Link to article here.

Issues to consider when voting on Prop 1
By Terri Hall
October 12, 2014
Examiner.com

Many Texans are struggling to decide whether or not to support the upcoming constitutional amendment  known as Proposition 1 on the ballot November 4. Prop 1 would take half of the oil and gas severance tax currently collected on oil and gas production (that goes to capitalize the state’s Rainy Day Fund), and allocate those funds to the state highway fund for the next 10 years.

There are many issues to consider when deciding how to vote. Many Texans wonder why there needs to be an amendment to the constitution to address highway funding. They think the federal and state taxes, or user fees, we pay on every gallon of gasoline pay for highways. Few Texans are aware of the structural road funding shortfall facing Texas and the nation.

Texans pay 20 cents per gallon for state gasoline tax and everyone pays 18.4 cents per gallon in federal gasoline tax. Neither tax has been raised in more than 20 years. It’s not indexed for inflation, nor do either adjust when the price of gas goes up or down. So we’re trying to build today’s roads with a twenty-year-old revenue stream. The Texas Department of Transportation (TxDOT) is $4-5 billion a year behind in its ability to properly build and maintain the state highway system.

Lawmakers on both the state and federal level have exacerbated the problem by habitually raiding highway funds for non-road purposes. On the federal level, the diversions are primarily spent on transit programs, with a huge emphasis on hike and bike trails and commuter rail under the Obama administration. On the state level, twenty-five percent of the gas tax goes to fund public education, which voters approved decades ago through yet another constitutional amendment. State lawmakers have also raided gas tax for non-road purposes beyond those allowed in the Texas Constitution. According to the Texas Public Policy Foundation, forty-seven percent of the state gasoline tax is diverted to non-road uses. Whether it’s used to plug the holes in public pension funds or to buy school buses, the abuses have been persistent.

Despite promises to end state gas tax diversions session after session, lawmakers barely made a dent last session. Due to this lack of fiscal discipline, lawmakers have turned to toll roads and massive borrowing using debt financing to kick the can down the road. Few legislators want to raise the gasoline tax and prefer to outsource the tax hike to unelected toll authorities or private toll corporations rather than face the wrath of voters by directly voting to raise taxes. But now taxpayers have figured out tolls are taxes and the most expensive way to fund roads and an anti-toll revolt is spreading like wildfire.

So what can be done to start fixing the road funding shortfall?

Upside to Prop 1
Prop 1 is projected to send $1.7 billion a year in funds to highways without raising taxes. So passage of Prop 1 helps solve about twenty-five percent of the funding gap. Because of the aforementioned toll revolt, lawmakers made sure the Prop 1 funds cannot be used for toll roads. Some also see a natural tie-in to oil and gas severance tax and roads. Indeed one of the arguments for levying a severance tax in the first place was to help the state keep up with road maintenance and repair caused by natural resource extraction. Texas is blessed with a shale oil boom that’s been swelling the state’s Rainy Day Fund. Once the fund reaches a certain level, the excess spills over into the General Fund, which is primarily spent on education and public health which are unrelated to roads.

The legislation also requires a minimum balance to be maintained in the Rainy Day Fund before any funds can be transferred to the highway fund. Hence, emergency funds cannot be drained dry from passage of Prop 1. It can also help retire Texas’ out of control road debt – now the largest in the country at $31 billion in principle and interest.

Downside to Prop 1
However, many fiscal hawks feel the legislature should be funding roads out of existing funds, not with revenues that normally fund the state’s emergency fund, particularly since lawmakers just placed an amendment to raid the Rainy Day Fund for water infrastructure just last year. Conservatives were angered when budget writers failed to fund both roads and water in the regular budget last session, forcing lawmakers to dip into the Rainy Day Fund in order to cover the basics. Infrastructure is one of the core functions of government and legislators should be prioritizing the taxes we pay to get the job done.

Prop 1 is their get out of jail free card absolving them from making tough decisions on the budget. Prop 1 could also free-up other money to continue borrowing and tolling elsewhere. Since it won’t fix all the problem, TxDOT can spread the new funds around so that no single project is fully funded, and therefore still needs toll elements on it. Others reject Prop 1 based on the notion that it moves away from a user fee model (like the gasoline tax) to one borne by oil and gas producers. They argue those who use Texas roads from out of state would not be paying for their road use as they do under the gasoline tax system.

