Friday, September 03, 2004

"The Toll Roads are coming!"

Toll roads: Without new money, they’re coming


by James A. Bernsen

The Lone Star Report
Volume 9, Issue 5
Copyright 2004

Toll roads are quickly becoming one of the sleeper issues of the upcoming legislative session, as the reality of new tolling authority sets in across the state.

Rumblings of a taxpayer revolt have begun even in Austin, a city long known for its affinity for big government and the taxes that support it.

But if Texas were getting all the money it should be getting for transportation, toll roads would still be the exception, not the rule, in the Lone Star State.

Last session’s HB 3588 gave the green light to expanded tolling as a way to raise revenue bonds to speed up road construction and meet current, as well as future needs. Robert Daigh , the Austin District Engineer for the Texas Department of Transportation, told LSR (June 11, 2004) that the state gets only one-third of the money it needs.

While the storm over toll roads first blew up in Central Texas – where pay roads are still nonexistent – it is spreading to locations long used to toll roads. The sticking point, opponents say, is not the idea, it’s the questions of the individual roads that are to be tolled. Many of these are not new roads, but existing ones, built and paid for without gasoline taxes, not tolls.

In North Texas, a fight is brewing over plans to toll State Highway 121, which connects southern Denton County with McKinney to the east in Collin County. The North Central Texas Council of Governments put forth Aug. 9 a new transportation plan that included the idea, among others.

In most cases, local governments and chambers of commerce have passed resolutions supporting the idea. Not just for 121’s sake, but for that of other roads as well. The McKinney City Council recently passed a resolution encouraging tolling of Texas 121 as a revenue source for expansion of U.S. Highway 75, which connects Dallas to Sherman.

In opposition are grass-roots groups and websites such as Founder Randy Jennings told the Dallas Morning News that tolling an existing road was like “selling your soul to the devil.” The Fort Worth Star-Telegram also took aim at the idea in an editorial calling the tolling of existing roads “double taxation.”

In Austin, a group known as People for Efficient Transportation (PET) has organized to fight the toll road battle and toll opponents have organized a recall of local officials who voted for the plan as members of the Capitol Area Metropolitan Planning Organization (CAMPO).

On Sep. 1, one of those officials, Austin city council member Brewster McCracken , backed down. While still supporting the new toll roads in the CAMPO plan, McCracken balked on tolling existing roads.

The case for tolls

Whether or not they sensed others getting cold feet over the plan, toll supporters on the same day held a press conference at Austin City Hall to make their case and counter the opponents’ momentum.

“The road you drive on today, if it’s got three lanes and five stop lights, after we have toll capacity to that road, you will still be able to drive on the three lanes with five stop lights,” said Diana Zuniga , president of the Real Estate Council of Austin.

The group took on the “Top Five Myths” of toll roads. The first is that tolling represents double taxation. Not so, proponents say, pointing to the high maintenance costs of highways. Indeed, a look at the TxDOT budget shows that 40 percent of State Highway Fund disbursements goes to maintaining state roadways, compared to 47 percent for planning and construction.

Another myth, the group says, is that there will be new tolls on existing capacity. Any new toll lanes on existing roads, they say, would be on added lanes. But the CAMPO plan doesn’t guarantee that, it simply opens up roads for possible tolling, without specifying how they would be tolled.

Toll proponents also noted several other “myths” and challenged PET’s accuracy and truthfulness.

Indeed, PET’s anti-toll road website, , claims that “education tax dollars” will be diverted to fund toll roads. In fact, the reverse has been the case. The Legislature has for years raided transportation funding, giving a large portion to education.

Federal funds

Texas transportation funding could never keep up under the old pay-as-you go system. The reasons for that – and for the turn to tolls under the state’s landmark transportation bill (HB 3588) – are twofold.

First: Texas, like Oliver Twist, is last in line at the D.C. trough. Over the last 48 years, Texas has been dead last, with an average of 86 cents in benefits for every dollar it sends to the federal government in transportation taxes. Since 1956, only three other states have averaged below 90 cents. Oklahoma, which has long relied on toll roads is next-to-last, with 88 cents on the dollar.

For two years - 2001 and 2002 - Texas actually caught up, with $1.03 and $1.01 cents return. But in 2003, the state plummeted back down to 89 percent. Last year, it reached 90.5 percent but still tied for last.

