Link to article here.
This was the compromise hatched in a backroom deal with Governor Perry, Texas House Speaker Tom Craddick,and Lt Governor David Dewhurst. Read the letter here. Perry gets access to public pension funds to build toll roads that even the private sector now deems risky, and Legislators get their $1 billion in projects TxDOT previously cut due to an “accounting error.”
TxDOT to borrow another $1.5 billion
By Ben Wear
AMERICAN-STATESMAN STAFF
Saturday, August 30, 2008
The Texas Transportation Commission, taking its cue from state leaders, decided Friday to borrow $1.5 billion that would be paid back with future gas taxes.
That authority, granted on a unanimous vote of the commission in a specially called meeting, will allow the Texas Department of Transportation to issue nearly $4.3 billion in contracts in the budget year that begins Monday. At least $1.1 billion of that would be for maintenance projects. But the remainder, nearly $3 billion, would allow TxDOT to get to several state road expansions that had to be shelved this year.
That 2008 crunch directly affected the Austin area, where local leaders had approved a $1.45 billion plan to build five more toll roads based on a promise of several hundred million dollars from TxDOT. Politicians here, particularly state Sen. Kirk Watson, D-Austin, were incensed when TxDOT reneged on that promise only a few weeks after a tough October 2007 vote on the toll roads.
TxDOT Executive Director Amadeo Saenz could not say with certainty Friday whether the move to issue the $1.5 billion in gas tax bonds will restore much of that financing to Austin.
“It could help Austin,” Saenz said. “We want to make sure we get projects that are ready to go in 2009.”
The Central Texas Regional Mobility Authority will be building the first of those five projects, an expansion of U.S. 290 from Northeast Austin to Manor that would include toll express lanes and improved frontage roads.
However, officials with the authority this week indicated that environmental and engineering work will probably not be ready in time for construction to begin until late 2009. That would be beyond the state’s budget year, which ends Aug. 31, 2009.
Saenz indicated that some of the $1.5 billion would be spent on engineering and right-of-way purchases around the state, readying projects in anticipation of even more borrowing to come. Under state law, TxDOT could borrow an additional $1.4 billion against the gas tax in the 2009-10 budget year. Austin projects could see some of that engineering money or some of the $1.4 billion if TxDOT follows through and takes on that debt as well.
And if the Legislature passes the proper legislation next year, the agency could borrow up to $5 billion more that voters approved under the Proposition 12 constitutional amendment in November. Those bonds would be paid back by general state revenue, not gas taxes.
Friday’s action came in response to a letter a week ago signed by Gov. Rick Perry, Texas House Speaker Tom Craddick and Lt. Gov. David Dewhurst, the state’s three most powerful elected officials. In that letter, the three backed more borrowing against the gas tax and financing the Proposition 12 bonds.
In the past year, TxDOT had resisted borrowing more against the gas tax, arguing that doing so would starve the agency’s bottom line down the road as gas taxes were used to pay back the borrowed money. But in the letter last week, the three leaders supported ending or curtailing significantly the use of gas tax money for state needs other than building transportation projects.
About $1.6 billion in the current two-year state budget went to such “diversions,” the bulk of it to the Texas Department of Public Safety.
If the Legislature were to return much of that money to TxDOT, replacing it with general state revenue from other taxes and fees, then TxDOT could presumably handle the additional gas tax borrowing.