However, this legislation isn’t repealing the gas tax. The state will still capture that usage. Prop 1 is in addition to the current gas tax. The gas tax will still capture road use from all who drive Texas highways. Former State Rep. Tryon Lewis wants to see the gas tax increased to fix the shortfall, however, to get $4-5 billion more per year from a gas tax hike would require nearly tripling the 20 cent per gallon state gasoline tax. Not one sitting legislator would vote for such a hike, nor do voters want such a dramatic tax hike.

Other solutions
Both gubernatorial candidates, Greg Abbott and Wendy Davis, are fleeing from toll roads, but Abbott has laid out a comprehensive transportation plan that will end gas tax diversions, dedicate vehicle sales taxes to roads, and fix the highway funding shortfall without new tolls, taxes, or fees. That requires finding $4-5 billion in cuts from the current budget in order to re-direct those dollars to highways. Both candidates also support passage of Prop 1 as part of the mix of necessary solutions to address road funding shortfalls. So it appears help is on the way with or without the passage of Prop 1, but Prop 1 certainly makes bridging the gap a lot easier for those tasked with fixing it. Taxpayers need to be involved in the process every step of the way to ensure our highway system gets properly funded and the new hidden toll tax onslaught gets nixed, or the punitively expensive double taxation will continue in earnest.

Link to article here.

Both gubernatorial candidates stake out anti-toll positions
By Terri Hall
October 2, 2014
Examiner.com

Texas gubernatorial candidates Greg Abbott and Wendy Davis claimed to be against more toll roads at last night’s debate. Perhaps the recent research conducted by Texas Transportation Institute (TTI) that shows Texans do not want anymore tolls made the decision to be anti-toll a little easier. What’s shocking however, is that Wendy Davis thinks she can get away with it.

Since Davis entered the Texas senate in 2009, she’s done nothing but vote in favor of toll roads, even for the controversial private, corporate toll roads known as public private partnerships (P3s). Prior to her stint in the senate, she served as a Ft. Worth council member where she was appointed to serve on the Regional Transportation Council. Davis cried crocodile tears when the legislature yanked a P3 contract from Spanish toll giant, Cintra, for Hwy 121 in 2007. The contract would have locked down the expansion of free roads in Collin and Denton counties for the next 52 years. The toll rates Cintra could have charged in those final years would have been more than the cost of an airplane ticket from San Antonio to Dallas.

Davis voted repeatedly to hand more and more Texas roads to these private corporations in 2011 and 2013, among them the North Tarrant Express (7 segments of highway in Ft. Worth including major arteries like I-820, Hwy 121, & I-35) in her own district. Her law firm, Newby Davis, LLP,  does work for the North Texas Tollway Authority (NTTA) which has spawned an investigation by the FBI for conflicts of interest since Davis also sits on the Senate Committee on Transportation that handles NTTA legislation. So for Wendy Davis to try to claim she’s against toll roads after doing everything in her power to foist them upon Texans and even position herself to profit from them, is the height of hypocrisy.

Now, when running for higher office, she glibly uttered, “Tolls have been a poor solution.”

Indeed, and it’s the solution she helped bring to fruition. She touted her bill to end gas tax diversions last session and passage of Prop 1 this November as her transportation plan, however, Senate Joint Resolution 31 only froze the existing diversions and would only reduce them if the state’s revenues grew by more than three times the amount of the reduction. At that rate, the pittance of new money that would kinda, maybe, sort of ever actually get to roads would be so infinitesimally small that the bill is more akin to lip service, than an actual plan to ensure gas taxes only go to roads. By the time there’d be enough money to wean Texas off toll roads, the whole state would already be covered in tolls. Even if Prop 1 passes and all gas tax diversions ceased tomorrow, that would only solve half of the $4 billion problem.

