Author: Terri Hall

Gurwitz: Conservatives want more than Perry's photo-ops

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Web Posted: 03/06/2010
Conservative Texans want more than photo-ops

By Jonathan Gurwitz

San Antonio Express-News

When the 2009 regular session of the Texas Legislature concluded, Gov. Rick Perry came to San Antonio to affix his signature to a major property rights measure. In front of the Alamo, Perry appeared to sign legislation putting a constitutional amendment on the November 2009 ballot that sharply restricted the circumstances under which state and local government could exercise eminent domain.
The ceremony presented a great photo-op: a conservative governor affirming an essential right, drawing a line in the sand on eminent domain in the shadow of the Cradle of Texas Liberty. The ceremony was also deceptive.

What Perry purported to sign was a joint resolution passed by a two-thirds majority in both houses of the Texas Legislature. Such measures circumvent the governor’s office and automatically appear on the ballot in the next general election. Voters approved it in November with 81 percent support.

The decision of conservative Texas lawmakers to bypass the governor on eminent domain reform in 2009 was deliberate. Two years earlier, Perry had vetoed an even stronger affirmation of property rights drawn up in response to the U.S. Supreme Court’s Kelo decision.

The ostensible explanation for Perry’s 2007 veto was that a key provision would have vastly inflated costs for new road construction. Beneath this explanation lay additional bothersome issues that put him at odds with conservative Texans.

The 2007 eminent domain reform effort conflicted with Perry’s plans — since abandoned — for the Trans Texas Corridor, a 4,000-mile multi-modal transportation network that would have necessitated the state’s seizure of as much as 600,000 acres of private property. The project generated even greater controversy because of its heavy reliance on toll roads; because a former Perry staffer worked as a consultant for the Spanish company, Cintra, that won the rights to develop the corridor; and because Perry fought a ruling by Texas Attorney General Greg Abbott that compelled the Texas Department of Transportation to lift a veil of secrecy on the contract’s details.
Read the rest of the story here.

Goldman Sachs fueled financial crisis in Greece, Europe

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Link to article here.

Goldman Sachs has been playing both sides (consulting and giving financial advice to both the government and the private entities with whom the government is making deals) for quite some time now, especially with regards to public private partnership infrastructure deals. They’ve been operating with impunity despite the colossal conflicts of interest. Now it’s toxic wheeling and dealing has led to the financial collapse of Europe. The U.S. government beware – time to boot Goldman from the halls of Washington and Austin!

February 14, 2010

Wall St. Helped to Mask Debt Fueling Europe’s Crisis

By LOUISE STORY, LANDON THOMAS Jr. and NELSON D. SCHWARTZ

New York Times

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Athens did not pursue the latest Goldman proposal, but with Greece groaning under the weight of its debts and with its richer neighbors vowing to come to its aid, the deals over the last decade are raising questions about Wall Street’s role in the world’s latest financial drama.

As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.

Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

Some of the Greek deals were named after figures in Greek mythology. One of them, for instance, was called Aeolos, after the god of the winds.

The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

A spokeswoman for the Greek finance ministry said the government had met with many banks in recent months and had not committed to any bank’s offers. All debt financings “are conducted in an effort of transparency,” she said. Goldman and JPMorgan declined to comment.

While Wall Street’s handiwork in Europe has received little attention on this side of the Atlantic, it has been sharply criticized in Greece and in magazines like Der Spiegel in Germany.

“Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” said Gikas A. Hardouvelis, an economist and former government official who helped write a recent report on Greece’s accounting policies.

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.

“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

Banks eagerly exploited what was, for them, a highly lucrative symbiosis with free-spending governments. While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal.

Such derivatives, which are not openly documented or disclosed, add to the uncertainty over how deep the troubles go in Greece and which other governments might have used similar off-balance sheet accounting.

The tide of fear is now washing over other economically troubled countries on the periphery of Europe, making it more expensive for Italy, Spain and Portugal to borrow.

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

Derivatives do not have to be sinister. The 2001 transaction involved a type of derivative known as a swap. One such instrument, called an interest-rate swap, can help companies and countries cope with swings in their borrowing costs by exchanging fixed-rate payments for floating-rate ones, or vice versa. Another kind, a currency swap, can minimize the impact of volatile foreign exchange rates.

But with the help of JPMorgan, Italy was able to do more than that. Despite persistently high deficits, a 1996 derivative helped bring Italy’s budget into line by swapping currency with JPMorgan at a favorable exchange rate, effectively putting more money in the government’s hands. In return, Italy committed to future payments that were not booked as liabilities.

“Derivatives are a very useful instrument,” said Gustavo Piga, an economics professor who wrote a report for the Council on Foreign Relations on the Italian transaction. “They just become bad if they’re used to window-dress accounts.”

