Download our Voter Guide here.

Find out where the candidates stand on toll roads and the Trans Texas Corridor with our Voter Guide. If you don’t see candidate responses for your district, call them and ask them why they didn’t respond and find out where they stand on the specifics of our legislative agenda for next year! Doing a statewide Voter Guide (we focussed primarily on state legislative races) is a massive undertaking and a handful of dedicated volunteers contacted all candidates for 150 Texas House races plus some Senate races. Many chose to dodge the issue, because they do NOT want to commit to ANYTHING in writing. Don’t let them wiggle out of it!

Link to article here. For the first time since his push for toll taxes, Texas Governor Rick Perry indicates in this article that he would not veto a bill that would index the gas tax to keep pace with inflation. This could give communities an alternative source of funding to avoid the most expensive transportation tax….tolls.

Pouring billions into aging U.S. infrastructure urged to help avoid recession
Tuesday, October 14, 2008
By MICHAEL A. LINDENBERGER / The Dallas Morning News
Would spending billions putting engineers and construction crews to work rebuilding the nation’s aging infrastructure keep America out of a recession?

A group of leading governors, transportation experts and House Democrats say it’s worth trying, with Gov. Ed Rendell of Pennsylvania and others arguing Tuesday that the federal government should immediately spend billions on America’s highways, bridges and rail systems.

“We can’t wait for this to be discussed next summer,” Mr. Rendell said Tuesday. “Congress and the president-elect must undertake major investments in our infrastructure.”

Mr. Rendell and others on Tuesday called for a two-pronged approach to transportation: More spending now, with an eye toward adding jobs for construction workers, engineers and others, and a much more expensive plan that would involve completely rethinking the way America views transportation.

Tuesday’s announcement by the governors comes just a day after House Speaker Nancy Pelosi took similar steps. On Monday she ordered House committee leaders to begin hearings on a so-called second bailout plan, and promised a renewed push for tens of billions of dollars in new spending on infrastructure.

The House passed a $61 billion stimulus package earlier this year, but it did not pass the Senate. With the nation either already in or fast headed toward a recession, Ms. Pelosi said Monday said she will try again, and this time include even more transportation spending.

“The benefit of the thinking that we’ve had in the week since we passed that [$700 billion] recovery package is that another recovery package is needed,” Ms. Pelosi said Monday. “It may have to be larger than the one we passed in the House in light of the events that have transpired since [then].”

A panel of leading economists, including former Treasury Secretary Lawrence Summer and Nobel Prize winner Joseph Stiglitz, met with Ms. Pelosi on Monday and endorsed her plan to pump transportation money into the economy. Mr. Stiglitz said the stimulus bill would have to be “be a comprehensive recovery program, not just based on trickle-down economics, not just giving money to the financial markets but going directly — at least some of the money going directly to households, to meet infrastructure needs, to meet the variety of — of challenges facing our society today.”

Some experts, however, say increased government spending on infrastructure is unlikely to improve the U.S. economy or prevent a recession.

“The short answer is no,” said Professor Mike Davis of the Cox School of Business at SMU in Dallas, when asked if billions in new spending on highways would shore up the economy. “The most obvious reason is that these projects take a long time to get up to speed, to identify the needs, to get the contracts in place, and to have the actual money spent. If you are looking to improve things between now and Christmas, I just don’t see that working. I have a hard time imagining that there is sort of a construction site with a big pad lock on it, and as soon as Congress votes to approve these things then we’ll see 1,000 new people at work and the heavy equipment moving.”

Both presidential candidates have also called for billion-dollar rescue plans for the economy, though they disagree over the role transportation spending should play.

Sen. Barack Obama, the Democratic nominee, has called for immediately spending $25 billion on improving the nation’s infrastructure, money that would be targeted to new highways, rail lines and meeting the system’s growing maintenance needs. Madhuri Kommareddi, a member of the Obama policy team, said the campaign calculates 1 million jobs would be saved or added by spending the $25 billion. “We’ve been certain to focus the plan on projects that are already in the pipeline, that are immediately ready to go.”

