TxDOT 2027 UTP: amid reduced funding, high priority projects are protected while others suffer
---
The release of the new TxDOT Unified Transportation Plan (
UTP) is the biggest annual event for TxDOT project funding. The UTP assigns funding to projects for construction in the next 10 years, determining which projects will be built and when they will be built. On July 3 TxDOT released the
draft 2027 Unified Transportation Program.
Due to tight funding and project cost increases, TxDOT has focused Houston funding on three high-priority projects – NHHIP, the I-10 San Jacinto River bridge and SH 35 – and delayed, downsized or entirely removed other planned projects.
UTP funding declines
This chart (annotated with updates) included in a
presentation at the January TxDOT Commission meeting shows the historical trend of UTP funding. Funding for 10-year periods peaked in 2025 at $104 billion, dropping to $101.6 billion in 2026 and $95.0 billion in 2027. Funding reduction is mainly due to reduced forecast federal reimbursements (
page 4).
However, this small reduction in 10-year funding causes a much larger decrease in the new funding available for projects.
A simplified explanation of new funding starts with the 2026 overall funding ($101.6 billion) and subtracts the new contracts awarded, around $10.7 billion. This leaves $90.9 billion in funds previously committed to projects. New funding available is the new 10-year revenue forecast ($95 billion) minus the previously committed funds ($90.9 billion), which is $4.1 billion. This is a simplified explanation, and the actual value of new funding for 2027 with all accounting considerations is $4.97 billion. The harsh reality is that a small percentage decline in the estimated 10-year funding results in a much larger percentage decline in available new funding.
We can see in this chart that new funding available statewide has plummeted from $14.54 billion in 2025 to $4.97 billion in 2027. (See presentations for
2025,
2026 and
2027.) New available funding is not specifically reported prior to 2025; however, 2027 is the lowest value in many years, probably since at least 2023.
NHHIP
Of course, Houston has big funding needs with
NHHIP. Committed funding for NHHIP projects (
page 71) shows a slight decrease, from $5.174 billion in 2026 to $5.023 billion in 2027. However, this is mainly due to administrative shifting of funds between projects and scope changes for individual projects. Project 3C-2, scheduled to receive bids in March 2028, sustained a cost increase from $1.74 billion to $2.225 billion, and received extra funding to remain 100% funded. Project 3C-1 has a new $170 million drainage project which is 100% funded. Project 3C-4 was previously listed at $1.165 billion but is now listed as 3C-4A at $723 million, suggesting there may be a project split.
Project 3B-1, a drainage project, was awarded in June 2024 with a contract amount of $122 million and completion scheduled for 2027. Project 3-B2 was awarded in September 2024 with a contract amount of $696 million and completion scheduled for 2033. So far, the only visible progress on 3-B2 is the demolition of the Alabama Street bridge.
Here is a summary of all sections NHHIP and their funding status. Projects not yet included in the UTP (yellow background) and have no funding. These projects will need to be funded in future UTPs before construction can start. Start dates are subject to change and are taken from the
NHHIP schedule and TxDOT project
dashboard.
| Section |
In UTP |
Est. const. cost, millions $* |
Funding, millions $ |
% funded |
Start const. |
| 1A |
no |
360 |
0 |
0% |
TBD, listed 2034 |
| 1B |
no |
474 |
0 |
0% |
TBD, listed 2033 |
| 1C |
no |
313 |
0 |
0% |
TBD, listed 2032 |
| 2A |
yes |
607 |
100 |
16% |
TBD, listed 2031 |
| 2B |
no |
1,015 |
0 |
0% |
TBD, listed 2032 |
| 3A |
yes |
771.8 |
771.8 |
100% |
sched. letting Oct 2027 |
| 3C-1 (two projects) |
yes |
442.3 |
195 |
44% |
listed 2028 |
| 3C-2 |
yes |
2,225 |
2,225 |
100% |
sched. letting Mar 2028 |
| 3C-3 |
yes |
398.4 |
398.4 |
100% |
listed 2027 |
| 3C-4A** |
yes |
722.8 |
722.8 |
100% |
listed 2028 |
| 3D-1 (Eado) |
yes |
1,481 |
610 |
41% |
listed 2030 |
| 3D-2 (West side) |
no |
261 |
0 |
0% |
TBD, listed 2035 |
* For projects not in the UTP, estimates from the NHHIP
site are used
** See explanation below.
For section 3C-4A, it is possible the cost reduction was achieved by the design change, which places all lanes over the "Be Someone" railroad bridge and eliminates the need to build a new, costly railroad bridge. It is unclear if there will be a separate 3C-4B project, which would mean section 3C-4 is not actually 100% funded.