As Attorney General, Abbott has had plenty of encounters with toll roads. In 2005, Abbott sued the Texas Department of Transportation (TxDOT) to make public a P3 contract for the Trans Texas Corridor that the Department was suing Abbott to keep secret. He was given the unpleasant task by the legislature with reviewing P3 toll contracts for legal sufficiency. He was not at liberty to negotiate any of the terms – TxDOT has been given a blank check by the legislature to do so. These complicated, lengthy contracts ended up pushing Abbott to ask for $1 million annually just to pay for the enormous legal costs of negotiating these specialized toll contracts. Abbott initially spoke out about the unconstitutionality of TxDOT using the state highway fund to guarantee a loan of up to $4 billion in future gas taxes for the NTTA’s Hwy 161 toll project.

The constitution prohibits using the state highway fund to guarantee debt (outside the debt voters specifically approved with passage of constitutional amendment Prop 14 in 2003) and bind future legislatures. Rather than use his power as the state’s chief law enforcement officer to block the final unconstitutional loan, he looked the other way and allowed it to happen. Since then, TxDOT did another loan guarantee on the Grand Parkway toll project for another $4 billion last year.

Now Abbott declares: “My plan does not involve any toll roads, period. I’m not interested in adding toll roads in my plan,” in an answer to a pointed question posed by Express-News Austin Bureau Chief Peggy Fikac.

The anti-toll sentiment in Texas is now in full bloom, and both candidates know supporting more toll roads is a losing proposition. So while both candidates have some baggage when it comes to toll roads, the more credible candidate is Abbott. His plan actually solves the funding shortfall without new taxes, fees, and tolls. He never directly voted on toll policy as Davis did, and he did sue TxDOT to open up the Trans Texas Corridor contract to the public as well as make waves about TxDOT’s unconstitutional loan guarantees on toll projects.

While Abbott should have stopped those loan guarantees, Texas Governor Rick Perry, the defacto head of the Republican Party in Texas for over a decade, made toll roads one of his chief legacies and made publicly opposing him difficult, especially for members of his own party. With Perry out of the way, Abbott’s instincts are obviously to chart a different course. January, when the new governor gets sworn in, can’t come fast enough.

Link to article here.

Cintra, Macquarie file bankruptcy on Indiana Toll Road
By Terri Hall
Examiner.com
September 23, 2014

Yesterday, the two private, foreign corporations that tookover the Indiana Toll Road in 2006 filed for Chapter 11 bankruptcy. Former Indiana Governor Mitch Daniels sold it to Spanish infrastructure company Cintra and Australia-based Macquarie in a $3.8 billion, 75-year lease that raised eyebrows around the world.

Few thought a road could fetch so much money. It set off a chain reaction of state governments clamoring for quick cash to shore-up shrinking highway funding. Indiana used the money to build other highway projects, forcing Indiana Toll Road users to pay for other road expansion they don’t use. The state has long since spent the money in the short-term, but now the tollway is in long-term trouble.

When Cintra and Macquarie acquired the tollway, they immediately doubled the toll rates. The troubled road has failed to attract enough traffic to repay its $5.8 billion in debt still owed on the project. It shouldn’t surprise anyone that the road is in bankruptcy when they’ve doubled the cost to use it. In a true market approach, if not enough customers are buying your product, you lower the price, not increase it. The hedge fund and distressed debt investors that now own about 80% of the debt have agreed to allow Cintra and Macquarie to restructure their debt or dupe another company into buying it.

Former Penn State Professor Ellen Dannin explains how these companies cash-in even when they go bankrupt in Randy Salzman’s article on public private partnerships (or P3s) in Thinking Highways. She documents how these companies never intend to pay back the debt, but simply ‘mine the the code.’ The corporations first create a separate entity, usually with the road’s name in the title like Cintra and Macquarie did here with their Indiana Toll Road Concession Company, in order to protect the parent company from losses.

They structure the deals to be extremely long leases so that they can depreciate the road as an asset on their taxes. They put very little of their own money at risk as the equity (a mere $800 million out of a total $3.8 billion), and allow the private bond investors and/or taxpayers to take on the risk for the vast majority of its debt. The companies get their own equity back with some profit in just a few short years of collecting tolls. This leaves the other investors to the take the actual losses just about when the road is going to go bankrupt, and often when the road is also in need of major maintenance or rehabilitation.

Is the Texas SH 130 next?
The Indiana Toll Road was already in trouble when Cintra’s Texas State Highway 130 opened in 2012. The tollway was a brand new road, as opposed to an existing tollway, and the only stretch of the controversial international trade corridor known as the Trans Texas Corridor TTC-35 to ever be built. It was intended to serve as an alternative to the perpetually congested NAFTA superhighway Interstate 35. But it, too, is not attracting the level of projected traffic to keep it financially solvent.

