DALLAS — Texas transportation planning has shifted to the slow lane as state legislators seek record spending cuts and prepare to rewrite the law governing the Texas Transportation Commission.
As Republican lawmakers focus on such hot-button social issues as illegal immigration and abortion, two of the major budget challenges — education and transportation — have received little attention so far.
Also missing is an established advocate for transportation funding reform. Sen. John Carona, R-Dallas, who chaired the Senate Transportation Committee in previous Legislatures, has been replaced by Sen. Tommy Williams, R-Woodlands.
Carona in past years has pushed for increases in fuel taxes and local-option elections on whether to hike the levies for regional projects. He guided SB 792 to passage in the 2007 session, establishing a moratorium on private toll projects but allowing those already on the boards to proceed. The issue of whether to allow new, comprehensive development agreements with private toll developers remains in limbo as the Texas Department of Transportation lacks funding for new projects.
“It is time for Texas to take a closer look at the public-private partnership model,” said Williams, who noted that the state will have no money for new roads or highways as of 2012. “Because we are the fastest-growing state in the nation, I would say this lack of funding for transportation infrastructure constitutes a crisis.”
In the Texas House, Rep. Larry Phillips, R-Sherman, has taken over as chairman of the Transportation Committee.
While Williams’ district is in the Houston metro area, Phillips’ stomping ground is just north of the Dallas-Fort Worth area. The two regions have taken different approaches to toll projects.
In the DFW area, the North Texas Tollway Authority serves as a regional agency covering several counties. North Texas has also pioneered comprehensive development agreements, or CDAs, with the Spanish developer Cintra leading the redevelopment of Interstate 635/LBJ Freeway and the North Tarrant Express.
In the Houston area, toll projects are managed by authorities for different counties, primarily Harris and Fort Bend. Harris County, the most populous in the state, has sharply differed with TxDOT over CDAs, rejecting the model and the concept of up-front payments for the right to develop toll projects.
Despite the conflicts, the department last month decided to proceed with a section of an outer loop around the Houston area known as Grand Parkway, using $340 million of existing funds for the nearly 15-mile section north of Houston.
TxDOT, which issues debt through its supervisory Texas Transportation Commission, is perennially one of the largest issuers of revenue and general obligation bonds in the Southwest. In 2010, the TTC issued nearly $2.5 billion of Build America Bonds, including the largest single issue of debt in the region with $1.5 billion of revenue bonds. TxDOT values the federal subsidies for the BABs at $1.4 billion over the life of the bonds.
With $11.9 billion of outstanding debt, total cost of principal and interest will come to $21.1 billion over 30 years, according to Rep. Joe Pickett, D-El Paso. About $1 billion of TxDOT’s $8 billion annual budget goes to debt service.
The two newest sources of bond issuance from the TTC are so-called Proposition 12 and Proposition 14 bonds. Up to $5 billion of Prop. 12 bonds were authorized in 2005. About $1 billion of Prop. 12 bonds have been issued and TxDOT is seeking authorization for another $1 billion from the current legislative session.
Proposition 12 projects include rehabilitation work or improvements. The largest project currently underway is the $1.9 billion widening of 94 miles of Interstate 35 in Central Texas. TxDOT has issued $4.6 billion in Prop. 14 bonds backed by fuel taxes. Total cost of that debt will come to $7 billion over 20 years, officials say.
Voters also passed a constitutional amendment in 2001 that created the Texas Mobility Fund as a revolving fund for highway projects. The state has issued about $6.3 billion of Mobility Fund bonds, payable over 30 years. The $340 million for the Houston area’s Grand Parkway will come from the fund.
Several bills affecting TxDOT finance are pending in the House and Senate transportation committees, but the one with the most impact is not yet introduced. Rep. Linda Harper-Brown, R-Irving, one of the agency’s fiercest critics, told the Dallas Morning News that she would write the bill to reorganize TxDOT and outline its authority. The biggest change would be the replacement of the five-member Texas Transportation Commission with a single commissioner appointed by the governor.
Currently, the five-member body meets monthly in work sessions and official meetings where its discussions are aired in public. Special reports are submitted and TxDOT staff make recommendations. Local officials also appear before the panel to make requests. The five commissioners are appointed by the governor and represent different regions of the state. With a single commissioner, the decision-making process would be streamlined without public hearings and discussions.
Harper-Brown has also dismissed the possibility of raising registration fees to increase revenue. All leading Republicans say that any tax hike is out of the question.
The lack of a tax increase and refusal to allow the use of the state’s rainy-day fund for operations have left agencies wondering how deeply they will have to cut services.
State Comptroller Susan Combs told the House Appropriations Committee on Thursday that spending cuts alone will not be sufficient to cover the current $4.3 billion budget shortfall for the remainder of the fiscal year ending Aug. 31. Lawmakers must deal with that deficit before addressing the gap in the next biennial budget estimated at more than $20 billion.
Texas last used money from the rainy-day fund in 2003, and Combs said the current revenue gap is worse than that year.
Fuel-tax revenue is falling because it hasn’t been indexed for inflation and cars are more fuel-efficient. As revenue per mile of travel falls, the state population of 25 million is projected to grow by 60% by 2030. To limit traffic congestion to current levels, TxDOT would need to spend $16 billion per year on maintenance and construction over that time period, according to staff research. The agency currently spends about a quarter of that.