Lawmakers trot out special interests to lobby for tax hikes

Public hearing turned lobbyist feeding frenzy
By Terri Hall
San Antonio Express-News/Houston Examiner
Feb 02, 2010

We’ve seen it before. But in an election year during an economic downturn, it’s breathtaking — a room stacked with lobbyists and elected officials lobbying for higher taxes. Yesterday’s Joint Public Hearing of both the House and Senate Transportation Committees (more news coverage below) to discuss the state of transportation finance was what San Antonio Rep. Ruth McClendon defined as insanity, doing the same thing over and over and expecting a different result. McClendon feels that unless the political aspect of why road funding has not been properly addressed, all the public hearings and testimony won’t change the outcome.

Ultimately, Governor Rick Perry has repeatedly threatened a veto of any increase in transportation funding other than his policy of privatized toll roads, and he’s managed to successfully starve or squander existing funding enough to accomplish his goal. Perry, David Dewhurst, Tom Craddick and Steve Ogden’s desire to raid teacher retirement and public employee pension funds to finance these risky toll road deals fell flat in the Legislature, a sentiment echoed in yesterday’s hearing.

Once again, lawmakers tried to make the case that TxDOT is plum out of money and that higher taxes are needed to build more roads, while conservative legislator Rep. Linda Harper-Brown and a handful of conservative watchdog groups pushed back saying there’s already tax collected that’s not getting to transportation, which needs to be fixed first.

Business interests like the Texas Association of Business and virtually all the urban Chamber of Commerce groups shamelessly advocated private toll roads, and every tax imaginable to go to roads. San Antonio Greater Chamber of Commerce President Richard Perez even asked for a “arterial collection” tax, which is code for tolling surface streets, not just highways. These hogs at the trough want no tax left “un-levied” to exploit the powers of government taxation and forcibly empty our pockets to fill theirs. They want it all — from a hike in vehicle registration fees and vehicle sales tax to property tax, sales tax, and basically taxes on anything that moves.

Lawmakers again had a hard time discerning the true funding “needs” due to TxDOT persistently including projects not on the state highway system in its “funding gap” figures that started at $86 billion in 2006 (then was revised downward by $30 BILLION after the State Auditor found TxDOT had bloated that figure) and is now up to $387 billion. TURF also obtained sworn testimony from a former employee of the State Auditor that Perry’s Transportation Commission directed the agency to gin-up its 2006 funding gap so that it appeared insurmountable under the gas tax system (so it could push private toll roads as the solution to funding shortfalls). Distrust of TxDOT is the elephant in the room few lawmakers seemed prepared to address.

Americans for Prosperity and Texans Uniting for Reform and Freedom, two of only three watchdog groups to testify (Eagle Forum didn’t show and Texas Public Policy Foundation was invited but declined) compared with 31 invited witnesses in favor of higher taxes without accountability, emphasized prioritizing existing funding first, like ending diversions of gas taxes revenues away from transportation, and cleaning up a broken TxDOT that continues to illegally use taxpayers money on lobbying for more privatized toll roads.

Defending the indefensible
Though the Texas Conservative Coalition echoed many of the same sentiments, its Director, John Colyandro, was taken to task by Chairman Senator John Carona for advocating the most expensive road tax while rejecting a more affordable gas tax increase. “How is that conservative?” asked Carona.

While Colyandro stopped short of endorsing Rick Perry’s position of having all new capacity being toll lanes handed over to foreign corporations that charge 75 cents PER MILE to use public roads, he did advocate that private toll roads have a legitimate role as part of a mix of both toll and non-toll roads.

Earlier in the hearing, Carona laid down the gauntlet asking, “I’m looking for someone to come and defend to me that a privately built toll road is less expensive than a free road ’cause it just ain’t so.” While Colyandro and many of the lobbyists and local politicians asked for the moratorium on private toll roads be lifted and remain “one of the tools in the tool box,” none could defend how that funding “option” was more affordable than a gas tax increase. Because it isn’t. It’s rather telling when even a so-called anti-tax advocate lobbies for the most expensive road funding option, but outright rejects the most affordable one.