Moody’s downgraded Cintra’s debt to junk bond status last year. In June, Cintra failed to make its full debt service payment, placing its SH 130 Concession Company in ‘technical default.’ But this time, Cintra and its minority partner San Antonio-based Zachry American Infrastructure used a $430 million federal TIFIA loan as part of the $1.3 billion debt package, which is backed by the U.S. taxpayer. If the traffic fails to show up (only half of the projected traffic has materialized) and the tollway goes belly-up, the taxpayers go down with the ship.

On Cintra’s two other P3s in Texas, the debt-risk picture gets even more bleak for taxpayers. On the Interstate 635 contract in Dallas, the total project cost was $2.6 billion with $2 billion of that price tag coming from the taxpayers. Cintra landed an $850 million TIFIA loan, $615 million in Private Activity Bonds (also a federal program, special tax-exempt bonds just for these toll road deals), and $490 million in gas taxes from Texas taxpayers.

On the project called the North Tarrant Express in Ft. Worth, Cintra snagged 7 different stretches of highway in one bid. They snagged the development rights which gave Cintra the right of first refusal on all of them under two ‘best value’ bidding procurements (see here and here).

Out of a total cost of $3.7 billion for the projects, $2.8 billion came from the taxpayer: $1.2 billion in TIFIA loans, $673 million in PABs, and nearly $1 billion in other unspecified ‘public funds.’ Segment 3B was 100% funded by taxpayers. All told, $1 billion in just gasoline taxes alone went into the I-635 and North Tarrant Express projects, yet Texans will still be charged a hefty toll (up to 95 cents a mile) to use it.

Cronyism infects P3s
It’s no coincidence the first three Texas P3s went to Cintra. With direct ties to Governor Rick Perry’s office, Cintra’s lobbyist Dan Shelley worked for Cintra, became the chief legislative liaison for Perry in 2005 when he secured the development rights to the Trans Texas Corridor for his former employer, then went back to work for Cintra.

The rest, as they say, is history. Cintra had the rest of its P3s in the bag thanks to Rick Perry’s personal branch of cronyism. Perry gave a keynote address to the International Bridge Tunnel, and Turnpike Association’s annual conference last week in Austin, telling attendees from 18 different countries that, “You have come to what I would suggest is the mecca of innovation on transportation infrastructure.”

Cronyism and putting taxpayers on the hook for private corporations’ losses isn’t ‘innovative,’ it’s a rip-off as old as politics itself. So all eyes will be on Cintra’s SH 130 this December when its next debt service payment is due – both the December payment along with the remainder of its June payment. Perry’s highway department is already supplying the second round of subsidies for the failing tollway by offering another $32 million in public money to allow trucks to use the tollway for the same rate as autos. The first round of subsidies did net an increase in truck traffic, however, as soon as the subsidies stopped, the uptick in truck traffic did, too. The Texas Department of Transportation (TxDOT) is only too happy to keep the subsidies coming since they have a revenue sharing agreement with Cintra.

But absent a major uptick in traffic, even with TxDOT help, the tollway is headed for bankruptcy. TxDOT put it on life support likely long enough for Cintra to at least re-coup its own meager equity of $210 million. However, any further subsidies or bailouts are just putting off the inevitable. Failure to pay its next debt service payment will land Cintra-Zachry in bankruptcy just as Perry’s presidential hopes will kick into high gear. This time, the nation will be watching.

________________________________________________________________________

Link to article here.

Indiana Toll Road Declares Bankruptcy
Spanish-Australian consortium behind the Indiana Toll Road cannot pay its $6 billion in debt obligations.
The Newspaper.com

Public-private transportation partnerships continue to fail around the world. The Spanish-Australian consortium that runs the Indiana Toll Road became the latest casualty seeking Chapter 11 protection in the US Bankruptcy Court for the Northern District of Illinois. On Tuesday, Judge Pamela S. Hollis began hearing the case.