Other Houston Projects
The Interstate 10 East Freeway San Jacinto River bridge is a high priority project which has sustained very large cost increases since its first inclusion in the UTP in 2023. In 2023 the cost was listed at $340 million, rising to $556 million in 2024, $810 million in 2026 and now $1.065 billion in 2027. The project remains 100% funded, with $256 million new funding in 2027. The project is not currently listed in TxDOT's letting
schedule through 2029. This project goes through the San Jacinto River waste pits superfund site. Clean up of the south part of the site was completed in 2024, and in May the EPA
ordered remediation to begin on the north part of the site. It is unclear if the remediation work will affect the construction schedule.
| |
2026 |
2027 |
| |
Cost |
Funded |
Cost |
Funded |
| I-10 San Jacinto River bridge |
$810 million |
$810 million |
$1.065 billion |
$1.065 billion |
Construction of the new SH 35 Freeway adjacent to the University of Houston is currently in progress, and future projects will connect the freeway to Loop 610, including four connection ramps. The project received $30 million in new funding to remain 100% funded. However, this project has been delayed and will proceed to construction between 2031 and 2036.
| |
2026 |
2027 |
| |
Cost |
Funded |
Cost |
Funded |
| SH 35 Loop 610 connection |
$408 million |
$408 million |
$438 million |
$438 million |
Interstate 10 between Katy and Brookshire will be expanded to 8 main lanes and 2 HOV lanes, similar to the design through Katy. However, this project has been shortened in the 2027 UTP with a $278 million reduction in funding. In 2026 the project extended from Mason Road in Katy to FM 359 in Brookshire. In the 2027 UTP the project is from Mason Road to Pederson Road (Texas Heritage Parkway), a length reduction of around 4 miles.
Update 8/6/2026:
The project between Pederson Road and FM 359 remains excluded from the draft 2027 UTP, but as of 8/6/2026 the TxDOT project
dashboard shows a $270 million project between FM 359 and Igloo Road scheduled for receiving bids in December 2028. The project dashboard is accurate for about one year into the future, so the schedule beyond one year is subject to change. This project could be added to the 2028 UTP if it actually proceeds as shown in the dashboard.
| |
2026 |
2027 |
| |
Cost |
Funded |
Cost |
Funded |
| I-10 Katy to Brookshire |
$895 million |
$895 million |
$618 million |
$618 million |
Widening Interstate 45 on Galveston Island between the causeway and 61st Street has been delayed. The project was estimated at $126 million in 2026 and scheduled to start before 2029, but the cost has increased to $191 million in 2027 with no increase in funding, so it is now 66% funded and will need additional funding in a future UTP. Construction is scheduled to start between 2031 and 2036.
| |
2026 |
2027 |
| |
Cost |
Funded |
Cost |
Funded |
| I-45 Galveston |
$126 million |
$126 million |
$191 million |
$126 million |
Casualties
Two previously funded projects are entirely removed from the 2027 UTP with their committed funding presumably transferred to higher priority projects.
The big news is the removal of all funding for the
Inner Katy managed lanes. This project will add managed lanes in the gap between the existing managed lanes outside Loop 610 and the planned managed lanes on the NHHIP section of Interstate 10. The 2025 UTP positioned this project to be built concurrently or even before the Interstate 10 projects of NHHIP, with $987 million in funding covering 84% of the $1.17 billion project cost. A
public meeting scheduled in May to present a new alternative was abruptly canceled nearly immediately after the meeting was announced. The Inner Katy project is entirely removed from the 2027 UTP. The absence of managed lanes on the Inner Katy will be a bottleneck between the existing and planned managed lanes, but this is unfortunately a consequence of financial and political reality.
| Year |
Cost (millions $) |
Funded (millions $) |
|
| 2024 |
1,137 |
948.7 |
Project authorized and funded |
| 2025 |
1,170 |
986.5 |
|
| 2026 |
322 |
69 |
All projects east of Washington Av. (Westcott St.) removed |
| 2027 |
0 |
0 |
Project entirely removed from the UTP |
A project to expand the non-freeway section of SH 249 inside Beltway 8 had $146 million funding in the 2026 UTP, 100% of project cost. It has been removed from the 2027 UTP.
These maps from the 2025 and 2027 UTP show the removal of the Inner Katy and SH 249 projects.
Conclusion
With minimal new funding available compared to recent years and rising costs on planned projects, TxDOT has focused available funds on the highest priority projects: NHHIP, the I-10 San Jacinto River bridge and SH 35. For NHHIP, funds have been shifted between projects to cover cost increases for upcoming projects. To cover cost increases on other priorities, low-priority projects have been delayed, downsized or entirely eliminated from the UTP, notably the Inner Katy managed lanes being entirely removed.
Labels: governance, government transparency, mobility strategies, transportation plan
HCTRA is wonderful! (according to HCTRA) while investigative reporters circle...
Part 2 guest post from Oscar Slotboom documenting the outrageous looting of HCTRA. You can find Part 1 here.