TxDOT admits Trans Texas Corridor still alive & well
Considering all the campaign rhetoric from Perry claiming the Trans Texas Corridor (TTC) is “dead,” his highway department laid it to rest when it admitted on the record that it’s still alive and well in the transportation code. The Department still has the legal authority to move forward with it should Perry be re-elected. So once again, all the claims that the TTC is dead, are just plain inaccurate. In fact, one of Perry’s appointees to the Transportation Commission, Ned Holmes, asked at a Commission hearing last fall that the TTC-69 private toll contract be expedited. Two other pending TTC corridors, La Entrada de Pacifico and Ports to Plains are also actively being pursued.

Private toll roads cost more than public
As part of the discussion on private versus public toll roads, several lawmakers queried TxDOT staff and Commission Chairwoman as to why public agencies can’t go to the bond market and fund these toll roads the same as a private operator can and even more cheaply since they can access tax-exempt bonds and don’t need to make a profit. The answer is it can stay in the public’s hands more affordably.

Though Transportation Commission Chairwoman Deirdre Delisi tried to say the private operators can tap money the taxpayers can’t, it’s totally false. In fact, it’s the other way around. The private sector is exploiting the tax-exempt capital backed by taxpayers (like federally backed TIFIA loans and Private Activity Bonds, PABs, as well as other sources of taxpayer revenue like gas taxes to subsidize toll projects) in addition to its access to the private bond market, which charges higher interest rates resulting in higher toll rates.

If a potential road is toll viable, the public toll entity can go to Wall Street and get private investors to fund the project using toll revenue bonds based on traffic forecasts. The private investors, not the taxpayer, are on the hook if the traffic fails to show-up to cover the debt. No public money has to be tapped when building a toll viable road.

Delisi seemed clueless as to what a toll viable road even was or how one is funded, looking to TxDOT staff to bailout her out of answering the question. That’s because TxDOT hasn’t built any toll viable roads since she became Chair. Delisi also claimed there were no guarantees (where the taxpayers bailout the private entities) that the private operators would make a profit, yet an article in today’s Bond Buyer confirms there are.

Financial death spiral
Under Perry, rather than scrap toll projects that won’t pay for themselves, he’s buried the taxpayers in massive amounts of new debt to SUBSIDIZE losing toll projects, socializing the losses and privatizing the profits. Pre-Perry, there was ZERO debt for roads. On Perry’s watch, $12 billion in debt has been amassed, not counting the off-budget debt local toll entities have had to incur to pick-up the slack for the State’s failure to properly fund STATE highways (and millions the Governor’s office has spent on roads for Colonias).

Much of this money has been leveraged multiple times (using borrowed money as collateral to borrow more money, and often several times over), the same reckless financial methods that got us into the mortgage crisis and bailout era. If we continue down this road, debt service payments will likely eat-up our existing gas taxes at a faster pace than inflation, fuel efficiency, and diversions COMBINED!

Though there’s some room to borrow more money for roads, the Texas Bond Review Board Executive Director warned, there’s not much available. Many of the State’s bond ratings have already dropped from AAA to AA+. Perry has basically maxed out the State’s credit card in just 5 years!

Carona closed the hearing saying the committees planned to reach out to taxpayer groups next time around to try and reach consensus so that road funding issues get solved and not stonewalled for another session. From our perspective, more funding is a non-starter until they end gas tax diversions and audit and clean house at TxDOT, holding them accountable for the years of wrongdoing.

Be sure to read TURF’s oral testimony and written testimony.___________________________________________________________

Link to article here.

North Texans revive push for local-option transportation funding bill

Posted Monday, Feb. 01, 2010

Officials from Fort Worth, Dallas and Arlington signaled their intentions at a joint hearing before the state House and Senate transportation committees Monday, saying that congestion and pollution have only worsened since a similar bill died in the closing days of the 2009 Legislature.