Pete K. Rahn, president of the American Association of State Highway and Transportation Officials, said states desperately need money to build more roads and highways, and said $25 billion would put a lot of people to work. Mr. Rahn, who is also Missouri’s transportation secretary, said a survey of state agencies earlier this year found that there were 3,000 such projects — costing $18 billion — ready for an immediate start, should funding be available. With winter coming on, he said that number would likely be smaller now. “But there is still a very large number of projects that would benefit from this spending immediately.”

Sen. John McCain, the Republican nominee, also supports a stimulus package, but his focus is on reducing Americans’ taxes, rather than spending more money on highway projects. His campaign declined an interview request Tuesday but issued a position paper that reiterates his opposition to funding earmarked transportation projects and demands that inter-city rail service be put off until federal rail initiatives can be made more efficient.

His $52.5 billion stimulus proposal would cut capital gains taxes in half for two years and temporarily remove taxes on unemployment benefits.

Mr. Davis said neither candidate’s stimulus approach is likely to have a real impact on the economy. Tax cuts — especially those like the rebate checks sent earlier this year — hardly ever bring about long-term economic improvements, he said, in part because just like new spending they take too long to work.

Instead, he said systemic fixes, like the $700 billion effort already approved by Congress that is aimed at restoring confidence on Wall Street and heating up a frozen credit market, are more likely to succeed.

In Austin, Texas Gov. Rick Perry applauded the idea of reducing taxes, but said trying to stave off a recession by spending more tax money is exactly the wrong idea.

“The government bail-out is a very slippery slope, and we will look back on this in a few years and say, ‘What were they thinking?’ ” Mr. Perry said. “The government giving money back to us is just another way of raising taxes. That’s the reason that this whole government bailout was so ill-conceived. They have this idea that if we just shovel more of our own money back to the states, gosh they will be happy. Government spending is going to very little if anything to help our economy.”

The long-term solutions offered this week by Mr. Rendell and Ms. Pelosi each call for increasing America’s transportation spending by tens of billions of dollars — and maybe much more — each year. Both presidential candidates have been quiet about making commitments to long-term spending goals, though Ms. Kommareddi said Tuesday that Sen. Obama backs more federal spending on both rail and highways.

But to Mr. Perry, those ideas are dead wrong. About the only thing he said he agrees with the Democratic proposal is their conclusion that the current system is broken.

“If they said that, and stopped there, I’d agree with them,” he said. “But one shoe doesn’t fit all. This is the classic problem with D.C. … : The idea that they ought to be sitting up there collecting our gas tax, and then peal whatever it is out for their bureaucratic largesse, and then send some of it to other states, and then give us the rest.”

He’d rather see the federal government send Texas back every penny its drivers pay in gas taxes and give it the flexibility to build roads as it sees fit.

But in calling for more spending, Mr. Rendell said states can’t fix the system alone.

“America’s highways, bridges, tunnels, and mass transit have fallen behind because the federal government is contributing only 25 percent of infrastructure funding and the rest is coming from financially strapped state and local governments,” he said.

By the time President Dwight Eisenhower left office in 1961, he said, the federal government was spending 12.5 percent of its nonmilitary spending on infrastructure, but it’s spending just 2.5 percent now. “Washington needs to step up its commitment of resources.”

He said Mr. Perry’s approach — luring private investors to build toll roads — is one solution, and he agrees with the Texas governor that federal restrictions on tolling existing highways ought to be lifted. But he said even with those steps, Congress must spend more money or the states will never maintain the roads they have much less invest in rail and other projects they will need in the 21st Century.

Mr. Perry said he agrees to a point. He said the next Legislature will see him supporting a variety of measures aimed at increasing funding for highways and bridges, a departure from years past when he has pushed relentlessly for tolls.

“I am not one of these guys who says, ‘I did it right the first time and there is nothing to change,’ ” Mr. Perry said. “I wish I had the benefit of perfect hindsight, but I don’t.”

Come January, he said, he’ll support spending cuts to find as much as $600 million a year in new money for transportation. He’s not going to champion any tax increases, he said, though he also said he won’t veto legislation to index the state motor fuels tax to inflation.