This was supposed to be a model deal for other states to follow. In 2006, then-Governor Mitch Daniels (R) leased the 157-mile Indiana Toll Road to Cintra and Macquarie Bank, operating as the ITR Concession Company, in return for an up-front payment of $3.8 billion. Daniels promised to use that money to build new roads over ten years under a program he called “Major Moves,” while the consortium was allowed to charge motorists steadily rising tolls until the year 2081.

The consortium came up with the cash by borrowing $4.1 billion off the prospect of a “guaranteed” stream of future toll returns. Revenue projections proved to be unrealistic and the consortium was unable to turn a profit.

“The global economic recession and actions undertaken by the United States and various European governments in response thereto have driven interest rates down to historic lows, creating a substantial net obligation under the debtors’ interest rate hedging obligations,” consortium CEO Fernando Redondo told the court in a filing on Sunday. “As a result, absent a restructuring, the debtors will not have sufficient cash flows to service their funded debt obligations… and operate the toll road in a prudent manner.”

Motorists paid $196 million to use the road last year while the consortium owed $193 million in debt service payments. This left just $3 million to cover the cost of 244 employees, maintenance, capital upgrades and related expenses. Reserves were exhausted in December, and the consortium missed a $102 million interest payment in June. With interest, the consortium’s total debt obligation now stands at $6 billion.

The promise of the Major Moves Fund also failed to deliver. The $2.6 billion fund was supposed to have been set aside from the $3.8 billion payment to the state government. It was to grow by 5.25 percent annually from investments. That did not happen, and the money ran dry in 2013, though tolling will continue for at least another 69 years.

The toll road’s failure is not necessarily unexpected or unwanted for the companies involved. Australia’s Macquarie Bank, which indirectly owns half of the consortium, is known as the “millionaire’s factory” with a knack for turning profits from flipping assets and collecting management fees, according to a lawsuit filed in New York (view case).

Such failures are common. The 91 freeway high occupancy toll lanes in Orange County, California was one of the first modern toll projects to go belly up, with the county taxpayers in 2003 paying for more than the original cost of construction to buy out the project. San Diego’s South Bay Expressway went bankrupt in 2010 and was also bought out by county government. California’s Foothill-Eastern Transportation Corridor Agency, which runs the 241, 261 and 133 toll roads in Orange County, has been teetering on the edge of default despite $1.7 billion in subsidies from the taxpayer. The agency in charge of the road refinanced in December, extending the tolling period out to the year 2053.

In South Carolina, the Greenville Southern Connector went bankrupt in 2010. Transurban, the Australian company that runs the Pocahontas Parkway in Richmond, Virginia, wrote down the toll road as having a value of $0 in 2012.

In Australia, the operator of the Clem7 toll road went bankrupt last year, joining the Airportlink toll road, the Lane Cove Tunnel and the Cross City Tunnel. In Spain, ten toll concessions, including the Madrid-Toledo highway, became insolvent in 2012. The Spanish government provided more than a billion euros in bailout money to the tolling firms Abertis, Acciona, ACS, Bankia, Cintra, OHL and Sacyr Vallehermoso.

Link to article here. Update: Munoz & team did snag the contract.

Munoz’ ties to 281 toll road create trail of corruption
By Terri Hall
Examiner.com
September 17, 2014

The Express-News reported yesterday that Henry Munoz is angling to get a piece of the US 281 toll project in San Antonio by seeking a 5-year engineering contract with the Alamo Regional Mobility Authority (RMA). The trouble stems from his sordid history of buying and manipulating local politicians, and he’s particularly adept at it when it comes to transportation. He’s set-up his own company to now profit from the project he helped fashion while a public official.

Munoz is a former member of the Texas Turnpike Authority and a former Texas Transportation Commissioner, who resigned from the agency under a cloud of scandal for his staff abusing the state travel program and for providing inside information to a Mexican construction company in exchange for lavish accommodations, travel, and other personal pay-offs. Nearly a decade later, Munoz was appointed to the Alamo RMA and served as its Finance Committee Chair. He bolted when Texans Uniting for Reform and Freedom (TURF) successfully sued to halt the US 281 project in 2008. It was just no fun for him to be there anymore. No money to snag for the foreseeable future.

