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Understanding the Proposal to Allocate a Portion of State Fuel and Vehicle Fees to County Roads

Commissioners Court Agenda Item — 01/28/2026

1) Why this issue exists

Counties in Texas are responsible for maintaining a large share of the road network, particularly rural and local roads. These roads are heavily used by residents, commercial traffic, and agricultural and industrial vehicles.

However:

• Most transportation-related tax revenue is controlled at the state level.
• Counties have limited revenue tools and rely heavily on property taxes.
• Road maintenance costs continue to rise due to traffic volume, heavier vehicles, and inflation.

The proposal asks whether a portion of existing state transportation revenue should be shared with counties to help meet these responsibilities.

2) What revenues are being discussed

A) State Motor Fuels Tax (Gasoline and Diesel)

• Texas charges 20 cents per gallon on gasoline and diesel fuel.
• This tax already exists and is paid by drivers at the pump.
• The proposal requests one cent of that 20 cents (5 percent) be allocated to county road funding.
• This proposal does not increase the gas tax. It reallocates a small portion of an existing tax.

B) Electronic Vehicle Registration Fees

• Texas vehicle registration includes small state-level fees related to electronic systems, insurance verification, and public safety administration.
• One commonly referenced fee is a $1 state electronic registration or insurance verification fee.
• The proposal requests 5 percent of this fee be allocated to county road funding.
• In practical terms, this would amount to only a few cents per vehicle registration, but statewide it could provide consistent funding support.

3) How fuel tax revenue is currently distributed

For every 20 cents per gallon collected in state fuel tax:

• Approximately 15 cents (75%) goes to the State Highway Fund (state highway construction and maintenance).
• Approximately 5 cents (25%) goes to public education.
• No portion is dedicated directly to county road systems.

Counties currently receive no direct share of fuel tax revenue despite maintaining many of the roads most frequently used by drivers.

4) What would change under the proposal

If adopted by the Legislature:

• One cent per gallon of fuel tax revenue would be deposited into a county road fund.
• Funds would be distributed to counties using a defined formula (such as road mileage, population, or usage).
• Counties could use the funds for road maintenance, repair, and safety improvements.
• Statewide, one cent of the fuel tax represents roughly $200 million per year, depending on fuel consumption.

5) Does this proposal raise taxes?

No.

The proposal does not raise taxes or fees.

It proposes reallocating existing revenue. However, reallocating revenue requires deciding which existing uses receive less funding.

6) The central policy question

The key issue is not whether counties need road funding, but where the redirected revenue would come from.

Possible sources include:

• The State Highway Fund
• The public education portion of the fuel tax
• General state revenue
• A newly created additional fee or tax (which would require separate legislative action)

Any legislative action would need to clearly identify the source to avoid unintended impacts.

7) Why counties support this idea

Counties argue that:

• They maintain a majority of road miles in Texas.
• Heavy vehicles that cause significant wear often travel county roads.
• Counties cannot levy fuel taxes themselves.
• Property taxes are currently the primary funding source for roads.

Supporters believe a fuel-based revenue source better aligns road use with road funding.

8) Why the state proceeds cautiously

The state must balance:

• Highway construction and maintenance needs
• Public education funding
• Long-standing revenue allocation structures

Because fuel tax revenue is widely relied upon, changes require careful consideration and broad consensus.

9) What a resolution does and does not do

A resolution:

• Does not change the law
• Does not move money
• Does not increase taxes

A resolution simply:

• Formally requests the Legislature to study or consider a policy change
• Signals priorities from local governments and constituents

It is an expression of intent, not an implementation.

10) Potential impacts for residents

Possible benefits

• Improved county road conditions
• Reduced long-term pressure on property taxes
• More predictable funding for maintenance and safety improvements

Considerations

• Impacts on other state-funded priorities must be carefully evaluated
• Transparency and accountability in fund distribution are essential

11) Questions citizens should ask

• Where exactly would the reallocated funds come from?
• Would public education funding be affected?
• How would counties receive and report the use of these funds?
• Would this reduce property tax pressure or simply slow future increases?
• What oversight mechanisms would be in place?

Summary

This proposal asks whether Texas should dedicate a small portion of existing fuel and vehicle-related fees to county road systems in order to better match funding responsibility with road usage, while reducing reliance on property taxes.