In Greece, the financial wizardry went even further. In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.

Aeolos, a legal entity created in 2001, helped Greece reduce the debt on its balance sheet that year. As part of the deal, Greece got cash upfront in return for pledging future landing fees at the country’s airports. A similar deal in 2000 called Ariadne devoured the revenue that the government collected from its national lottery. Greece, however, classified those transactions as sales, not loans, despite doubts by many critics.

These kinds of deals have been controversial within government circles for years. As far back as 2000, European finance ministers fiercely debated whether derivative deals used for creative accounting should be disclosed.

The answer was no. But in 2002, accounting disclosure was required for many entities like Aeolos and Ariadne that did not appear on nations’ balance sheets, prompting governments to restate such deals as loans rather than sales.

Still, as recently as 2008, Eurostat, the European Union’s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.”

While such accounting gimmicks may be beneficial in the short run, over time they can prove disastrous.

George Alogoskoufis, who became Greece’s finance minister in a political party shift after the Goldman deal, criticized the transaction in the Parliament in 2005. The deal, Mr. Alogoskoufis argued, would saddle the government with big payments to Goldman until 2019.

Mr. Alogoskoufis, who stepped down a year ago, said in an e-mail message last week that Goldman later agreed to reconfigure the deal “to restore its good will with the republic.” He said the new design was better for Greece than the old one.

In 2005, Goldman sold the interest rate swap to the National Bank of Greece, the country’s largest bank, according to two people briefed on the transaction.

In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.

Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.

Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”

Lawmakers push for repeal of NAFTA

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Link to article here.

Remember that NAFTA is the reason for all the trade corridors planned to pave over Texas called: NAFTA superhighways, the Trans Texas Corridor (TTC), Corridors of the Future, High Priority Corridors, or the renamed TTC called “Innovative Connectivity Plan.”

U.S. lawmakers launch push to repeal NAFTA

By Doug Palmer, Reuters
Thu Mar 4, 4:35 PM EST

A small group of U.S. lawmakers unveiled legislation on Thursday to withdraw from the North American Free Trade Agreement in the latest sign of congressional disillusionment with free-trade deals.

The bill spearheaded by Rep. Gene Taylor, a Mississippi Democrat, would require President Barack Obama to give Mexico and Canada six months notice that the United States will no longer be part of the 16-year-old trade pact.

“At a time when 10 to 12 percent of the American people are unemployed, I think Congress has an obligation to put people back to work,” Taylor said.

He argued NAFTA has cost the United States millions of manufacturing jobs and hurt national security by encouraging companies to move production to Mexico.

The high unemployment rate makes it the “perfect” time to push for repeal even though past efforts have failed, he said.

“You’ll see the American people rally behind this, in my humble opinion,” said Rep. Walter Jones, a North Carolina Republican who is one of about 28 co-sponsors of the bill.

Business groups like the National Association of Manufacturers and the U.S. Chamber of Commerce strongly support NAFTA, which they say has spurred U.S. economic growth by tearing down trade barriers between the three countries.

The repeal proposal comes as Obama says he wants to resolve problems blocking congressional approval of long-delayed trade deals with South Korea, Panama and Colombia.

The strongest opposition to those agreements comes from Obama’s fellow Democrats.

The United States also will begin talks later this month with Australia, New Zealand, Singapore, Chile, Peru, Vietnam and Brunei on an Asia-Pacific regional free-trade agreement.

Obama criticized NAFTA during the 2008 presidential election campaign but has not followed through on threats to withdraw from the agreement if Canada and Mexico did not agree to revamp the pact’s labor and environmental provisions.

But many Democrats are pushing for that and other changes to existing trade deals before considering any new deals such as the deals with South Korea, Colombia and Panama.

The House of Representatives is expected to vote later this year on whether the United States should remain a member of the World Trade Organization.

U.S. law allows House and Senate members to request a vote on that issue every five years. In 2005, 86 of the House’s 435 members voted to withdraw from the world trade body.

(Reporting by Doug Palmer; Editing by Stacey Joyce)

Elections come & go, but resistance to toll taxes continues

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If there’s one thing we’ve learned in the 5 years we’ve been fighting to keep our freeways toll-free, it’s that elections don’t matter near as much as the people themselves staying engaged in the ongoing battles against our own government. We’ve passed the era where citizens could get by with complacency, we’re in a new ballgame now. After years of neglect and trusting our elected representatives to do the right thing when no one’s looking, it’s obvious to even the casual observer that those days are long gone, and we now face the Goliath of entrenched special interests and lobbyists who really run the show. As one of our supporters likes to put it, we need a permanent, grassroots lobbying class for “we the people.”