In December 2008, Bexar County Judge Nelson Wolff appointed him as Chairman of the Board for both Via Metropolitan Transit and the Advanced Transportation District, or ATD, (which oversees the portion of local sales tax dedicated to transportation projects – half goes to transit, half to roads). The RMA immediately attempted a hostile takeover of Via (cloaked as a merger but the idea was concocted by Wolff and Munoz) to get itself on life support, since its seed money from the city ($500,000) and county ($750,000) had run out. It had no ongoing revenues to cover its operating expenses absent any toll projects.

With roughly $40 million in debt on the RMA’s books, many Via board members balked at the merger, and before the state laws could be changed to allow the merger, President Obama came to the rescue and bailed out the RMA with his stimulus program. With a project now in hand, the RMA dropped Via like a hot potato and ran merrily on its way to build the southern ramps of the 281/1604 interchange. But the bad blood between the two agencies lingered. It didn’t take long for the RMA to get too big for its britches, and Bexar County took over the operations of its recalcitrant child in June of 2012.

But it wasn’t until 2012 that Munoz made his move to get back in the toll road game. When TxDOT announced a $2 billion surplus (due to cost under runs and infusion of federal money), San Antonio received $146 million in unexpected funding. TURF asked for the funds to go to one of the region’s top most congested roads, US 281, especially since it had $100 million in gas taxes yanked from the project in 2008 (without TxDOT or the local Metropolitan Planning Organization, MPO, ever accounting for where it went).

The MPO and the Bexar County Commissioners passed unanimous resolutions to use the funds, along with $100 million in ATD sales tax revenues, to fix both US 281 and Loop 1604 West without tolls. But TxDOT quickly went to work in both public and private meetings to assure any deal still contained tolls on US 281. Munoz seized the opportunity to get back at the RMA since ATD dollars were involved, and the Via/ATD Board passed a resolution to bar the RMA from controlling the toll revenues. In a back room deal with TxDOT, Munoz, and Wolff, Munoz also insisted the deal include a Via Park-N-Ride transit center ($12 million) and an exclusive ramp (also over $10 million) into and out of the inside toll lanes on 281 for its buses and park-n-ride customers, which in the Stone Oak area is scant at best.

Fast forward to January of 2014. Once again, TxDOT, Wolff, and Munoz hatched a back room deal to hand over 29 miles of TxDOT highways to city and county taxpayers in an $825 million toll road package that now included adding toll lanes to I-10 (outside Loop 1604) and free expansion on Loop 1604 West. Munoz, a powerful ally and penultimate fundraiser for Democrats, as well as a high-powered bundler for Obama, was sure to protect fellow Democrats’ districts from tolling, while slapping toll taxes on the largely Republican north side.

Apparently, after the now defunct unpopular streetcar plan went south, Munoz got the hankering to cash-in on the US 281 toll road deal he helped fashion, and decided to let the ATD Board relinquish control of the toll revenues. Perhaps knowing the backlash to his name being attached to the engineering teams vying for the 281 toll contract would come, he wanted to soften the obvious tie to his Via/ATD Board Chair activities and this project. At its board meeting in August, the RMA officially ceded the project back to TxDOT, but retained the rights to the toll revenues.

Fraught with red flags

The obvious red flags are these:
1) Munoz & Co. is not even an engineering firm; it’s an architecture firm. How can an architecture firm qualify as part of a team for a civil engineering contract? Clearly Pape Dawson and AECOM are seeking to cash-in on Munoz’ connections to local officials and even to the RMA board itself. Indeed, Munoz has strong ties to three current RMA board members. The first, Reynaldo Diaz, served on the RMA board with Munoz. The second, Gavino Ramos, is a former Via board member that served at the same time as Munoz, and the third, Ramiro Cavazos, is the CEO of the Hispanic Chamber of Commerce who led a business coalition to advocate for Munoz’ street car plan.

2) The US 281 toll project does not have final clearance from the Federal Highway Administration. The final configuration of the road is still in doubt, too. Judge Wolff and Texas State Senator Donna Campbell sent a letter to the Texas Transportation Commission requesting that if Prop 1 passes in November, that some of those funds be used to replace some of the toll lanes planned for the 281 toll project with more free lanes. So how can an engineering contract be issued for a project where the design is still up in the air and for a project that has not received final approval from the feds yet?