Part of the reason for the 2001 and 2002 increases was the heavy lobbying by Sens. Phil Gramm and Kay Bailey Hutchison . But Gramm’s retirement set back those efforts. His replacement, Sen. John Cornyn , however, has secured a seat on one of the Senate transportation subcommittees, where he hopes to press Texas’ claims. He has set as a goal a minimum of 95 percent return for the state, but sees 2009 as a realistic date for reaching that number, since that’s when the next transportation bill – which is approved on a six-year cycle – comes up.

“As a member of the committee, I will be working closely with the chairman and ranking member during the reauthorization process to improve and further address the bill’s proposed funding distribution,” Cornyn said.

The biggest winners in the fight for federal dollars are the asterisk states. Alaska, which is the largest, but with a tiny population, has received $6.40 for each dollar it spends on education (1998-2003). The District of Columbia gets $3.65 back. Hawaii is fifth with $2.25. The top 10 states are all small, and a percentage here or there doesn’t really represent a lot of money. But for large states, the reverse is true, and not all are on the losing end.

New York, for example gets $1.30 for each $1 it puts in, or $730 million extra a year. Pennsylvania gets $1.23. Other big states, like Missouri (97 cents) and California (95 cents), don’t win, but still don’t lose as much as the Texas (90 cents).

A further element actually reduces Texas’ return even more. The formulas establishing those rates of return don’t apply to the entire gas tax proceeds, but to a percentage, which is currently around 90 percent of the federal Highway Trust Fund. The remaining 10 percent of the fund is “discretionary” funding, of which Texas gets even less than it does under the formulas, according to TxDOT Finance Director James Bass .

“The rate of return is even worse than that. Once you blend it all together, we get about 86 percent,” Bass said.


The second reason for the transportation shortfall is diversions of state transportation revenue. Only 72 percent of the state’s 20 cent per-gallon gas tax actually goes into the State Highway Fund. The rest goes to two sources. One, which makes up five percent, is refunds, collection expenses and “other” expenses. While those numbers are changing somewhat as a result of the movement of the point of collection of gas taxes, the exact amount of the savings is in dispute.

The biggest diversion, however, is to the public school system - $665.7 million in FY 2003. Moving those funds, however, is very unlikely because they are constitutionally dedicated, and a 2/3 majority in the Legislature to take money out of the school finance system is very remote.

But there are other funds being diverted – most of them before they even make it into the Transportation Fund. The total cost of diversions (depending how they are defined, and varying year-to-year), is around $3.3 billion, not including the money going into the school system.

Some of these funds – about $238 million – are already earmarked to be turned over to the Transportation Fund, as a result of legislation passed in 2003. The change takes place in 2006.

As to federal funds, Texas, in 2003, put in $2.56 billion and got $2.28 billion back. Few think the state could get a 100 percent return, but using Cornyn’s goal of 95 percent, the state could get an additional $240 million a year.

If Texas could end non-school-related diversions and get 95 percent of its federal gas tax money back, the total boost to transportation revenue would be about $3.5 billion, for a total State Highway Fund of $5.6 billion. In effect, Texas could increase highway funding by 63 percent.

An additional $3.5 billion compares to the current $2.2 billion for the CAMPO plan for Central Texas. Adding in Dallas and Houston projects, as well as maintenance costs, would likely not rule out toll roads, but the reliance upon them by TxDOT would be considerably diminished. Of course, any funds transferred from general revenue to TxDOT would have to come from a presumed surplus, or cuts in other programs.

Jennings’s anti-121 tolling website lists a “hall of shame” and “hall of fame” of toll road supporters and opponents. The elected official conspicuously absent on the supporters’ list is Gov. Rick Perry . But on the “hall of fame” list is Comptroller Carole Keeton Strayhorn and Sen. Hutchison, who have both expressed strong opposition to the toll road expansion plan of HB 3588, which Perry backed heavily.

Given the speculation that either or both women may challenge Perry for governor in 2006, and the scope of the growing taxpayer revolt, toll roads – barely on the radar screen several months ago – could become one of the more important issues of the upcoming session. O

The Lone Star Report:


"They’re turning in their graves"

Opinion: Toll roads in Texas? They’re turning in their graves

September 3, 2004

by William Murchison

The Lone Star Report
Volume 9, Issue 5
Copyright 2004

Let me begin, in approved Media Age fashion, with “me.” Specifically, with my initial exposure, as a 13-year-old, to toll roads. The exposure – which took place, I believe, on a vacation jaunt to Maryland and Delaware – set me on course for a career spent in the perpetual indignation mode of the political commentator. Did I like toll roads? Not a bit. We didn’t have such in Texas: government people telling us we had to pay to drive our cars. Deprivation of rights! Remember the Alamo! And on from there....

