When he first became Texas governor, Rick Perry(R) pushed out some ambitious infrastructure spending plans to accommodate a fast-rising population, as I wrote earlier this week. But his biggest proposals to build new highways and waterways never made it through the legislature, and that’s taken a toll on the state, reports the Houston Chronicle.

Perry’s proposal for a $184 billion Trans-Texas Corridor--a toll road financed partly by private investors --failed after generating a public outcry. Instead, the state has borrowed heavily to finance building new roads by issuing bonds, and the debt service on the bonds has since mounted. “For the first time in history, the Texas Legislature this year appropriated more cash to pay for debt service than to pay for actually building new roads: $850 million per year versus $575 million,” the Houston Chronicle writes. Meanwhile, the story notes, the state will require an estimated $488 billion in road construction by 2030 to meet its needs, according to the Texas Transportation Institute, a Texas A&M research institute.


((SOURCE: CALIFORNIA LEGISLATIVE ANALYST’S OFFICE.))

Some states are paying that price right now: Texas’ mounting debt, for instance, created a $27 billion budget shortfall this year, which Perry and his colleagues closed through big spending cuts to social services and accounting maneuvers. That’s partly what prompted President Obama and others to propose more federal funding for infrastructure spending, relieving states’ debt burden while stimulating the economy. To be sure, that would simply move the cost for such projects from the states to the federal government. It would, however, alleviate some of the pressure on states that need to balance their budgets each year.

States do have another way to help fund infrastructure projects: increasing taxes and fees on users. “There is a strong economic rationale for charging beneficiaries for the costs of infrastructure. For example, it can be more efficient to impose taxes and fees on identifiable groups of users, such as drivers, than to rely on general revenues to fund an infrastructure project,” former Congressional Budget Office director Peter Orszag explained in a 2008 report. A tax hike would force users to pay for new road construction now, but it would relieve the general populace from having to deal with the debt service later. The Texas Transportation Institute explains:

According to the TTI study, the typical Texas household currently pays $232 in taxes and transportation-related fees annually. If the Legislature approved a modest tax hike, say increasing a household’s annual cost by $402, the typical household would enjoy a return on the investment of $2,440 in benefits each year by reducing the costs associated with additional travel time.

Perry, however, took such options off the table this year in Texas. As he’s boasted on the campaign trail, the budget he presided over contained no tax increases. Meanwhile, as the Chronicle notes, the $3 billion in borrowing that voters approved in 2007 for road construction will run out by next year.