The only explanation is corruption. This deal is rigged in favor of Munoz’ team from start to finish. Munoz was a key player in orchestrating the 281 toll road as a public official, and he’s now stealthily positioned himself to profit from it. He has a string of bad deals fraught with abuses in this town (San Antonio ISD bond program and the Museo Alameda project to name a few), and the US 281 toll project may be next among them.

Link to article here.

From roads to rail: TxDOT head opens door to raiding road funds for rail
By Terri Hall
Examiner.com
May 29, 2014

In what appears to be a contradiction with Texas House Speaker Joe Straus’ announcement that his next budget will end all un-constitutional gas tax diversions to ensure taxes collected for roads indeed go to roads, Texas Department of Transportation (TxDOT) Executive Director Joe Weber recently signaled the need to depart from highway-only funding to use road taxes for rail.

Weber told the Dallas Morning News that “it’s going to take more than new roads to keep Texans traveling smoothly if population growth estimates prove true.”

He also said TxDOT needs to increase funding for rail projects despite an environment where road dollars are already scarce. With the Department’s shift to tolling, some of this money it plans to divert to rail will include toll revenues. Texans won’t take kindly to paying tolls to fund rail that they can’t or won’t use.

Weber’s position seems a contradiction in and of itself by acknowledging road funding is already inadequate to meet transportation needs, yet his plan to fix that is to steal yet more funding from roads to build rail. Weber did not respond to requests for clarification. There is a very limited amount of road dollars available and it can either be boosted to expand roads where needed to relieve congestion or raided for rail, which the vast majority of Texans won’t or can’t use since rail doesn’t take you where you need to go.

TxDOT has already diverted some of its Texas Mobility Funds to fund streetcar projects — $92 million in San Antonio and $90 million in El Paso. The Department has also funded $140 million in rail-related projects in Dallas-Ft.Worth. Meanwhile, the agency persistently claims there’s no money to fix our roads without tolls. Stealing from Peter to pay Paul has already become the practice at TxDOT with gas taxes and other public money being used to build toll roads, which is double taxation. Texans have been duped into thinking the toll they pay is for the road they’re driving on, but those days are over. It’s no longer the user pays model. Now tax money is building the toll road, but motorists are being taxed again to drive on it.

Rather than increase transparency and truth in taxation, Weber wants to muddy the waters even further by using road taxes for rail. Until Weber’s announcement, TxDOT diverted money to rail under the radar. Now it appears to be official policy. Judging from its actions in prior legislative sessions, TxDOT will likely use all resources available to advocate for more ‘flexibility’ in the use of gas tax and other revenues under its control to spend however it sees fit – including on rail.

Rosy projections may not come to fruition
Population forecasts are likely not much different from toll road forecasts – wildly optimistic and largely inaccurate. Officials always have to create a crisis to convince taxpayers to part with their money to advance the agenda of special interests. Behind this new push for rail is the reality that President Obama’s transportation vision emphasizes rail, and the Administration’s transportation bill would shift funding away from highways. That means rail is where the money is to be had. Weary of waiting for lawmakers to shore up road funding, special interests are reading the tea leaves and see another gravy train opportunity through rail projects.

Regardless of Weber’s motivation, rail is enormously more expensive than adding highway capacity. Purchasing and maintaining the rail cars alone adds tremendous cost that doesn’t exist with roads since individuals pay for their own cars and for the maintenance of their own vehicles. Most Texans aren’t clamoring to get into rail cars, they’re begging for highway capacity and for their road & vehicle taxes to go to their intended purpose. It’s going to require vigilance to ensure scarce road money doesn’t get raided for rail programs while Texans aren’t looking.

The mixed messages state leaders are sending – Straus promising to end raid of gas tax for non-road purposes, while Weber is calling for road funds to go to rail – could torpedo the effort to get voters to approve more road funding this fall when Prop 1 appears on the ballot. Prop 1 funds would be deposited into the State Highway Fund which can only go to roads, but voters may not know that with all this talk of rail.

Link to article here.

Update: Bob Hall did edge out incumbent Senator Bob Deuell by 300 votes.