---
Before the main content of this post, I want to mention that Channel 2 News did excellent reporting about the Harris County Toll Road Authority (news report, YouTube video) a few days after my May 1 post about HCTRA. Reporter Mario Diaz focused on the $399 million diversion of toll revenue, and asked HCTRA director Robert Trevino in advance to provide examples of projects built with toll money. (Trevino couldn't provide anything.) Diaz also mentioned the lack of improvements to the toll system in spite of high tolls and heavy traffic congestion, but did not provide any details about the long delays for planned projects.
The interview with Trevino is another instance of Trevino appearing clueless about the financials of his agency, similar to his
appearance at a Texas Legislature hearing in 2025. When he wasn't claiming to not know an answer, he gives a wrong answer at 3:23 in the
video, answering with 2024 revenue ($874 million) instead of 2025 revenue ($1,028 million). This is a convenient wrong answer, giving the appearance that HCTRA is collecting less from the public.
Is Trevino, with his $491,218
annual salary, really as clueless as he appears, or is he playing dumb to avoid answering hard questions? I'm inclined to think he's playing dumb to avoid confirming the ugly truth about toll diversion, agency mismanagement and poor project delivery. He is very highly paid to be a rubber stamp for the agenda of Harris County Commissioners Court, which is to plunder toll money from HCTRA.
Looking at the comments for the YouTube
video, the report struck a nerve with viewers, with plenty of anger about HCTRA management.
If you watched the evening local news last year you most likely saw HCTRA's advertising campaign. The six advertisements are available on HCTRA's
YouTube page in the "Commercials" section.
The most heavily run
ad features retired local anchor personalities Jerome Gray and Lisa Foronda in a simulated news situation, "reporting" to us about the benefits of an EZ Tag.
Another
ad uses the newsroom situation to tell us facts about HCTRA. Of course these are the facts HCTRA wants us to know, not the ugly truth.
There are two Spanish language videos, including a newsroom
video featuring Beatriz De Alvarado and Claudia Deschamps.
Another
ad features a cute girl to promote awareness of emergency assistance.
This campaign continued month after month, and I was soon thinking: how much is HCTRA spending on all this advertising?
Surely HCTRA's financial
statement reports its advertising and marketing spending, right? Wrong! There is nothing in the financial statement relating to this type of spending. This is in contrast to Houston Metro's annual financial statement (
page 25), which specifically reports marketing expense, $14.2 million in 2025. For HCTRA, advertising must be mostly included in the $283 million "Services and fees" expense, which I call a
black hole due to lack of information about this spending.
Looking at the Harris County 2026 budget document (
pages 42 and 56), HCTRA has a $17.5 million budget line item for "Communications and Marketing". This is a recent item, with zero funding shown for years prior to 2025. The document says, "The program is responsible for marketing, graphic design, mailing materials, mapping, asset management, and the creation of map/GIS exhibits," but no spending details are provided for specific objectives. "Toll mapping and graphics" appears to be expensive, with a $2.94 million budget increase in 2026. $12 million is probably a reasonable estimate for the cost of the 2025 advertising campaign.
The Harris County procurement
portal shows two contracts for "Branding, Marketing and Strategic Communication Services for the Harris County Toll Road Authority", but cost is not shown.
Did the $14 million marketing expense in 2025 pay for itself with increased revenue? It's possible, because toll revenue rose from $874.5 million in 2024 to $1,028 million in 2025. However, population and economic growth is expected to increase traffic on the toll roads, without any advertising needed, and HCTRA's financial statement (
page 10) says, "This increase was largely due to HCTRA’s cost recovery efforts associated with the invoicing services provided under the tolling service agreements."
With the public becoming increasingly aware of the huge diversion of toll revenue with poor financial transparency, and the long delays in getting projects done, I think the main purpose of this advertising campaign is public relations to improve HCTRA's image. I've also previously reported on a possible
ulterior motive for large public agency advertising budgets, possibly making it less likely that traditional media will do negative reporting. Thankfully, at least Channel 2 has maintained journalistic integrity.
A more accurate news report
Using the HCTRA advertising concept of a simulated news broadcast, here's a better depiction of the reality of HCTRA:
Jerome Gray: Our investigative staff has studied the Harris County Toll Road Authority financial statements and discovered that a large percentage of your toll money is not being used for the toll road system.
Lisa Foronda: In 2025, $399 million of the tolls you paid were transferred to Harris County, and over the last six years 40% of your toll payments, amounting to $1.9 billion, have been diverted to Harris County.
Gray: In spite of our specific requests, neither HCTRA nor Harris County has been able to provide a detailed accounting of how your toll money is being spent by Harris County commissioners.
Foronda: If you drive across the Sam Houston Tollway Ship Channel Bridge, you've surely noticed that the project is taking forever. The bridge was originally scheduled to be completed in 2024, and the current schedule is to finish the bridge by 2030.