One thing about elections remains the same…the same recycled candidates show-up in office year after year. Though on rare occasions the good guys and bad guys trade places, by and large, for a litany of reasons I won’t go into here, it’s those who have been corrupted and who have no qualms about ignoring and exploiting the taxpayers that remain the powerbrokers. The kingmakers simply won’t tolerate the incorruptible being in charge. So we’ve learned to work hard for the good guys, but to expect the bad guys to still be there when the dust settles.

Issue-based activism works

The grassroots have shown that we can mount an offensive and successfully defeat toll-related issues one at a time, year after year, by constant vigilance. The bad guys only have to win once to get their pay-dirt, but the taxpayers have to win time after time, year after year to defeat the litany of bad legislation and policies that hit the pipeline at breathtaking speed. The aversion to paying 75 cents a mile to a foreign company to simply drive on a public road hasn’t faded, nor will it. The waste, fraud, and abuse of taxpayer money by an out-of-control transportation department can and must be fixed. With the taxpayers on high alert, we can return to a sensible, sustainable, and affordable transportation policy in Texas, one without the highest tax on the table…tolls.

One of the biggest challenges in unseating incumbents isn’t so much the name recognition and hefty campaign coffers (though these things can be enormous obstacles) as it is the growing number of political favors and payback the politician doles out the longer he’s in office. It makes for highly motivated voters beholden to incumbents who eagerly head to the polls to re-elect the guy who is the gift that keeps on giving to one’s industry or pet program.

Corporate welfare

I sat down and read an issue of the Business Journal this week. A sizable chunk of the stories involved businesses who owe their success to taxpayer handouts. One business that experienced explosive growth (5,900 percent) exclusively provides services for the federal government. One article brazenly offered tips on how to secure contracts from local bond elections (and avoid pesky obstacles like competition) by positioning oneself early for favorable treatment by being a team player and helping the bond election pass.

For all the mudslinging about social welfare programs, corporate welfare costs the taxpayers dearly. The self dealings that often involve the revolving door between private sector and public sector positions, jumping between the two in order to secure government funding or land a government contract by being well-connected, often exploits taxpayers with backroom deals made in secret with lobbyists. Instead of standing in line at a welfare office, they have slick web sites that tell them of all the upcoming bond elections, how much taxpayer money is on the table, and what contracts are up for grabs. This ain’t capitalism, rather, it nicely explains the origin of the phrase: “hogs at the trough.”

The sooner we, the taxpayers, identify the enemy, the sooner we defeat the cronyism that grips the “system.” With our freedom to travel at risk and the threat of a complete financial meltdown of the infrastructure bubble (that will be too big to let fail) our politicians are creating with massive, multi-leveraged toll road debt, we cannot and will NOT relent until freedom is secured.

NTTA bailout saddles taxpayers with toxic debt

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Last week, both the Texas Transportation Commission (TTC) and the North Texas Tollway Authority (NTTA) approved a deal to use ALL Texas taxpayers (our state gas taxes) as collateral for toll roads in North Texas. Highway 161, a road to primarily benefit the Dallas Cowboys (Hwy 161 is the main pathway to its new stadium), got the green light first, and we’re on the hook for virtually unlimited interest on the debt for 36 years if the toll road traffic doesn’t show up.

The NTTA wouldn’t need the State to guarantee its debt if it didn’t already know that the projected traffic to pay for it is on shaky ground. Investors won’t bite unless a return on their investment is a sure thing. They made it a sure thing by using the State’s highway fund as a backstop for the NTTA’s toxic debt (read more history here).

For years Rick Perry’s excuse for levying toll taxes on urban Texans has been, “Why should West Texas pay for the congestion in Houston or Dallas?” Yet here we are, ALL paying for congestion in North Texas! The move is also unconstitutional (exploiting what TxDOT thinks can be construed as a “loophole”). The highway fund cannot be used to guarantee loans. To skirt the law, TxDOT added a provision it thinks it can use to make the unconstitutional deal legal by charging the NTTA interest on any money lent to it from the highway fund.

Exploitation or illegal?

Sound familiar? TxDOT exploited a “loophole” that was supposed to prohibit tolling existing roads for US 281, US 290, among others (watch it here). TxDOT also exploited the prohibition against selling our highways to foreign corporations through private toll contracts called CDAs by using another financing mechanism meant for local governments (called pass through financing) to accomplish the same thing.

In another example, TxDOT exploited a law that allows it to advertise toll roads in order to wage a PR campaign to persuade/lobby the public to accept more toll roads versus following the legislative intent of the law, which was to advertise the use of toll roads already open to traffic (like “get your Toll Tag here”). Perry vetoed a law passed by the legislature last year that would have prevented such chicanery from continuing.

