Lawmaker Hopes Bill Will Encourage Legislature to End Shady Accounting Practice

Representative Joe Pickett wants to stop collecting fees from Texans to improve air quality and spend the $1.27 billion sitting unused in the TERP fund.


The Texas Emissions Reduction Plan (TERP) targets smog-causing pollutants from vehicles.  Flickr/Whatnot

Texas collects millions of dollars every year from residents to improve air quality, but almost never spends it all. Instead, the Legislature hoards the money through an accounting gimmick and uses it to balance the budget. A Texas lawmaker laid out a plan to end that practice at a committee hearing Tuesday morning, but faced opposition from environmental and business groups.

Representative Joe Pickett, D-El Paso, introduced two bills in the House Environmental Regulation Committee that would in part suspend more than $200 million in collections into the Texas Emissions Reduction Plan fund — a program that provides money to improve air quality — in the hopes that it would spur lawmakers to appropriate money from the current $1.27 billion balance in the fund.  

While advocates from environmental and business groups agreed that the fund balance should be spent to reduce smog, they argued that halting revenue to the fund might make it difficult to restart the program down the line.

“I’m very concerned because once we suspend the fee program, it’ll be very hard to start it back up again,” said Adrian Shelley, director of the consumer and environmental advocacy group Public Citizen. “It’ll be hard to convince the Legislature to spend down the corpus if we’re not collecting fees.”

The TERP program was set up in 2001 to reduce smog pollution and help the state meet federal environmental standards. The program collects taxes and fees from Texans during car inspections and title transfers, as well as from businesses that lease, rent or sell diesel vehicles. Ultimately, the money can only be used to improve air quality and is supposed to be appropriated back into programs that retrofit vehicles with cleaner-burning engines to reduce air pollution. But since its inception lawmakers have failed to appropriate the full amount. As a result, the fund has ballooned to $1.27 billion and is set to add a couple hundred million dollars in the coming years.

State Rep. Joe Pickett (D-El Paso)

At the hearing, Pickett said his bills would help spend that large pot of money sitting unused. Pickett said it was “a fact” that “appropriators don’t appropriate” the full amount of money deposited into the TERP fund and that groups trying to improve air quality are left “fighting over the scraps.”

Opponents of Pickett’s bill said halting fees into the fund could backfire. For one, there’s no guarantee that the Legislature would appropriate the balance in the fund. If Pickett’s efforts succeed, Texans might benefit in the short term from reduced fees. But, if lawmakers fail to fund air quality programs, it might ultimately put the health of millions of people in jeopardy.

“I’m not sure that this body will actually appropriate the money out of the corpus,” said Cyrus Reed, conservation director for the Sierra Club’s Lone Star chapter. “I don’t think it’s realistic that that’s going to happen.”

Lawmakers also face a number of constitutional barriers in appropriating the money, advocates pointed out. If revenue into the fund ceases and lawmakers try to appropriate money from the $1.27 billion balance, they’ll likely run into provisions of the Texas constitution that mandate limiting state spending to within the total revenue collected per two-year cycle.

The Legislature has been “handed a short straw,” said Stephen Minick, vice president of governmental affairs for the Texas Association of Business.

“The mechanism that requires a revenue estimate before you even convene the session is a structural issue that is going to take a conservative statutory or even constitutional effort to fix,” he said. “It’s the latest example of how that totally ties your hands.”

The Legislature faced a similar challenge in 2013 with the System Benefit Fund, a program that collected small fees on utility bills and sent the money to low-income Texans to help pay for electricity. Over the years lawmakers started hoarding revenue to that fund to help balance the budget. Finally, in 2013, the Legislature disbanded the program and disbursed the remaining money to poor Texans. If revenues to the fund are suspended, TERP could face a similar fate, advocates fear.

Still, changes to the System Benefit Fund were made in the 2013 session when the Legislature had a $10 billion surplus, Minick said.

“Fixing [TERP] in a session with a $5 billion deficit is very, very hard,” he said.