Power shift in Texas election to benefit anti-toll cause
By Terri Hall
Examiner.com
May 27, 2014

It was another great night for the anti-toll cause in Texas. Today was the Republican primary run-off election and voters toppled the incumbent David Dewhurst, replacing him with tea party favorite State Senator Dan Patrick for the powerful Lt. Governor seat. The campaign got downright nasty with Dewhurst hurling mud about Patrick’s past mental health challenges that dated back thirty years into the past, drudging up Patrick’s attempted suicide to try to win votes. It clearly didn’t work. Patrick beat Dewhurst 65%-35%.

Two more tea party favorites also won statewide office easily, perhaps on Patrick coattails: Ken Paxton beat Dan Branch for Attorney General and Sid Miller beat Tommy Merritt for Agriculture Commissioner. Newcomer and tea party leader Konni Burton cleaned up the senate seat vacated by Democrat Wendy Davis in Senate District 10, which is a pick-up for the GOP if she wins in November. Burton was also one of the top anti-toll candidates tonight.

A remarkable race to watch this election night was the nail biter between incumbent State Senator Robert Deuell versus dark horse tea party candidate Bob Hall in District 2. At one point, there was only one vote separating these two and no clear winner as of 10 PM. Deuell also used dirty tactics misrepresenting the court record in Hall’s divorce case from decades earlier, accusing him of being a wife beater when, in fact, the court exonerated him from all charges made by his ex-wife. Expect a recount in that race.

But there were notable losses, too. Newcomer Ryan Sitton beat former State Representative and conservative Wayne Christian for Railroad Commission, which regulates the oil & gas industry. John Wray edged out grassroots favorite TJ Fabby by just 5-percentage points in the open seat vacated by State Representative and powerful Appropriations Committee Chair Jim Pitts in House District 10.

Conservative sweep

What does all this mean to taxpayers? New conservative leadership in the Senate. Typically, the Texas House is more conservative than the Texas Senate, and conservatives counted on the House to stop bad bills. Now the roles may be reversed. The wild card is whether State Rep. Scott Turner will prevail in the Speaker’s race when the legislature comes into session next year, which would make both chambers decidedly conservative and a total political upset against the GOP-crony capitalist establishment.

Under Dewhurst’s leadership, Texans experienced a massive shift away from an affordable gas tax funded freeway system to a reliance on tolling (just about everything that moves). The Perry-Dewhurst regime brought us the Trans Texas Corridor, quick take eminent domain, tolling existing freeways, handing our public roads to private toll corporations who charge Texans 95 cents a mile to drive, and using gas taxes and a host of public money to subsidize and guarantee the loans on toll roads. They took Texas from zero debt for roads to now the highest road debt in the nation at $31 billion (in principle and interest).

Closing this chapter of Texas’ transportation history is a Texas-sized step in the right direction. Though Patrick has a poor voting record on transportation, he reached out to anti-toll groups like Texans Uniting for Reform and Freedom, which gave him an ‘F’ on their 2013 Report Card. Then, he went on to earn a ‘B’ in their 2014 Voter Guide, and Patrick signed onto their legislative agenda and promised to work with the grassroots to make things right. He also earned Texans for Toll-free Highways endorsement in the race.

With many new, more conservative senators joining Patrick in his inaugural session as Lt. Governor, like Van Taylor moving over from the House to fill the seat vacated by Paxton and possibly stalwart anti-toll hero Lois Kolkhorst in the seat vacated by Glenn Hegar who won Comptroller, 2015 may well be the year of transportation in the Texas legislature.

Road funding is heading off a fiscal cliff when the Texas Department of Transportation’s budget that has been propped up with mounds of debt disappears. The state’s gas tax has been frozen at 20-cents/gallon for 20 years and revenues have remained flat even with 1,000 new residents moving to Texas per day. Current House Speaker Joe Straus just announced his plans to introduce a budget to end the 80-yr raid of gas tax for non-transportation purposes. But other diversions like the 25% of gas tax that goes to education ($750 million/yr) and the vehicle sales tax ($3.3 billion/yr) that goes to general revenue still remain. These diversions need to be addressed in order to ensure Texas’ public road system is sufficiently funded.

If Patrick goes on to win in November, who he assembles as his committee chairs and transportation team will signal whether or not he’s serious about reforms and righting this ship that’s been run aground by his predecessors. Despite the grassroots gains from this election cycle, all politicians, regardless of party, must be held accountable for their campaign promises. Our freedom to travel, cost of goods, cost of living, and quality of life depend on it.