Gray: But that's the not only HCTRA project way behind schedule. If you're stuck in traffic on the toll roads, you're probably wondering when HCTRA will build long-promised improvements to remove toll barriers, add connection ramps and build the long-planned Hardy Toll Road downtown extension. These projects are delayed year after year, and HCTRA's web site does not say when they plan to get these much-needed projects done.
Foronda: If you're a longtime user of the toll roads, paying high tolls year after year, you're probably wondering if the older toll roads are paid off and will ever become freeways. In fact, the original three sections of the Sam Houston Tollway, from the Southwest Freeway to the North Freeway, generate $1 billion dollars every three years, enough to pay for the cost of its construction and improvement. Will Houstonians ever get any toll relief?
Gray: The short answer is no, there will never be substantial toll relief. As long as HCTRA has debt, they can charge high tolls on all toll roads and transfer the money out of the toll road system. Even as HCTRA transferred $399 million of your toll money to Harris County commissioners in 2025, HCTRA issued new debt which won't be paid off until 2055.
Cute young girl in the HCTRA commercial: That's right, when I'm a grown-up I'll be paying high tolls to use the toll roads. When I'm as old as grandma, I'll still be paying high tolls to use the toll roads!
If current management of HCTRA continues indefinitely, the young girl featured in the HCTRA commercial will face of lifetime of artificially high tolls.
Labels: governance, government transparency, HCTRA, toll roads
2025 HCTRA financial statement: $399 million diverted out, second highest ever
Another excellent but sad guest post from
Oscar Slotboom documenting the outrageous looting of HCTRA 😡 Let's hope the next County Judge can turn it around...
---
The Harris County Toll Road Authority (HCTRA) fiscal year (FY) 2025 financial statement was posted on their
site on April 21.
Harris County diverted $398.6 million of toll revenue out of HCTRA, which is the second highest annual diversion in HCTRA's history. It is a huge increase compared to 2024, which was $193.4 million.
This plot shows HCTRA toll revenue since 2004. 2025 toll revenue was $1.028 billion, a record for actual value. On an inflation-adjusted basis it is slightly below 2015, 2016, 2018 and 2019, with the all-time inflation-adjusted high $1.073 billion in 2019. Collection of tolls was substantially improved, going from an administrative loss of $44.7 million in 2024 to a gain of $5.93 million in 2025 (schedule 5 on
page 57). HCTRA's total revenue was $1.125 billion, which includes $95.2 million in investment income. Total traffic count of 667.5 million is also a record, exceeding the previous record 648.3 million in 2024.
This plot shows diversion of toll revenue out of HCTRA, called "Transfers out" in the financial statements. Diversions have been substantially above historical values since Democrat control of Harris County Commissions Court in 2019.
This plot shows the percentage of toll revenue diverted out of HCTRA since 2004. 38.8% of toll revenue was diverted in 2025. The six-year average before Covid, from 2014 to 2019, was 16.8%. The six-year average after 2019 is 40.2%.
Where is the diverted toll revenue going?
Diverted toll revenue goes into the county Mobility Fund. (There was a one-time diversion of $300 million into a separate Infrastructure Fund in 2021.) The Harris County Annual Comprehensive Financial Report (
page 290) shows the FY 2025 starting balance of the Mobility Fund was $376.1 million, expenditures were $249.7 million, and transfers in were $401.1 million (slightly above the toll diversion), leaving the fund with a FY 2025 ending balance of $547.0 million.
For the $249 million in expenditures, the comprehensive financial report shows $8.1 million to parks, $190.6 million to roads and bridges, and $51.0 million to "capital outlay", which is an expense which is also depreciated. Transparency and/or details of these large spending amounts has never been readily available, as Bill King (
1,
2) and Wayne Dolcefino also discovered when they investigated how this money is spent. Dolcefino calls this fund the county commissioner slush fund (
1,
2,
3,
4,
5,
6,
7). In April 2025, in response to legislative scrutiny, Harris County changed the allocation of funds to precincts to better match actual road mileage and needs in each precinct (
page 79).
The 2026 budget (
page 80) recommends $180 million toll money for precincts, which is equal to the budgeted toll diversion (
page 24). Actual amounts may differ.
The large balance in the mobility fund generates investment income, and the 2026 Harris County Budget (
page 80) states that in 2026 a new accounting fund for "mobility fund interest" will be created. This fund will have the same restrictions as direct toll diversions, including the "related facilities" loophole which enables spending on non-road projects. Eligible uses are "the study, design, construction, maintenance, repair, or operation of roads, streets, highways, or other related facilities."
Harris County might be managing toll diversion amounts for political expediency. HCTRA finances were subject to scrutiny during the 2025 legislative session, so it was probably expedient to show a lower-than-usual diversion of $194.3 million in 2024. This year, with no scrutiny, Harris County diverted $399 million, 39% of record-setting toll revenue. If my suspicion is correct, 2026 will have a lower toll diversion.