Lastly, TxDOT attempted “creative accounting” tricks with Proposition 12 bonds in order to multi-leverage debt (use borrowed money as a down payment to get more borrowed money and so on) after the Texas legislature soundly defeated such legislation in the special session in July of 2009. Lawmakers clearly did NOT want TxDOT to become a bank or engage in the same risky financial schemes that caused the mortgage meltdown and global financial crisis that required a massive taxpayer bailout.

So how many times will this rogue agency get away with flouting the law? Would you and I get a free pass for such violations (especially considering TxDOT is doing it with other people’s money forcibly confiscated through taxation)? Of course not! Add to that its rigged, fraudulent environmental studies to gain clearance for controversial toll projects and its $1 billion dollar “accounting error,” and it adds up to intolerable acts that cry out for accountability.

Scheme to buyback FREEway to toll it

Hwy 161 is already three-quarters built with taxpayer money and could open as a free road, yet in this NTTA bailout, the agency will borrow over $1 billion in part to buy back the free portion of the road so it can turn around and toll it. This scam shoots a hole through another Perry talking point that claims we’re out of money to build these roads with traditional funds, “so we MUST toll it.” In fact in 2007, a TxDOT report to Congress lobbied to buy back existing interstates so it can slap tolls on freeways already built and paid for, and it caused a statewide backlash, a federal amendment by Kay Bailey Hutchison to ban the practice, and a TURF lawsuit to stop such lobbying against the taxpayer.

See the pattern here? TxDOT continues its deplorable behavior unchecked while taxpayer money is exploited, wasted, and recycled (how many times do we have to pay for the same road?). At the end of the day, lawmakers huff and puff, but they never blow the house down (and clean house)!

It’s abundantly clear no one is looking out for us, so we must do it ourselves. We cannot give up the fight for accountability nor can we afford for this Governor and legislature to look the other way and continue to condone such disastrous fiscal policy certain to bring economic ruin for generations.

Call your state lawmakers at (512) 463-4630 or to contact his/her district office go here.

Perry's Commission approves NTTA BAILOUT

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Link to article here.

Tollway authority approves State Highway 161 project

Friday, February 26, 2010

By MICHAEL A. LINDENBERGER / The Dallas Morning News
mlindenberger@dallasnews.com The North Texas Tollway Authority voted today to borrow nearly $1.2 billion and formally accept State Highway 161 into its growing network of toll roads.

The decision means construction on the final leg of the 11.5 mile road between Irving and Grand Prairie can begin as soon as next month, and be open to full traffic by late 2012.

Also Online

Transportation blog: Pros and cons of NTTA’s construction of SH 161

The decision adds to NTTA’s already staggering $7 billion debt, and puts future drivers in the role of guarantors for the new loans, since toll rates will go up if traffic on highway is significantly below expectations.

Texas taxpayers could be on the hook, too. That’s because the Texas Department of Transportation guaranteed the debt for SH 161, promising to make annual debt payments for decades, in the unlikely event that traffic is so low the road can’t support itself even after rates are increased.

The NTTA board’s vote to proceed with the project was 8 to 1, with Bill Moore, an appointee from Collin County, opposed.

Under NTTA’s rules, it would have taken only two “no” votes to scuttle the project.

Even some of those voting for the deal expressed concerns.

Board Chairman Paul Wageman of Plano said the North Texas region has too many toll roads as it is. Vice Chairman Victor Vandergriff of Arlington said taking on the project means the agency could be “sidelined for a number of years,” unable to proceed with other major new ventures.

The decision was closely watched across the region and in Austin, as well as by scores of local and state officials packed into NTTA’s Plano headquarters.

The road is expected to generate big profits for NTTA after 2040. But Wageman — who peppered advisers and staff alike with questions as if he were a lawyer cross-examining witnesses — asked how reliable the revenue estimates could possibly be that many decades out.

“Are they not just estimates? Guesses?” he asked. “We don’t know what the world will look like in 30, 40 years.”

Dan Heimowitz of RBC Capital Markets, NTTA’s chief financial adviser, agreed. He noted, however, that NTTA’s current roads have, over time, exceeded projections, not fallen short.

___________________________________________________________________

Background on NTTA deal here. More background on the NTTA bailout in the article below. Link to article here. Also see Terri Hall’s article entitled “Toll roads run amok.”

Road Conditions

by Abby Rapoport
February 25, 2010
Texas Tribune

credit: Jacob Villanueva

Sensible people in the Metroplex may have given up long ago on Southwest Parkway and State Highway 161, two huge road projects that were first proposed back in the 1960s. Now they’re toll roads — one incomplete, one not yet started — and the money to build them may finally be available.

