Senate Approves Funneling Car Sales Tax to Highways

Two measures that would take some of the money raised from sales taxes on cars and dedicate it to building and fixing state highways passed the Texas Senate on Wednesday. The first legislation to clear the upper chamber this session moves to the House, but not before senators added a last-minute pay raise for teachers to the mix.

Senate Bill 5 from Senate Transportation Chairman Robert Nichols, R-Jacksonville would allocate the first $2.5 billion in annual car sales tax revenue to the state’s general fund. The next $2.5 billion would go to the state highway fund. Senate Joint Resolution 5, also by Nichols, would put a constitutional amendment before voters in 2016 to approve the setup.

"Transportation is a core function of government," Nichols told senators before they voted. "We are still short an adequately funded transportation fund."

Any revenue collected beyond $5 billion a year would be split between the general fund and the highway fund. However, Sen. Royce West, D-Dallas, successfully tacked on an amendment steering 20 percent of that general revenue slice toward pay raises for teachers. Any raises funded this way would come on top of other teacher pay appropriated by lawmakers. 

Texans pay a 6.25 percent state sales tax on automobiles. As it stands, all of the vehicle sales tax collected, about $4 billion annually, goes into the state's all-purpose general revenue fund.

The two measures passed on 28-2 votes. Sens. Rodney Ellis, D-Houston, and Kirk Watson, D-Austin opposed the measures, saying that dedicating the funds ties the hands of future lawmakers.

"I want to look for new sources of funding," Watson said. "This is not a new source of funding. This is just taking funds and renaming them."