OPINION: Toll roads have become cash cow for Harris County

The Harris County toll roads are very profitable. Over the last decade, the toll revenue has grown from $610 million annually to $896 million, a 47% increase. Because the expenses for the toll roads are mostly fixed, the net income from them has soared, growing by 78% ($230 million → $410 million). The cumulative profit over the last decade was just over $3.5 billion.

The dramatic dip in net income in 2021 reflects lower tolls due to the pandemic The dip in the "2023 Stub" reflects a change in fiscal year end.1,2

Texas law provides that excess income from tolls must be used for “the study, design, construction, maintenance, repair, or operation of roads, streets, highways, or other related facilities.” Using this authority Harris County annually transfers funds to its treasury. The transfers are included in the County’s general fund but are shown as “restricted” since they are supposed to only be used for transportation projects. In the County’s audits these restricted funds are referred to as the Mobility Fund. Over the last decade the County has transferred under $2.2 from HCTRA.

As you can see, the transfers have been dramatically ramped up since the Democrats gained control of Commissioner’s Court. From 2014-2018, the Court transferred 44% of HCTRA’s net income. Since 2019 it has transferred 75%. I do not offer that observation as a criticism because I generally do not favor governmental entities hoarding funds, especially when we have pressing infrastructure needs. However, it does raise the question of why, in the face of this surge in toll revenues, the County needs to raise property taxes by the 8% currently being discussed. I also worry whether transferring such a large portion of the toll roads’ income is prudent in the long term.

The other question the transfers raise in my mind is exactly how the mobility funds are actually being spent. The state law provides that the County may transfer excess funds “without state approval, supervision, or regulation.” So, there is virtually no state oversight.

I have not been able to find much public information on how the funds are being spent. Harris County’s monthly financial reports provide some general information about the transfers and expenditures. For example, as of last month, the County had spent about $174 million from the mobility fund this year and had $385 million on hand. But the expenses are shown in general categories such as “salaries” and “services and other” which are not particularly helpful in know how the money is being spent.

I was able to dig up a  Harris County Auditor report from December 2022. It found some documentation issues but concluded that “expenditures paid from the Harris County Mobility Fund generally complied with the Texas Transportation Code.” (Emphasis added.) 

The combination of the ambiguous definition of how the transfers can be spent, the lack of state oversight, the relatively little transparency on how the funds are currently being spent and the County Auditor’s qualification that the County’s expenditures “generally” complied with state law, gives me some concern about how these funds are actually being spent.