There is, of course, a catch.

On Wednesday, Texas Department of Transportation commissioners approved a “credit wrap” that will help the North Texas Tollway Authority afford the loans it needs to complete SH 161 and to build Southwest Parkway. That was expected, but they also added a provision that forces NTTA to pay interest if it can’t meet their revenue commitments. As part of the deal, NTTA gets to use TxDOT‘s credit rating to lower its own borrowing costs. Since the state isn’t allowed to guarantee loans from its highway fund — known as Fund 6 — and isn’t allowed to lend money that will be used directly to pay off someone else’s loans, the agency is exploiting a loophole.

The local authority will vote on whether to accept TxDOT’s conditions on Friday, and that late addition could prove contentious. NTTA building toll roads while drawing on TxDOT’s credit rating to incur enormous debts is a far cry from Texas’ traditional pay-as-you-go approach to highway construction. With traditional sources of funding falling short, the story of Southwest Parkway and SH 161 illustrates the lengths the state must go to meet its transportation needs.

The ramp-up period

Almost everyone in North Texas seems to agree on the necessity of the two projects. SH 161, first initiated in 1969, runs north-south from SH 183 to I-20 on the Dallas-Tarrant county line, forming a link in Dallas’ growing “loop.” Southwest Parkway (also known as Chisholm Trail Parkway), which first appeared on the drawing board in 1962, connects southwest Fort Worth to downtown. Three of SH 161’s four phases are complete; construction has yet to begin on Southwest Parkway.

The funding imbalances for the projects were projected to be in the billions, and given the state’s lack of available funds for transportation, both would clearly require using tolls to offset debt. As SH 161 began to garner support and funding, those concerned about the parkway proposed a new idea: Combine the projects so that excess revenues from one could support the other.

“[Southwest Parkway] was getting pushed aside in favor of what might be a more reliable revenue sources,” says state Sen. Wendy Davis, D-Fort Worth. That has changed: Southwest Parkway is now projected to be more profitable than its sister road, but the revenue-sharing mechanism is still in place and should lower risks for lenders and make construction loans easier to come by.

“We expect that both roads have potential to be very lucrative projects once they get through the ramp-up period,” says NTTA spokeswoman Sherita Coffelt. “We don’t anticipate either road underperforming, but in the case that one did, the other one would be able to support it.”

NTTA has taken out a variety of loans to complete its various projects, a burden that makes it less appealing to lenders and pushes up the costs associated with its debt. Thanks to the recent TxDOT vote, NTTA can now use TxDOT’s credit rating. While the state Constitution prevents Fund 6 from being used as collateral for this type of loan, the state can make construction and maintenance loans to NTTA that happen to mirror the amounts of the authority’s bond payments.

“We cannot loan them money for debt service,” explains TxDOT deputy director James Bass. “We’re looking at what eligible expenses we are able to make a loan available to them for.”

He estimates the funding gap now, if the deal is approved by NTTA on Friday, at about $30 or $40 million. That’s pennies in the world of road building. The maneuver could save the authority hundreds of millions in interest and essentially makes it possible to build two roads that might not otherwise get built. “So it’s real, it’s big,” says TxDOT Commissioner Bill Meadows, who represents the Fort Worth area on the board.

Will the safety net be needed?

It also creates a new way to pay for roads that may not be as fiscally conservative as people might like. “Given the amount of debt the [Transportation] Department has already incurred and the uncertainty of future revenue to replenish Fund 6, what protections, if any, are there for Fund 6?” wrote House Transportation Chair Joe Pickett, D-El Paso, in a letter to the agency. (Pickett did not return several requests for an interview.)

To answer his question, the agency included a number of protections. Before anyone could touch Fund 6, NTTA would have to raise tolls on both projects, and even if anyone dipped into the fund, it could not take out more than the difference between expected and actual toll earnings. “We’re not making a pledge that we’re going to make sure [that] in any and all circumstances bondholders get paid,“ Bass explains.

It also includes a stabilization fund with enough money to match the next year’s projected revenues. That way, should the highways underperform one year, the fiscal trouble is at least 12 months away. “The intent is that it will always provide one year’s cushion … before there’s a call placed upon Fund 6,” Bass told the board.

Staffers at both agencies assured the commissioners the safety net won’t be needed. Coffelt says the revenue estimates are very conservative, and that the roads would have to be 20 percent below these low expectations in order to even consider going into Fund 6. “We think there’s a very slim to none chance of that happening,” she says. Bass echoed those sentiments to the TxDOT commissioners.