“We in North Texas are facing nothing less than a mobility crisis,” said Fort Worth Mayor Mike Moncrief. “North Texas needs your help. The people of Fort Worth need your help.”

The legislative initiative being prepared for the 2011 Legislature would allow county or regional elections in which voters would choose from a menu of funding options, such as an increase in gasoline taxes or auto registration fees, Fort Worth Councilman Jungus Jordan said in outlining the plan after the hearing.

Jordan said proponents are tailoring the local-option feature for use in any region and plan to mount a statewide push on behalf of the bill.

In another key difference from the previous campaign, Jordan said, proponent cities will rely on help from business groups instead of tax-financed city funds to pay for lobbying efforts for the bill.

The measure is similar in concept to the 2009 bill, which Gov. Rick Perry and vocal conservative groups denounced as a tax increase. But Jordan said supporters will stress that urban residents are already paying millions of dollars in “hidden taxes,” such as lost productivity and increased business costs, because of traffic congestion.

Arlington Mayor Robert Cluck, a physician, told lawmakers that proponents will also cite the public-health benefits of reducing traffic. He pointed out that pollution in the Metroplex carries the same consequences as smoking and exacerbates pulmonary illnesses.

“As we get more and more cars off the street, the amount of asthma that we see will go down dramatically,” he said.

More than two dozen suburban communities joined with Dallas, Fort Worth and Arlington in the unsuccessful effort to pass the 2009 measure, called the Texas Local Option Transportation Act. The larger municipalities also hired one of Austin’s premier lobbying firms, HillCo Partners, to help push the bill.

“We didn’t stop after the last session,” Jordan said.

Planners are still working out details but hope to have a draft within 30 to 60 days. North Texas leaders will also hold discussions with their counterparts in San Antonio, Houston, Austin, Lubbock, Corpus Christi, El Paso and smaller urban areas to form a statewide coalition, Jordan said.

Metroplex leaders, he said, still have the same priorities as in 2009: finding money for up to 250 miles of commuter rail and expansion of the now overburdened road and highway network.

“The unparalleled quality of life that we’ve built is severely threatened by our congested highways and roadways,” Moncrief told the lawmakers, saying that “many if not most” of North Texas residents are “fed up” with being stuck in traffic.

“They deserve answers,” he said. “Not next month. Not next year. Now.”

The daylong hearing by the House Transportation Committee and the Senate Committee on Transportation and Homeland Security was called to explore funding options to help the state avert a looming transportation crisis.

Some lawmakers are touting an increase in the gasoline tax, which hasn’t been changed since 1991.

Deirdre Delisi, chairwoman of the Texas Transportation Commission, declined to take a position on the proposal but said the state needs financial stability to address “serious transportation challenges” over the next two decades.

The state will run out of money for new transportation projects by 2012. A panel of Texas business and civic leaders appointed by the commission says the state needs to invest at least $315 billion through 2030 to maintain roadways, combat urban traffic congestion, and increase mobility and safety.


Link to article here.

Money for roads sought

State could look at fuel tax hike

EL PASO — State legislators on Monday began what will be a long and difficult process to create new revenue streams for highway construction in Texas.

Money to relieve the congested freeways in the state has dried up and lawmakers have been left with the task of coming up with billions of dollars to relieve traffic tie-ups.

The members of the Texas House and Senate transportation committee had a joint meeting in Austin to discuss how the state will come up with additional revenue to help build new roads starting in 2012.

Both committees heard from mayors — including El Paso Mayor John Cook — transportation officials, lobbyists and business leaders during a meeting that began at 7 a.m. El Paso time and lasted until well past 4 p.m.

Although no official plan was discussed, most of the conversation revolved around a proposed hike in the state’s fuel tax, which has been stagnant at 20 cents per gallon since 1991.

“Yes, that’s on everyone’s mind, but the reality is that it won’t be easy to sell a gas tax increase to the public,” said state Rep. Joe Pickett, D-El Paso, the chairman of the House’s transportation committee. “Just think about the sound bite on television. As soon as you hear increase, your mind is going to be turned off by it.”