“I think it is an appropriate debate to have,” he said about whether Texas should allow the gas tax rate grow each year to keep pace with inflation. “I am not going to block the debate, or if it is the will of the people, and of the legislature, I suspect I would go along with it.”

Bexar County Commissioner Lyle Larson has long fought to get the original gas tax funded plan for overpasses and expansion installed on 281. Read his latest letter to the Governor, Lt. Governor, Speaker Craddick, Rep. Frank Corte, and Sen. Jeff Wentworth here. Give us the overpass plan now: www.281OverpassesNow.com.

By contrast, State Representative Frank Corte is up for re-election in just days…where is he on this? He voted to toll every chance he got in the legislature and has done NOTHING to prevent the freeway to tollway conversion on 281 and on parts of Loop 1604. Maybe its because he doesn’t even live in the district and has deceptively claimed a vacant lot as a residence. He doesn’t feel our pain or the urgency of the situation because he doesn’t LIVE in this congestion day in and day out like we do.

Send him a message at the ballot box…you vote to increase our taxes and let 281 motorists languish for 5 years when the gas tax fix has been paid for, you don’t deserve to be re-elected November 4.

Link to article here.

Toll road ridership down plus economic crisis equals no rationale to continue to build massive leveraged debt toll projects that will bankrupt the next generation. See article below. Remember this is written by the Father of toll roads, Peter Samuel.

The Great Crisis and tolling – declining traffic and dismal prospects
Toll Road News
Mon, October 6, 2008

In the spring and summer there was the big runup in gasoline/diesel prices. Now in the fall there’s the startling financial crisis and a likely economic recession/depression – events without precedent at least in living memory in their potential severity. But we’ll leave for later such analysis wandering into speculation and punditry.

First to report some traffic and revenue data from some of the tollers who report monthly. (Why don’t they all?)

Orlando Orange County Expressway Authority (OOCEA) collected tolls of $14.99m this August against $17.92m in August last year – down 16.4%.

Tropical Storm Faye saw tolls suspended for a day and a half 8/20-22 which could account for 4 to 5 percentage points (100/31 x 1.5).

Adjusted for that storm the decline for the month would be 11.4% to 12.4%.

July + August 2008 vs same bimonthly total last year is down 10.8%. Adjust for ther storm and that’s about 8% down.

July 2008/July 2007 had been down 5.2%, roughly the drop seen for several months.

August traffic and tolls were sharply worse – going from about 5% below to around 12%-storm-adjusted below the same month a year earlier. Suddenly the debt service ratio (net revenues before debt service/debt service) don’t look as healthy: in July they were 1.51, in August 1.27.

The Beachline (previously Bee Line) Expressway to the Atlantic coast is down the most – 19% on same month last year. That’s the most vacation/weekend oriented of the toll expressways.

OOCEA had forecast a decline in traffic and revenue this year, but way less than occurred. In August tolls were only 0.874 of those forecast.

The 12% reduction of August if applied to the coming year would produce annual tolls of $181m vs $206m in the year ending June 30, a drop of $25m.

Orange Co California: Foothill/Eastern Toll Road in August 2008 collected $8,215k vs $9,393k 07/08, a drop of 12.5%.  Transactions were down 12%. July 08 had been down 8.3% in revenue and 7.8% in transactions.

On the basis of August numbers toll revenues would drop from $102.3m to $89.5m, $12.8m less.

Further west on the San Joaquin Hills Toll Road toll collection this August was $7,781k vs $8,570k, a drop of 9.2%. Traffic was down substantially more – 2,396k 08/08 vs 2,773k of 07/08, a drop of 13.6%. Revenue drops were cushioned by toll increases. Most tolls went up 25c July 7 which is about 7% at the mainline plaza where the tolls for cars now are in the range $3.50 to $5.25 depending on cash/transponder and peak/off-peak. There were double digit percent increases at the ramp plazas. Overall the toll rates seem to have been increased 8%.

Based on the August revenue drop of 9.2% annual tolls in the coming year would be $83m, down $8.4m from last financial year’s $91.4m.