Such reassurances ease Davis’ concerns, as her constituents would benefit from the roads. “If I felt like Fund 6 were ever going to be drawn upon by virtue of these projects it would concern me, but I think enough analysis has been done,” she says. “I don’t foresee any circumstance that Fund 6 will ever spend a dime towards these projects.”

Coffelt says the credit wrap isn’t just good — it offers innovative methods to overcome funding challenges. “That’s never been done before,” she says. “Taking advantage of TxDOT’s good credit rating and our cash flow abilities is what’s allowing us to get these projects across the goal line. “

The idea of using state credit to finance local projects isn’t entirely new, says Bill Allaway of the Texas Taxpayers and Research Association. When school districts use bonds, the state often backs the bonds with the Permanent School Fund to secure a lower rate. “The difference is the Permanent School Fund’s actually got a pile of cash in it. It’s an endowment,” he says. “Whereas the highway fund is not an endowment but an operating fund.”

The Highway Fund, a.k.a. Fund 6, generally struggles to meet its own obligations — particularly as the Legislature has dipped into it for health and human services programs, education programs and other spending that has little to do with highways. With the fund already struggling, Meadows sympathizes with concerns that the credit wrap maneuver will become a regular tool in transportation.

Not everyone is worried. “I think this will be a model for projects all over our great state,” state Rep. Rob Orr, R-Burleson, told the TxDOT board as he exhorted them to approve the agreement to build in his district. Yet TxDOT Commissioner Ned Holmes of Houston insisted that the board amend the agreement to charge interest should NTTA not meet its revenue-sharing agreements after year 10 of the project. “We’re in the business of setting precedents,” he said. “I think it’s a very dangerous precedent to set, not to have cost to a deferral.”

Meadows argued against the amendment, which ultimately passed, but he acknowledged the significance of the effort. “This whole thing about the precedent-establishing nature of this action — I think that’s a good public policy question,” he says. But nonetheless, he’s “ready to build the roads” and isn’t interested in waiting longer.

No one’s saying the situation is perfect, but impatience and desperation are setting in. “I’m supporting it because at this point, it’s the only solution that we have,” Davis says.

But while legislators hold out for better leadership on transportation, some see this effort as a sign of things to come. “Projects in the future are going to be more and more complicated to fund,” says Michael Moore, director of transportation for the North Central Texas Council of Governments. “Is this a systemic problem? … The answer is yes.”

NTTA’s board gets its say on Friday. Coffelt says the board may be hesitant, given Holmes’ amendment. The various partners who have negotiated the effort — the Regional Transportation Council, the counties, not the mention TxDOT — are holding their collective breath.

Supporter of pro-toll Sheila McNeil tries to buy votes

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Link to article here. McNeil “Those people can afford the tolls” McNeil, who’s trying to oust Good Guy Tommy Adkisson from office (more how McNeil stole the MPO chairmanship from Adkisson here), has a supporter offering to “buy” votes to reward people for voting for McNeil. It’s highly illegal, but do you think anyone will pay the price?

McNeil voters were to be rewarded
By Gilbert Garcia
Express-News

A Sheila McNeil supporter who runs a youth football program sent a text message last week urging parents to vote for the Commissioners Court hopeful in exchange for a $125 credit on their children’s football enrollment fees, according to multiple sources.

Fred Davis, 35, founder of Youth Advancement Initiative, a nonprofit organization with five youth football leagues and a cheerleading program, sent the offer Friday, according to three former East Side City Council members: Mario Salas, John Sanders and McNeil, the hopeful whom Davis sought to help.

In the text message, Davis told parents with children enrolled in his program that if they went to the Claude Black Center over the weekend and cast their vote for McNeil, one of two hopefuls challenging incumbent Commissioner Tommy Adkisson in the Democratic primary, he would reward them with a $125 enrollment credit. It’s unclear how he would’ve determined whether the parents voted for McNeil.

Early Saturday, Davis sent a follow-up text message rescinding his offer, according to sources. But by then, the initial text had generated a buzz on the East Side.

Davis declined to comment.

Read the rest of the story here.

Tax indexed to fuel efficiency to replace gas tax?

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Is this a better gas tax idea?
Fri, Feb 19, 2010 | By Rodger Jones
Dallas Morning News

State lawmakers have been scrambling for ways to protect the buying power of the fuel tax even as cars get more efficient and require less gas. The concept under discussion in Austin has been to index the tax so it would automatically rise with inflation or the cost of construction.But that’s looking to be old school even before Austin gets seriously close to acting.

In Virginia, lawmakers are already looking at a newer idea of indexing the gas to the average fuel efficiency of the cars on the road. That’s yet another way to make sure that car owners produce a steady amount of revenue and keep up their per-mile tax support for roadways.