It appears that Harris County is keeping the mobility balance very large, and padding it as much as possible, perhaps as insurance for any possible future legislative action to curtail diversions or redirect surplus toll revenue. In the 2025 legislative session, a
bill sponsored by Senator Bettencourt to redirect surplus revenue out of HCTRA was passed in the Senate but did not get House support. (more details
here)
The $283 million black hole in the financial statement
Separate from "Transfers out", the financial statement reports "Services and fees", which was a record $282.6 million, 27.5% of toll revenue. Page 11 of the financial
statement says, "This is an increase of $72,126,093 from the prior year due to processing additional transactions tied to the onboarding of the Toll Services Agreement and additional resources needed for agency growth." This explanation is vague, and also doesn't explain why "services and fees" has been over $200 million for the last 3 years (page 55, excerpt below). As we'll see below, the "growth" is a growing budget, while HCTRA's project delivery remains dreadfully slow.

Where is this "services and fees" money going? The HCTRA financial statement provides no details. The Harris County comprehensive financial statement provides no details. The Harris County Purchasing Department
procurement portal has a list of all active and pending contracts, but does not report contract value. I compiled a list of all active and pending contracts which include "toll" or "HCTRA" in the contract name, and others which are likely for HCTRA, which results in 106 items (
spreadsheet). Most items appear to be low value (tens to hundreds of thousands per year), such as software licenses. Since this list is probably not comprehensive and it lacks contract values, it is impossible to make any conclusions.
56% Budget increase between 2024 and 2026
The Harris County 2026 budget document (
page 42, excerpted below) shows the HCTRA budget has increased from $275.3 million in 2024 (actual) to $429.6 million (adopted) in 2026, a 56% increase. The actual 2026 amount will differ from adopted, and could be lower.
Category "Administration and support" shows the largest increase, from $39.5 million actual in 2024 to $87.6 million budgeted for 2026, a 122% increase, but is partially explained by a shift of $19 million into this category from another program. (
page 49)
All these budget increases are happening with only one significant construction project in progress - the ship channel bridge, which is years behind schedule, and four connectors at the bridge and SH 225. Project delivery has been dismal for the last 8 years. Long-planned
projects, such as the Hardy downtown extension, toll plaza modernization and connectors at Hardy/Beltway 8, are delayed year after year. This certainly looks like an expanding bureaucracy with a substantial decrease in project delivery productivity.
How much does it cost to collect tolls?
To an economist, the cost of collecting tolls is a "
transaction cost". In an efficient economy, transaction costs should be minimized, and we want the cost of toll collection to be as low as possible. Lower transaction cost = higher productivity = higher incomes. Traditional road funding from the gasoline tax is very efficient. Google AI agent states, "The gasoline tax is highly efficient to collect, with administrative costs generally estimated to be less than 1% of the revenue generated."
The cost of collecting tolls is not reported in the HCTRA financial statement. Viewed from the budget perspective, it is likely covered within the $303 million in the 2025 budgeted amounts for administration and support ($54.5 million), customer service ($103.6 million) and tolling solutions ($145.5 million).
In contrast, the 2025 financial statement for the Fort Bend County Toll Road Authority explicitly states the cost of collecting tolls is $11.4 million of $68.5 million in toll revenue, an alarmingly high 16.7%.
What is HCTRA's cost to collect tolls? Is HCTRA becoming more or less efficient? There's no way to answer these questions from the financial statement.
Bond Activity
One item of good news is that there was not a major issuance of new debt in FY 2025.
The financial statement (page 32) reports on activity occuring after the fiscal year. Previously I reported on serious financial mismanagement by Harris County and HCTRA (see section "
Commercial paper shenanigans"). In 2020 Harris County diverted $554.1 million out of HCTRA, 99% of toll revenue for that year and the largest ever annual diversion. Soon afterwards HCTRA had insufficient funds for operations and needed to issue the K and K-2 series of commercial paper debt, which carried a 10% interest rate for the first period which cost $25.89 million. The K and K-2 debt was defeased by issuance of $227.44 million in long-term (30 year) debt maturing in 2055.
Instead of defeasing the debt with surplus toll revenue, Harris County diverts $399 million of toll revenue out of the agency and adds $227 in long-term debt to HCTRA.
More transparency, please
As I've stated in previous posts, HCTRA and Harris County need to provide more transparency about the huge costs reported in its financial statement.
- Harris County needs to provide a detailed accounting of spending of toll revenue diverted into the Harris County Mobility Fund.
- HCTRA needs to provide an itemized list of spending in the costly "Services and fees" category.
- The financial statement needs to report on the total cost of toll collection, like the Fort Bend County Toll Road Authority financial statement.
Part 2
HCTRA has saturated local media with advertising. In part 2 I will investigate the cost of the marketing campaign.
