Texas Constitutional Amendment Election, 2007 - Proposition 12

Proposition 12

Proposition 12 (S.J.R. No. 64) is the constitutional amendment providing for the issuance of general obligation bonds by the Texas Transportation Commission in an amount not to exceed $5 billion to provide funding for highway improvement projects.

The measure passed 62.61 percent in favor to 37.39 percent against.

• Comments by supporters: The proposed amendment would help the state finance transportation projects. There is not enough money to cover existing and future transportation needs with available funding. An expanding population has created the need to spend more on transportation projects and maintenance to correct existing and future problems relating to traffic congestion, including congestion at border crossings, deficient roads, and unsafe bridges. Borrowing against future revenue would enable the state to complete transportation projects sooner, aiding economic development and job creation. The proposed amendment also would provide a new source of revenue that the state could use to secure bonds for transportation projects. The bonds would not have a significant effect on the state’s fiscal standing because Texas has a comparatively low debt burden. Bonds backed by general revenue likely would have a lower interest rate than those backed by the state highway fund because the bonds are backed by the full faith and credit of the state. Texas has traditionally used general obligation bonds to fund various types of infrastructure in this state and should use them for funding transportation infrastructure as well.

• Comments by opponents: Borrowing increases the state’s costs and transfers those costs to future taxpayers and legislatures. The state cannot afford to pay the interest on the bonds authorized by the proposed amendment, even with low rates. The policy of the state has traditionally been to fund transportation projects through dedicated funds and minimize burdens on general revenue for debt service; therefore, the state should continue to pay for the highway construction it can afford rather than encumber scant resources and drive up the cost of already expensive projects. Some opponents question trusting the Texas Department of Transportation because they believe the agency has not been forthright regarding its expenditures, and it would be irresponsible to provide the agency with even more money not subject to the legislature’s appropriations process. Transportation projects should be funded through the state highway fund and not general revenue. It is not in the state’s best interest to obligate money to debt service for highway construction bonds when that money may be needed for other state purposes or budget certification.