Pickett’s committee, along with its counterpart in the Senate, began pitching a hike — or at least a retooling — of the fuel tax since last fall.

According to figures from the Texas Department of Transportation, the state could be $250 billion behind in highway construction by 2050, when the population of the state will reach 50 million.

“By January 2012, TxDOT will be dead-flat broke and without new revenues to build new roads. That’s a big issue,” said state Sen. Eliot Shapleigh, D-El Paso, a member of the Senate’s transportation committee.

Shapleigh said the state should not only increase the fuel tax but also alter it to make sure fuel-efficient vehicles pay their fair share in taxes for new highways.

Gov. Rick Perry, though, has said he will veto any bill that asks for an increase in fuel tax.

“Both Perry and (Lt. Gov. David) Dewhurst have seceded from reality and they’re doing nothing to fix the problem,” Shapleigh said.

Members of both committees conceded Monday that fixing TxDOT’s budget shortfall would require innovative legislation and changes to long-standing fee structures.

Some of the proposed changes include increasing vehicle registration fees, pushing cities and counties to use the Transportation Increment Refinancing Zone funding mechanism, and forcing TxDOT to become more efficient.

Officials also discussed creating a local option that would allow municipalities and counties to create local fuel taxes to help build local roads.

Legislators said the state needs to be more in tune with the U.S. Department of Transportation to secure as much federal funding as possible.

“Whatever happens, I hope all these tools that have been discussed are kept on the toolshed for us to use,” said Cook. “El Paso has taken advantage of many of these tools and we are doing well because of it.”

Many El Paso commuters, though, said they wouldn’t like to see an increase in fuel taxes, especially because gas prices have skyrocketed in the last five years.

“Look at me. I’m almost paying $3 a gallon here. And now they want me to pay more? That’s awful,” said Susan Robert, who was fueling her car at a Central convenience store on Monday. “I think we have enough roads for right now. Don’t raise my taxes.”

Pickett said he is concerned that the recent boom in highway construction — about $1 billion worth has been approved — in El Paso could make people think TxDOT is in good shape and that a fuel tax increase is not needed.

“El Paso is in good shape for the next four or five years, and I say that with hesitation because I know that we have done things right here and things have played in our favor,” he said. “But we are talking about the future and our list of projects is long.”

Pickett added, “Finding a solution to the transportation funding problem is going to be one of the most difficult things to get through the Legislature in the next session … but I guess I already knew that.”


Web Posted: 02/01/2010 6:18 CST

Legislators debate road funding

By Josh Baugh – Express-News

AUSTIN — Texas lawmakers on Monday hammered home that without a new funding method, the Texas Department of Transportation will be unable to build any new roads beyond 2012 and will not have enough money to properly maintain existing roads within two to three years.

They also demonstrated that finding a new funding solution they can agree on won’t be easy.

Legislators on the Senate Committee on Transportation and Homeland Security and the House Committee on Transportation grappled with the use of “public-private partnerships” and comprehensive development agreements, or CDAs, that in some cases privatize toll roads.

Senate Chairman John Carona, R-Dallas, chastised language often associated with toll roads, that drivers can “choose” to use them. Carona said it’s “disingenuous” to say drivers will have an option if the only way to fund new-road construction is by tolling them.

If every new road going forward is a toll road, that’s no choice,” he said.

Looking into other potential sources of dollars, Sen. Eliot Shapleigh, D-El Paso, asked Texas Transportation Commission Chairwoman Deirdre Delisi whether her board, appointed by Gov. Rick Perry to oversee TxDOT, supported an increase in the gas tax, something Perry has said he opposes. Delisi said it’s not the commission’s role to determine how much the gas tax should be increased, that’s the Legislature’s job.

Increasing the gas tax has been a political hot potato, but it’s an issue that’s gaining traction among lawmakers. It’s unclear, however, what chance it will stand during the 2011 legislative session.

Read the rest of the story here.

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