TxDOT accounting tricks use funny money, cause us to lose $100 million in highway funds

By Terri Hall
Express-News & Examiner
October 4, 2009
The average Joe barely puts his toe into the morass of transportation funding woes, but when the un-elected highway department becomes a defacto taxing entity through tolling, Joe’s pocketbook will soon take note.

Since Rick Perry led Texas away from a pay-as-you-go system into a borrow-toll-and-spend-money-we-don’t-have regime, TxDOT’s “books” have been in a complete shambles (ie – its $1.1 billion “accounting error” last year that derailed dozens of promised highway projects). It takes an incredible skill in accounting, that TxDOT apparently lacks, to keep up with the cashflow to cover mounds of toll road debt and the increasing number of promises the agency just can’t seem to keep.

The accounting trick this time involves something called “contract authority,” where the highway department can put a certain amount of money in projects under contract before there’s actually money there to do it. Federal and state lawmakers encourage this game played with what amounts to Monopoly money, and no one is the wiser until it catches up with them. Like it did a few days ago.

The federal highway bill that passed in 2005 just expired on September 30. President Obama has several front burner bills, healthcare and cap and trade, ahead of any new transportation bill and Congress couldn’t even agree on a 3 month extension bill, so it punted and passed a one month bill that continues the current law until a new bill or another extension bill is passed.

So you may have heard that the feds made over $8 billion in “rescissions” (or cuts) to highway funds, and will require the states to return money to Washington. Texas owes the feds $742 million. I mean how could they give us the money we send to Washington only to take it back again? Sounds ridiculous, right? Well, actually the vast majority of the rescissions don’t involve REAL money. It involves this “contract authority” nonsense where the project gets “obligated” with funny money that doesn’t exist, and rescissions only affect funds that aren’t obligated yet.

So in reality, only about $100 million in REAL money is actually at stake. Sadly, TxDOT could have avoided the $100 million loss by simply making sure all the federal money was obligated. By its own admission, TxDOT knew it was coming and didn’t properly prepare for it. Now it has to return $100 million in desperately needed transportation dollars when it has been claiming we’re completely OUT OF MONEY for roads in a scheme to make us accept Perry’s toll-everything policies. Thanks to TxDOT’s failure to obligate the funds, the “we’re out of money” mantra is getting some legs.

Perry, whose political appointees run the highway department, is playing the blame game in the government version of Monopoly, but he’s got no one to blame but himself.