Honorable Larry Phillips, Chair, House Committee on Transportation
FROM:
John S O'Brien, Director, Legislative Budget Board
IN RE:
HB563 by Pickett (Relating to the purposes and designation of a transportation reinvestment zone.), As Introduced
No significant fiscal implication to the State is anticipated.
The bill would amend Chapter 222 of the Transportation Code regarding use of taxes collected on property in a municipal transportation reinvestment zone and in a county transportation zone and deposited into a tax increment account. The bill also would change the criteria for which municipalities and counties would be authorized to create a transportation reinvestment zone.
The bill would add Sections 222.108 and 222.109 to Subchapter E, Chapter 222, Transportation Code, to authorize a municipality or a county, notwithstanding other subsections, to establish a transportation zone for any transportation project. In addition, if all or part of a transportation project in the zone is subject to oversight by the Texas Department of Transportation (TxDOT), TxDOT would be required, at the option of the governing body of the municipality or county, to delegate full responsibility for the development, design, letting of bids, and construction of the project, including project oversight and inspection to the municipality or county provided that the commission or department may take any action reasonable to ensure compliance with federal requirements to receive federal-aid highway funds. A project on the state highway system must comply with state design criteria unless TxDOT were to grant an exception to the municipality or county.
TxDOT would be prohibited from penalizing a municipality or a county with a reduction in traditional transportation funding because of the designation and use of a transportation reinvestment zone. Any funding from TxDOT identified for a project before the date that a zone is designated may not be reduced because the zone is designated in connection with that project.
TxDOT would be prohibited from reducing any allocation of traditional transportation funding to any of its districts because a district contains a municipality or county that contains a transportation reinvestment zone.
The bill would take effect September 1, 2011.
TxDOT indicates that the state's federal highway funding could be jeopardized under certain provisions of the bill and federal penalties could accrue depending on the number and scope of projects in violation of federal requirements. Currently, TxDOT is the designated state administrative agency granted authority by the federal government to oversee or conduct environmental and design and build reviews for any major roadway receiving federal aid and/or intersecting a federal-aid highway or transit system subsidized by the federal government.
For the purposes of this analysis, it is assumed TxDOT and the Texas Transportation Commission would take any reasonable action to ensure compliance with federal requirements to receive federal-aid highway funds as authorized by the bill.
Local Government Impact
The fiscal impact of implementing the proposed requirements for use of tax increments in a transportation reinvestment zone would vary depending on the projects to be funded. Regarding change in eligibility to create a transportation reinvestment zone, it is assumed that a municipality or a county would designate a transportation reinvestment zone and undertake a transportation project only if there were sufficient resources available or the net fiscal impact would be positive.
The Texas Municipal League noted that transportation reinvestment zones are optional for municipalities; therefore, it is assumed that a municipality would designate a transportation reinvestment zone and undertake a transportation project only if there were sufficient resources available or the net fiscal impact would be positive.