91 Express Lanes down

The largest decline is in traffic and revenue on the 91 Express Lanes (91XL) where we have weekly data to 9/27. The lower levels of traffic and revenue were established earlier there and haven’t shown further declines. 91XL’s weeks of course straddle months, but crudely taking weeks ending within the month traffic this September was 894k vis 108k Sept last for a drop of 17.6%. Revenue us $2,740k vs $3,187k, down 14%.

91XL has been steady on the same month last year through July, August and September – traffic down 17 or 18%, revenues down 14 to 15%.

Colorado

E470 in Denver CO reports a definite increased drop in traffic in August. March through July were down about 4%.  In August traffic was down 8.2%, and revenue was down 11% – suggesting trip distances were shortened.

West Virginia

West Virginia: West Virginia Turnpike traffic continues to be down about 6% on the same period a year ago, according to Greg Barr just days ago.

WSA numbers

Ed Regan head of traffic and revenue at Wilbur Smith Associates said at a session at the recent IBTTA annual meeting in Baltimore that toll traffic is generally declining by the same amount as non-toll traffic.  The exception is those toll facilities which relieve congestion on parallel tax-supported roads. With traffic and congestion down on the untolled roads there will be a disproportionate drop in toll traffic as motorists shift to the free route.

Regan cited the San Joachin Hills Toll Road as a classic of this. Even more so would be the toll lanes within a freeway like 91XL.

The WSA figures through August were roughly as follows:

– Illinois Tollway down 4%

– Maryland 3 to 4% down

– Penn Pike 5% down

– MDX Miami 1% down

– Tampa 4 to 5% down

Regan said trucks were down a percentage point or two more than cars. He attributed the majority of the decline in those numbers to the big run-up in fuel prices.

Going forward – the bursting housing bubble and the wider panic

Going forward the economy is apparently going to be a more significant downer as the financial crisis starts to have effects on spending and employment.

First there is the bursting of the housing bubble pumped up 2002-2006 by:

– loose money since 2001

– governmental pressure to lend to bad prospects

– securitization of mortgages

The housing bubble has been deflating for the best part of two years, but house prices look to be still too high to clear markets, so it has some way to go.

The Panic

The last couple of weeks have seen a wider panic about the stability of financial institutions and a breakdown in normal financial business. Panics don’t go on very long. The greater the panic the more prices fall, and at a point bargain hunters start buying. The opportunity for profit is seen as outweighing the risks.

The “prices” of short term private money as reflected in the inverse of spreads between 3 month interbank lending (LIBOR) and Treasury bills (TED) have dropped so far – the spread  has risen so much –  there are now strong incentives to take the minimal risks with the interbank lending.

Most of the banks aren’t in danger so the ‘prices’ of their money have already dropped too low – the yields are too high. The correction there could come quite quickly as this realization sinks in. The panic of the last few days will then abate.

However the correction in housing prices and the write-downs of mortgage based securities and other feeble ‘derivatives’ will take a lot longer to be worked off. It isn’t clear that the federal government will help here. To the extent that it holds prices artificially high by holding out the promise of being an above-market buyer it will delay a clearing of the market.

Marx’s definition, the American Marx, that is

I’m indebted to Matt Brouillette of the Commonwealth Foundation for Groucho Marx’s definition of politics and government as: “The art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.”

It is unclear how far the rot has spread beyond mortgage-based securities. Auction rate securities, credit default swaps, swaptions and other derivatives have clearly been vastly oversold and their risks understated.  It is a pathetic reflection on the incompetence rife on Wall Street that securities traded in their billions for years now are widely described as incapable of being valued because of their complexity. The Bear Stearns and Lehmans and Merrills never considered there might be any difficulty in valuation?

Charlatans claiming to be able to give organizations unprecedented risk-free leverage managed to con rating agencies and supposedly smart chief financial officers and get awarded “Deal of the Year” by the likes of Bond Buyer magazine building financial structures so flimsy they have been collapsing in large numbers over a considerable period now. Many of these people were worse than charlatans, they apparently were fools who believed in the crap they were selling.

