campus security costs ran from 10 to 80 percent, with an overall average of 35 percent of total security costs for each institution. None of these expenses are charged to the Highway Fund at this time. Likewise, of the sm all amount of road repair and maintenance conducted at each educational institution, none are charged to the Highway Fund.


Recommendations
A. Effective September 1, 1994, the Legislature should appropriate all state agency and higher education expenditur es for rights-of-way, constructing, maintaining, purchasing of road materials and supplies, and policing/patrolling of roadways out of the State Highway Fund (006).

An analysis of eight Texas state universities and the Texas Parks and Wildlife Department found that at least $12,195,000 could be appropriated from the State Highway Fund for these purposes in the 1994-1995 biennium. The Legislature should also require t he staff of the Legislative Budget Board to identify any other similarly planned transpo rtation-related expenditures by other state agencies and institutions for the 1994-1995 biennium. For future budget periods, the state agencies and institutions would be required to report all such planned expenditures, as recommended below.

B. Effective September 1, 1994, state law should require all state agencies and institutions of higher education to prepare a cost study each year to document the full costs of rights-of-way, of constructing, maintaining and purchasing of road materials an d supplies and of policing/patrolling of roadways.

Documentation of costs should include direct labor, fringe benefits, supplies, materials, direct personnel equipment and office expenses, as well as all appropriate indirect costs as determined by professional cost accounting practices. By documenting the se costs, the Legislature would have an accurate means of estimating the proper amounts to appropriate each biennium from the Highway Fund for use by state agencies and institutions of higher education.


Implications
Enacting the recommendations would ensure a uniform treatment of state agencies and institutions of higher education s costs for rights-of-way, constructing, maintaining, purchasing of road materials and supplies and policing/patrolling of roadways.

Texas population and economy will continue to grow. This is a timely opportunity to set the recommended policies into state law. For example, roads for higher education, for prisons, for state parks and state hospitals eventually will have to be repaired and maintained, and in some cases, new roads will have to be built. Similarly, state agency, hospital, prison and campus roads will need to be patrolled and supervised to ensure the safety of the public. The precedent already exists; it is now a matter of recovering the full legitimate state costs uniformly across state government.

One concern would be if agencies and institutions had unilateral right to charge these costs directly to the Highway Fund, they may spend too much constructing, maintaining and policing such public roads. To prevent this, the recommendation requires all such expenditures to come under the scrutiny of the legislative appropriations process.


Fiscal Impact
The estimated costs for fiscal 1994 through 1998 are conservatively stated. These estimates include only allocated amounts for policing and patrolling state and campus roads (using the 35 percent allocation factor). The estimates do not include the cost of acquiring rights-of-way, constructing and maintaining state and campus roa ds, since data for future years could not be readily compiled or projected. Further, the fiscal analysis includes only eight universities and the Texas Department of Parks and Wildlife. Therefore, actual savings could be well above the amounts stated below .

Also of note, the Texas Department of Mental Health and Mental Retardation has included in its five-year plan a request for $15 million for road construction to be financed by General Obligation Bonds beginning in fiscal 1996. Repayment of the bonds, if approved, would be from state appropriations. These funds could instead be paid out of the Highway Fund. While not included in the following fiscal tables, this would yield general revenue savings of $15 million plus related debt service costs.

To achieve the savings resulting from the recommendations, the Legislature must reduce agencies appropriations from the General Revenue Fund by the savings amount indicated and appropriate a like amount from the Highway Fund (006).


Savings to the Savings to Loss to the
Fiscal General Revenue Other Dedicated Highway Change in
Year Fund 001 Accounts or Funds Fund 006 FTEs

1994 $2,425,000 $3,606,000 $(6,031,000) 0
1995 2,522,000 3,642,000 (6,164,000) 0
1996 2,522,000 3,642,000 (6,164,000) 0
1997 2,522,000 3,642,000 (6,164,000) 0
1998 2,522,000 3,642,000 (6,164,000) 0





Endnotes
1 Texas Const., art. VIII, Sec. 7-a; Tex. Rev. Civ. Stat. Ann., art. 6674e.
2 Interview with Patrick Terry, Texas Department Mental Health and Mental Retardation, Austin, Texas, November 19, 1992.
3 Ibid.