Labels: governance, government transparency, HCTRA, toll roads
The Original Three Sections of the Sam Houston Tollway Pay for Themselves Every 3 Years
This week we have another excellent analytical guest post from Oscar Slotboom:
In the recent legislative session
Representative Shaheen, representing the North Dallas suburbs, introduced a
bill to end perpetual tolling. The bill required that a tollway becomes a freeway after all construction costs are paid, with the facility transferred to either TxDOT or the county for free operation.
The bill didn't make it out of committee, but it did remind me that I and hundreds of thousands of toll payers are victims of the most flagrant instance of perpetual tolling in Texas: the original three sections of the Sam Houston Tollway.
Construction cost with interest: around $978 million
The approval of the Harris Country Tollway Authority (HCTRA) by voters in 1983 with $900 million bond funding authorized the construction of the original three sections of the Sam Houston Tollway and the Hardy Toll Road. Section 1 from US 59 (Southwest Freeway) to I-10 (Katy Freeway) opened in June 1988, section 2 from I-10 to US 290 opened in June 1989 and section 3 from US 290 to I-45 (North Freeway) opened in July 1990. One lane in each direction was added in the early 2000s.
| Original cost, 1980s, millions* |
$420 |
| Interest, estimated 5% for 30 years |
$400 |
|
|
| Widening, early 2000s** |
81.1 |
| Interest, estimated 5% for 30 years |
77.2 |
| Estimated Total Cost |
$978 million |
Three-year revenue: $1.04 billion
Looking at the three most recent HCTRA
financial statements for 12-month periods (there was a transitional 7-month fiscal year in 2022), these three sections of the Sam Houston Tollway generated $1.038 billion in revenue.
| 2021 (millions) |
$351.45 |
| 2023 |
$342.39 |
| 2024 |
$344.25 |
| Total Revuene |
$1.038 billion |
HCTRA data for the original three sections is available back to 2001. Since 2001, these three sections have generated $5.95 billion in revenue, which is $7.97 billion in today's dollars.
Of course, there are operation and maintenance expenses. If this expense is $10 million per year, it is only 3% of annual revenue. Other improvement costs were also incurred, such as connection ramps to the SH 249 Tomball Parkway and Westpark Tollway, ramp modifications, toll plaza modifications and miscellanous work like lighting. This
HCTRA document shows they are all small costs over the last 25 years, adding up to less than one year of current toll revenue.
A previous
blog post reported on the huge diversions of toll revenue to the Harris County budget, which has amounted to $1.486 billion in the last 5 annual reports, averaging $297 million per year.
With tolls in place 35 to 37 years, high toll rates and heavy traffic, the typical toll payer on the original three sections of the Sam Houston Tollway is surely thinking that the toll road paid for its construction cost long ago. Yes, this is correct. Now the tolls are being used to finance diversions of toll revenue to Harris County.
Should tolling at high rates continue perpetually?
If you are a toll payer, the answer is almost surely no. If you are a government official distributing "surplus" toll money or an entity receiving the money from toll payers, you surely want tolling to continue.
Of course, work-from-home employees can avoid tolls. These workers are usually higher-paid professionals. Lower paid service workers don't have the option to work from home, such as those working in warehousing, education, health care, construction, industrial and Bush airport operations. These lower-paid folks are paying the price for perpetual tolling on the original three sections of the Sam Houston Tollway.
Labels: governance, government transparency, toll roads
Texas Just Launched a Four-Pronged Attack on the Housing Crisis
This legislative session has culminated in a landmark victory for property rights and housing affordability in Texas. Thanks to the tireless work of advocacy groups like Texans for Reasonable Solutions, which championed this entire suite of bills, Governor Abbott has now signed four powerful pieces of legislation that represent the most significant pro-housing reform the state has seen in decades. This isn't a single, timid step; it's a coordinated, multi-front assault on the regulatory red tape that has driven up housing costs and limited options for Texas families.
For years, we've watched major Texas metros grapple with an affordability crisis born not of scarcity of land or lack of demand, but of an ever-growing thicket of municipal ordinances. These four new laws—HB 24, SB 840, SB 2477, and the capstone bill, SB 15—take direct aim at the root of the problem: artificial constraints on supply. Let's break down each of these strategic wins.
1. HB 24: Ending the "Tyrant's Veto"
One of the most pernicious, anti-growth mechanisms in Texas zoning has been the "protest-by-a-small-minority" rule, rightly dubbed the "tyrant's veto." Under the old law, if owners of just 20% of the land area near a proposed zoning change objected, it triggered a supermajority vote (three-fourths) of the city council for approval. This gave a handful of NIMBY ("Not In My Back Yard") neighbors disproportionate power to block new housing projects that a simple majority of elected officials, and likely the community at large, supported.
Championed by Rep. Dustin Burrows and Sen. Bryan Hughes, HB 24 fundamentally restores fairness to the process. The bill targets the most common use of the veto by raising the protest threshold for adjacent property owners to 60% and, crucially, removes the supermajority requirement for those protests.