Democrats have been running the Congress and are the most responsible

But government, especially the Democrat majority in the Congress deserve a lot of the blame too – for their failure to allow any sensible restructuring or containment of the bastard public-private Freddie and Fannie monsters which manufactured the mass of “toxic” mortgage based securities and insured them ith taxpayer backing.

As Kevin Hassett AEI economist writes: “many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.”

Fortunately in “conservatorship” they can’t continue to buy protection directly.

Prize for the most asinine bumper sticker of this election campaign surely goes to this: “It’s Time for a Change: Vote Democrat 2008.” Last time we looked Dem Nancy Pelosi’s party was in the majority in the House of Representatives and Dem Harry Reid’s party had the numbers in the Senate. Giving this crew larger majorities will change them?

McCain has blown the presidency?

However John McCain has probably blown his chances of winning the presidency by failing to take a firm stance against the abominable “bailout.” In a single huge misstep he undercut completely his claim to be a reformer who would fight Washington corruption and bumbling. The bailout will be a source of continuing frustration and developing scandal to all associated with it.

While McCain dramatized his intervention in support, Obama went along with the bailout as he always goes along with the establishment. But Obama was politically savvy enough to keep a low profile.

No Great Depression just Protracted Chaos

It is most unlikely there will be any 1930s style Great Depression. it was caused by a highly restrictive monetary policy over several years. And Amity Shlaes excellent “The Forgotten Man: A New History of the Great Depression” makes clear how disastrous was the dominance in this period of Franklin D Roosevelt – totally clueless about the economy and whose capricious measures almost invariably prolonged the depression.

Neither McCain nor Obama inspire any more confidence in terms of their economic understanding, but it seems most unlikely either would dictate monetary restrictionism like Hoover and Roosevelt. And neither would dominate decisionmaking as FDR did for a grim decade.

More likely than a Great Depression is the Great Chaos Recession.

But how big and how long?

IMF economists Stijn Claessens, M. Ayhan Kose and Marco E. Terrones have systematically reviewed the data from 122 recessions in 21 advanced nations since 1960.  Their findings suggest recessions accompanied by burst bubbles and credit crunches are much costlier and slightly longer than average recessions.

A recession on average lasts about a year or as they measure it 4 quarters with substantial variation  — the shortest recession is 2 quarters and the longest 13 quarters. The typical decline in output from peak to trough, the recession’s amplitude, tends to be about 2%.  The cumulative loss of output in a recession is typically about 3% of GDP, but this number varies quite a bit too.

The three write: “Recessions accompanied with severe credit crunches or house price busts last only a quarter longer, they typically result in output losses two to three times greater than recessions without such financial stresses. During recessions coinciding with financial stress, consumption and investment usually register much sharper declines leading to the more pronounced drops in overall output and unemployment.”

On this basis a fair expectation is the Great Chaos Recession will:

– last about five quarters, that is through 2009 and perhaps into early 2010

– involve GDP dropping 4% to 6%

– a cumulative loss of output of 6 to 12%

This would be the worst economic downtown in the past half century, but not comparable in amplitude or duration with the Great Depression.  Hopefully the US will handle the Great Chaos with average competence/incompetence. If you are pessimistic on this score it would be bigger and longer, mostly longer. If you’re optimistic then it should be shorter and less severe.

Further downside risks

There are two further downside risks:

– that destructive “protectionist” measures will be taken that will depress imports and subsequently exports compounding present problems

– that the American financial mess will be so mismanaged by resistance to market clearing prices and profligate government handouts that the US will suffer capital flight, a further serious decline in the US$ and a deteriorating terms of trade

These could turn a housing-related recession of about two years into a deeper and prolonged economic malaise like Japan’s lost decade in the 1990s. If so all those traffic growth projections need to be severely pruned back.

There are some modest upside possibilities:

– oil prices and fuel costs at the pump will continue to come down so the price effects on traffic seen from April through July should abate moderating the effects of declining economy

– the rampant inflation in construction costs of the past few years will come to an end and there will be some bargains among construction contractors short of work