How Will This Help | Target Market | Implementation Examples | References
Introduction
The State of Texas requires all vehicles registered in the state to pay a state vehicle registration fee. The fee was first established by the 35th Texas Legislature in 1917 at a rate of $0.35 per horsepower. Proceeds from the state registration fee help pay for the construction, maintenance, and operation of the state highway network.
Some counties in Texas already have this ability with varying requirement for how the money may be spent. Additionally, the funds may be spent on non-highway projects like transit, rail, or waterway initiatives.
The most recent change in state vehicle registration fees occurred in 2011 with House Bill 2553. Since then, the annual registration fee for passenger vehicles (6,000 lb or less) has been $50.75, and the fee for heavier passenger vehicles (6,001–10,000 lb) has been $54. Owners of vehicles 10,001 lb or more pay a weight-based registration fee.
A portion of registration fees is kept by county tax assessor-collectors, while another portion is sent to the Texas Comptroller of Public Accounts. Texas Transportation Code Section 502.1021 describes how vehicle registration fees are divided between state and local entities.
In order to meet the growing demand for highway projects in some high-growth areas of the state, some local government officials want to be able to charge a local vehicle registration fee. Currently, Section 502, Title 7 of the Texas Transportation Code1 prohibits this option statewide (though Section 502.402 does allow certain counties this option). If approved by the legislature, local regions could charge an additional vehicle registration fee that would be spent on local transportation programs.
How Will This Help?
- Puts 100 percent of funds into transportation. While only 75 percent of funds from gas and diesel tax revenues go toward funding transportation, 100 percent of a local option fee would go to local transportation funding.
- Provides funds to reduce local traffic congestion and help maintain the safety and quality of local roadways. Every vehicle owner in the state pays a statewide vehicle registration fee. That fee goes into a statewide fund and is given out based on a statewide transportation plan. Locally collected fees can be dedicated to local transportation projects.
- Increases the number of funded projects and helps speed up or expand the scope of existing projects.
- Is not affected by increased fuel efficiency. Fuel tax revenues will likely decrease over time. The expected growth in future population means more people traveling on the roadways and using more fuel. However, today’s more fuel-efficient cars and trucks pay lower fuel tax per mile than when the tax rates were last set 20 years ago. As vehicles become more fuel efficient and alternative-fuel vehicles become more common, the number of gallons needed to go the same distance will decrease. Benefits such as less pollution and the ability to travel farther per gallon are gained. However, the resulting decrease in fuel use means less gas and diesel tax revenue to cover rising transportation needs. A local option vehicle registration fee is a flat fee. The profit from a local option fee would vary only with the number of vehicles on the road.
Estimated Funding Yield
A local $5 fee increase would, from 2015 to 2019, yield an estimated:
- $49 million in Austin.
- $150 million in Dallas-Fort Worth.
- $142 million in Houston.
- $52 million in San Antonio.
A local $25 fee would, from 2015 to 2019, yield an estimated:
- $245 million in Austin.
- $748 million in Dallas-Fort Worth.
- $712 million in Houston.
- $258 million in San Antonio.
Implementation Examples
Texas Local Option Registration Fees
In Texas, certain counties can increase their local vehicle registration fees. During the 2013 legislative session, two bills were passed that allowed Bexar, El Paso, and Webb Counties to raise their vehicle registration fees by $10. HB 1198, authored by state Representative Richard Raymond, and HB 1573, authored by state Representative Ruth Jones McClendon, approved the increases. Both bills allow county commissioners to approve the increases under two conditions:
- All revenue goes toward road and bridge projects.
- Funds are managed by the relevant regional mobility authority.
Virginia
In 2008, the State of Virginia allowed county governments with major transportation needs to raise an additional $20 for each vehicle registered (HB 6042).2
Issues
- Passing piecemeal enabling legislation instead of a statewide allowance creates a non-uniform patchwork of legislation.
- The local fee will only apply to vehicle owners who reside and register their vehicles locally. A large additional fee may deter new businesses and residents, slowing economic growth.
- Implementation requires the passage of legislation and involves cooperation among a number of local officials.
- Permitted uses of the revenue and the authority responsible for oversight may vary from county to county depending on the enabling legislation.
For More Information
Legislative Budget Board. Texas Highway Funding: Legislative Primer. March 2013. http://www.lbb.state.tx.us/Documents/Publications/Primer/238_TexasHighwayFunding_LegislativePrimer_ThirdEdition2013.pdf.
Legislative Budget Board. Transportation Funding Options: Legislative Policy Report. February 2015. http://www.lbb.state.tx.us/Documents/Publications/Policy_Report/2208_Transportation_Funding_Options.pdf.
Texas A&M Transportation Institute. Transportation Revenue Estimation and Needs Determination System (TRENDS). http://trends-tti.tamu.edu.
References
- State of Texas. Texas Transportation Code Section 502. 2013. http://www.statutes.legis.state.tx.us/Docs/TN/htm/TN.502.htm.
- The State of Virginia. Virginia House Bill 6042. 2008. https://leg1.state.va.us/cgi-bin/legp504.exe?083+sum+hb6042.