The result: A small group of opponents can no longer single-handedly kill beneficial projects. This strengthens property rights for landowners who wish to develop housing and empowers city councils to make decisions for the good of the entire city, not just a vocal few.
2. SB 840: Turning Underused Commercial Strips into Homes
Drive through any major Texas city, and you'll see them: aging, half-empty strip malls, vast parking lots, and underutilized commercial corridors. This is what I call "greyfield" land—already developed and served by infrastructure, yet failing to meet its economic potential. SB 840, led by Sen. Bryan Hughes and Rep. Cole Hefner, provides a powerful tool for recycling this land into something far more valuable: housing.
The bill allows residential and mixed-use housing to be built by-right on land zoned for commercial or retail use in Texas's largest cities. This means developers can bypass the lengthy, expensive, and uncertain rezoning process to build multifamily or mixed-use projects. The law builds on the stunning success of similar reforms in Florida, which saw over 15,000 housing units approved in its first year.
The impact is threefold: It unlocks a massive supply of land for infill development, which reduces sprawl and conserves precious farmland. It puts downward pressure on rents by increasing the housing supply where it's needed most. And it revitalizes unproductive commercial areas, turning them into vibrant, walkable neighborhoods.
3. SB 2477: Unlocking Empty Offices for Housing
The post-pandemic world has left Texas cities with millions of square feet of vacant office space. Houston and Dallas have some of the highest office vacancy rates in the nation. This is not a cyclical dip; it's a structural shift. SB 2477, from Sen. Paul Bettencourt and Rep. Jared Patterson, offers a common-sense solution: let people live there.
Much like SB 840, this law legalizes the conversion of vacant office buildings into residential housing by-right. It streamlines the process by waiving costly and often unnecessary requirements like traffic impact analyses and new parking minimums that were designed for a commercial-use building, not a residential one. With polls showing 71% of Texans support this idea, it's a clear policy winner.
This is the definition of sustainable growth—recycling existing structures to meet a critical need without using an inch of open space.
4. SB 15: The Starter Home Revolution
The final and perhaps most crucial piece of the puzzle is SB 15. With an overwhelming 90% of Texans viewing housing costs as a problem, the need for more attainable options is undeniable. For decades, many cities have used large-lot zoning requirements as a tool to mandate low-density, high-cost housing, effectively outlawing the construction of more affordable "starter" homes.
SB 15 takes direct aim at this exclusionary practice. In Texas's largest cities (150K+ population in counties of 300K+), the law now limits a city's ability to impose a minimum lot size greater than 1,400 square feet in new subdivisions. It also reigns in excessive setback, height, and bulk rules for these smaller lots, giving builders the flexibility to provide a wider range of housing products.
We don't have to guess at the results. Houston’s pioneering 1998 reform provides a real-world case study, resulting in a boom in townhomes that in 2021 averaged just $310,000 compared to $545,000 for traditional single-family homes. Analysis shows the potential is enormous: Dallas could add over 120,000 starter homes and Fort Worth could add 26,000 on available land under the new rules. This is the kind of sustainable, market-driven solution that encourages infill development, conserves farmland, and boosts tax revenue per acre.
A New Era for Texas Housing
Individually, each of these bills is a significant victory. Together, they represent a paradigm shift. The Texas Legislature and Governor Abbott have sent a clear message: the state will no longer allow arcane local regulations to stand in the way of housing production. By neutralizing the NIMBY veto, unlocking underutilized properties for residential use, and allowing the market to build the smaller, more affordable homes that Texans clearly want, this legislative session has laid the foundation for a more prosperous and affordable future for our state.
Labels: affordability, development, governance, home affordability, land-use regulation, zoning
HCTRA Update: Legislative session is a bust for reform, but no action is better than bad action
In December I reported on HCTRA's massive diversions of toll revenue, financial mismanagement and dismal project delivery (
part 1,
part 2). Bill King has reported (
1,
2) on HCTRA's lack of financial controls and poor transparency. Investigative reporter Wayne Dolcefino has
exposed HCTRA's slush fund and financial improprieties. The Dallas Morning News did an extensive report called "
Toll Trap", documenting how toll road agencies statewide work against the public interest.
So as the Texas legislature convened in January I was hopeful there would be legislation to reform HCTRA and perhaps toll roads statewide.
The result: nothing relating to HCTRA passed. In fact, I don't see a single meaningful bill statewide relating to highways, toll roads, high speed rail or public transit which passed. (
search by subject) (Some non-meaningful bills like naming sections of highways passed.) The legislature was not in a mood to do anything relating to transportation.
However, getting nothing done is better than something that does more harm than good, which seemed likely in May for HCTRA. After bill
SB2722 was approved by the Senate and seemed poised for a House vote, perhaps Harris County Commissioners Court will take the initiative to improve HCTRA management, project delivery and financial transparency. If not, we can hopefully get legislation in 2027 with meaningful reform and cleanup of HCTRA.