Two transportation guys around here have tossed out this idea too — my colleague Michael Lindenberger wrote about it recently, and Michael Morris, transportation director for the North Central Texas Council of Governments, has made public presentations.

Both Michaels seem to be claiming authorship of the idea — our Michael says he thought about it before he heard about it — and it’s hard to know which one to believe. I do know that both have the attention of transportation officials.

— Our Michael says he was buttonholed the other day by Texas Transportation Commissioner Bill Meadows, who had read the blog item and said the idea is worth pursing.

— Morris laid out details of the concept this month to a joint meeting of the Legislature’s Senate and House transportation committees. Senate Transportation Chairman John Carona asked for details. You could hear the wheels turning.

I have to say Morris has a better pitch. Lindenberger has a treatise. Morris has charts, numbers, a powerpoint and everything. He’s also got a great intro line for elected officials who are sensitive to the “tax friendly” label.

Morris told lawmakers: “If I said there is a strategy to raise taxes that does not cost the consumer any more money, you would say I’m crazy.”

He had their attention. You can see his presentation by clicking up the Feb. hearing on the Legislature’s archives. Dial into 3 hours, 29 minutes and listen. You can also follow his chart while listening (click to pg 10).

I’m not sure I follow how you can cut people’s taxes and make more money, but lots is possible in Austin. One of the Michaels will have to convince me how a fuel efficiency index does magic that an inflation index can’t.

Even so, this campaign year is a tricky time to talk about any kind of new tax. Kay Bailey Hutchison has jumped on Rick Perry because TxDOT is studying the concept of so-called VMT (vehicle miles traveled) tax. That method also could make sure you pay a steady per-mile cost of using roadways, regardless of fuel efficiency. It could be a lot more complicated, potentially with transponders that could have to produce information at car-registration time or perhaps at the gas pump.

But any of the new ways of raising more highway revenue is politically dangerous in an election year. Just look at the answers legislative candidates gave on this newspaper’s voters guide when asked about highway funding.

Whoever goes down to Austin next year will need to confront a long-term funding shortfall estimated at more than $300 billion over 25 years. The status quo isn’t cutting it.

What transportation crisis? Voters would cut road funding first

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First, not one of the major newspaper outlets who commissioned the poll will release it: the questions, how many Republicans versus Democrats were polled, or the methodology used.

While we have many road projects that lack funding right now, when given a choice between all the potential cuts to implement to balance the State’ budget next year, voters chose cuts to road funding over other priorities. We’ve contended for along time that a host of taxes already collected aren’t getting to transportation, and those must be redirected to roads before ANY increase in gas tax is considered.

But are they listening? No, Hillco lobbying firm is re-doubling its efforts to ram a local option gas tax through without first fixing the diversion problems or reforming TxDOT. Also, they try to make toll roads look like the option of choice to fund roads, but this analyst rightly proclaims that when only 20% say they want toll roads, that means 80% don’t want them! Our take is that people view that option as the one they can avoid paying. However, under Rick Perry’s policies, no road in urban areas (and some suburban and rural areas) will be left untouched by tolls. Even Senator John Carona admitted in a hearing February 1 that it’s disingenuous to say people have a choice whether to pay toll taxes or not when tolls will be everywhere.

Poll: Texas voters would cut highway funding first

02/15/2010

Associated Press

Forty-one percent of Texas voters chose highway funding in a poll asking what they would cut to deal with a projected state budget shortfall as high as $16 billion next year.

About one in five surveyed in the poll said they would raise taxes or fees, and fewer said they would cut spending on education or health care for the poor.

The Feb. 2-10 telephone survey of 1,508 registered voters has a margin of error of plus or minus 2.5 percentage points.

Blum & Weprin Associates Inc. conducted the poll for the Austin-American Statesman, The Dallas Morning News, the Fort Worth Star-Telegram, the Houston Chronicle and the San Antonio Express-News.

Asked where to get money for roads, voters were even more ambivalent. Given five widely debated options, toll roads ranked the highest. Twenty-one percent of respondents chose that option.

“It tells me that 20 percent like toll roads, but 80 percent don’t like them,” said Dale Craymer, president of the Texas Taxpayer and Research Association, a nonpartisan research group.

The results come amid the high-profile Republican gubernatorial primary between Gov. Rick Perry and Sen. Kay Bailey Hutchison. Debra Medina is also in the race.

Perry has made transportation a high priority in his campaign leading to the March 2 vote, while Hutchison has been critical of toll roads, including a Perry-backed plan called the Trans-Texas Corridor.

Craymer said the poll shows that in times of budgetary duress, concrete-and-steel projects that are costly and take years to complete are the first to go in the minds of voters.