SB 2722: Initially disastrous, amended to be tolerable, then dies
Just before the bill filing deadline, Senator Bettencourt introduced
SB2722 targeting HCTRA. When I read the text I was horrified.
- It mandated that 100% of toll "surplus revenue" is distributed to Harris County and the City of Houston (CoH).
- The City of Houston would receive 30% of surplus toll revenue, ostensibly for providing emergency services on toll main lanes in Houston.
- There was no limit on the annual diversion of toll revenue, and the diversion continued in perpetuity.
- The bill's only redeeming quality was that it strictly required Harris County to use toll diversions for road improvements and imposed an audit to verify compliance. There was minimal restriction on use of the funds by CoH.
Let's consider these bill features one at time.
On point 1, "surplus revenue" is somewhat ambiguous but would likely be very large. HCTRA reported income of $410 million in 2023 and $407 million in 2024. Harris County and CoH would be incentivized to maximize surplus revenue to maximize legally-mandated diversions into their budgets. How to do you maximize surplus revenue? First, you build as little as possible. Second, you issue bonds when you do build a project, instead of using available toll revenue. Third, you keep tolls artifically high. This is exactly what HCTRA is already doing, resulting in dismal project delivery, more debt and high toll costs to the public.
A legally mandated diversion of surplus toll revenue sets a very bad precendent. SB2722 basically says that surplus toll revenue should be diverted to local governments, potentially to spend as they please, which undermines already underfunded transportation resources.
On point 2, the huge payoff to CoH is totally unjustified. 30% of HCTRA profit in the last two years is around $120 million per year. Harris County took the initiative and risk to launch HCTRA in the 1980s. HCTRA continuously invested to expand the system and grow revenue. CoH did nothing. HCTRA says they spend $43 million per year to handle 98% of incidents on the entire system (not just the sections in CoH). This is entirely consistent with my observations, since I see HCTRA assistance and constables on the toll roads all the time, and I virtually never see Houston police or fire/ambulance. Yet CoH made the highly implausible claim that they spend $19 million per year handling incidents on the toll road main lanes in Houston. Even if $19 million was valid, the likely payout to CoH would have been vastly larger, with few strings attached.
On point 3, the original version of the bill passed out of committee had no limits, not on diversions of toll revenue, and not on duration of diversions. HCTRA bond payments are slated to drop in the future (although this may change as HCTRA issues more debt), and revenue will probably increase. It is plausible that around 60% of revenue would be "surplus" revenue in the future. (Net income was 45.7% or toll revenue in 2023 and 46.5% of toll revenue in 2024.) Of course, governments expand to spend revenue and it could become difficult or impossible to stop the diversions in the future.
On point 4, there was a strict requirement that 95% of the share of surplus funds going to Harris County (which would get 70% of the surplus amount) must be spent on roads using a new formula for distribution. But of course money is fungible. More toll money going to Harris County means money normally slated for roads could be used elsewhere. Restrictions on the use of funds by CoH were minimal, simply sending the money to the police and fire departments.
SB2722 passed out of committee on a 6-3 vote on April 16.
Amendments, House Substitute, then it Dies
On April 29 SB2722 reached the Senate floor for a vote. It was amended to place an $80 million annual limit on toll revenue diversions to CoH and ended diversions to CoH in 2030, passing on a 21-8 vote. But there was no limit on diversions to Harris County.
The House Transportation Committee considered the bill on May 13 and submitted a committee substitute, which limited payments to CoH to $25 million per year and retained the expiration in 2030. There was still no limit on the toll revenue which could be diverted to Harris County. This version was far better than the original version, but provided no requirements for Harris County to build toll system projects and no protection for toll payers.
The House substitute was never placed on the calendar for a House vote. On Thursday May 29, the Houston Chronicle
officially declared SB2722 dead. Yay!
Statewide
While HCTRA mismanagement is the main problem in Houston, overzealous criminal prosecution of individuals with unpaid tolls is the main problem North Texas and was the focus of extensive reporting by the Dallas Morning News. (
overview,
Houston case study)
"Each year, thousands of drivers are hauled into court for unpaid fees. Some have their car registrations yanked and others are sent to jail even when they have proof the fees they were charged are incorrect. These practices make Texas one of the country’s harshest and most unforgiving states for unpaid toll fines, the investigation revealed."
"Texas is one of only a handful of states that criminalize toll drivers for unpaid fees and where courts regularly issue arrest warrants over the debts."
All
bills relating to toll roads, including toll billing
reform, died in committee. A highly controversial
bill related to the use of public transit sales tax in North Texas also died.
The reality for this session of the Texas Legislature is that there was no appetite to do anything relating to toll roads.
Labels: governance, government transparency, toll roads, transit