“It’s not so much an indicator that people are willing to tolerate the traffic as much as it is recognition about the cost of fixing it,” Craymer said. “You can throw billions at the problem and not make a dent.”

While 38 percent of Texas voters said illegal immigrants should be deported, a combined majority picked two options that would allow them to stay. A path to citizenship was favored by 29 percent of voters, and 23 percent said they support giving immigrants work visas.

“There is a plurality for deporting them and the path to citizenship is not wildly popular in the state except among a few groups — minorities and the young,” said the pollster, Mickey Blum.

The economy and jobs was a prevalent worry for many of those interviewed, especially coupled with the looming state deficit.

Most said they believed offering incentives for businesses to move to Texas was the best way to create jobs. Only 16 percent said the state should spend money on public projects as a way to put Texans back to work.

Officials raise concerns about 161/Southwest Pkwy deal

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Area officials raise concerns about Southwest Parkway/Texas 161 deal

Posted Friday, Feb. 12, 2010

By GORDON DICKSON

gdickson@star-telegram.com

ARLINGTON — Negotiations to turn over construction of Southwest Parkway and Texas 161 to the North Texas Tollway Authority are on course to meet a Feb. 28 deadline, but some Dallas-Fort Worth officials say they are uncomfortable with what they say is a financial shell game that’s taking place to seal the deal.

A $300 million funding gap remains, and to help fix that problem, $91 million in Regional Transportation Council funds meant for other Metroplex road projects would be diverted to the Southwest Parkway/Texas 161 deal.

But some area elected leaders, particularly those from the Dallas area, say they’re worried that the deal is potentially a roadblock to the region’s ability to perform other work for years to come.

Dallas County Commissioner Maurine Dickey said those concerns are being glossed over in a furious attempt to get the deal completed by the deadline.

“I feel we’re being held hostage,” Dickey told members of the Regional Transportation Council, Dallas-Fort Worth’s official planning body, during a monthly meeting Thursday in Arlington. “I’ve never been on a board where I’ve been so absolutely pressed to make a decision on an issue without being able to discuss it.”

Despite those concerns, the 43-member RTC agreed on a voice vote Thursday to allow funds to be used as a bargaining chip.

Progress

Southwest Parkway, a proposed 28-mile toll road from downtown Fort Worth to Cleburne, and Texas 161, which is under construction in Grand Prairie and Irving, are being developed as toll roads because for decades the state has been short of the cash needed to build them as freeways.

In Cleburne, the Southwest Parkway project is known as the Chisholm Trail.

Texas 161 runs parallel to Texas 360 in Arlington and is considered a main route to Cowboys Stadium.

The Texas Transportation Commission agreed last month to use the state’s gas taxes as collateral for debt issued to build the roads, though a rival agency, the North Texas Tollway Authority, would control the project. The two roads will share toll revenue — as if they were a single project — until both are fully paid for.

That agreement all but assured that Southwest Parkway, which has been on the planning books for four decades, would be under construction by year’s end and open by 2013.

All that remains is negotiating the final details of the deal.

Tricky proposition

But that’s proving to be a tricky proposition because, even with the state co-signing debt for the road, there is still a $300 million gap between the cost of building the roads and the amount of revenue the roads can raise.

One of the key negotiators is Michael Morris, transportation director for the North Central Texas Council of Governments.

Morris’ latest proposal involves taking $91 million in funds that the RTC expects to receive beginning in 2014 and using tollway authority debt to convert the funds to cash so it can be used immediately for construction.

That would mean $91 million less for the RTC to spend on other Dallas-area projects in 2014. Morris said, however, that funds from state-issued Proposition 14 bonds could make up the difference. The Legislature has authorized the sale of Proposition 14 bonds to build roads today and repay the debt with future gas tax revenues.

The deal would also include language requiring the tollway authority to raise tolls on Southwest Parkway if necessary to satisfy debts, which means motorists could be asked to pay more for using the road if the project hits any fiscal snags down the road.

Several RTC members said it’s important to take the painful step of including their $91 million to ensure that the tollway authority — and not the state Transportation Department — takes the project.

If the tollway authority determined that the project wasn’t feasible, the alternatives would be to have the state build the project as a state-run toll road or to find a private partner to enter into a comprehensive development agreement — or CDA. Otherwise, construction could be postponed again.

But state lawmakers have repeatedly said they want the Transportation Department out of the toll business.

Tarrant County Judge Glen Whitley worries that if the tollway authority deal falls apart, Southwest Parkway would not get built.

“You’re running the risk of being at the mercy of the Legislature,” he said, “and whatever their feelings are about CDAs and toll roads.”