The present sentiments of today’s anti-toll-road warriors I can appreciate, therefore: at least emotionally and historically. Our peerless highway system was founded on gasoline taxes, and we liked it that way. A lot of Old Texas, I suspect, survives in the New Texas. Dad blast it, we’re still paying our gasoline taxes around here. Ain’t that enough?

Evidently it ain’t, or the anti-toll-road warriors wouldn’t be on the war path against plans for uncorking our congested highways through – in part – construction of new toll roads. And – herewith the truly sensitive part – the conversion of existing, or already planned, stretches to tolls.

Down in Austin, whose traffic horrors are best appreciated by those of us who attended UT 40 or 50 years ago, a city councilman is backtracking on his support for the tolling of three out of seven highway projects. Up in North Texas, my own region, an organization calling itself is scattering tacks in the pathway of plans for tolls along Highway 121– an enterprise likened by its founder to “selling your soul to the devil.”

And – por supuesto –Carole Keeton McClellan Rylander Strayhorn —has heaved herself into the middle of the gathering fray. The acute nostrils of Ms. Keeton McClellan Rylander Strayhorn accurately scent the odor of Gov. Rick Perry, whose Trans Texas Corridor plan is the matrix from which arise these plans for reverse tolling. The corridor plan compasses, as well, a large number of new highways financed by tolls. Anyway the comptroller of public accounts is incensed that “this governor” should be “taking existing highway projects that are on the verge of completion and turning them into toll roads at the last minute.” (Point of clarification: It’s local, not state officials, who will be doing that if it gets done at all.)

Ms. KMRS likely underestimates the appeal of toll roads, even to Texans who see in them the possibility of disentangling their larger cities from befouling traffic. The impeccably conservative Heritage Foundation calls toll roads “a way to measure demand for new highway investment. If tolls are set flexibly, they indicate motorists’ willingness to pay for the cost of service, and valuable tolls can be used to optimize traffic flow and prevent breakdowns into inefficient stop-and-go driving.” Taxes, Heritage says, “have a doubtful future as the principal source of funding for roads.”

Of course there are other ways to think about the matter, as James Bernsen ably points out elsewhere in this issue of LSR . He notes that Texas doesn’t yet – our senators are working on it – get its fair share of giveback in federal gasoline taxes. And he notes, with comparable justification, that a hunk of state gasoline tax revenues goes to non-highway purposes, including public schools. If we ended non-public school diversions, and if we recovered (as per Sen. John Cornyn’s design) just 95 percent of the money Texas sends to Washington in gasoline taxes, we’d gain some $3.5 billion in money available for highway building. And if (as the old hobo might point out wryly) we had some ham, we could have ham and eggs – if we had some eggs. You’d think all the same the taxpayers could keep for road purposes more of what they pay at the pump – a worthy question not just for U.S. senators but also for legislators.

How the toll flap ultimately will be resolved is obviously a matter for conjecture. Less conjectural is the need not just for denunciations of reverse-tolling an existing road but for constructive solutions to the overall problem – a problem with highly negative implications for continued economic growth hereabouts.

Austin Mayor Will Wynn , concerning his councilman’s retreat on the reverse-tolling of area highways, puts it pithily enough: “What’s the alternative revenue plan?” Similarly, where’s the Keeton McClellan Rylander Strayhorn plan?

Some of us old coots might lean toward inducing Southern Pacific, the Katy, and the Burlington Rock Island railroads to return to the business of hauling long-distance passengers. The passing of the the pasenger train, in the ‘50s and ‘60s of the last century, remains a matter of more-than-nostalgic regret, given the comparative efficiency of that mode of travel. Or we could lay on more airports and airplanes.

The challenge of being Texan in this new century, which knows not J. S. Cullinan or Col. Charles Goodnight , architects of the old, freer order, is that of responding to extraordinary change without turning Texas into New Jersey. Plenty of turnpikes up there in New Jersey. And plenty of taxes and regulation, too. With our traditions and advantages, we can do this thing better. And we had better.

The Lone Star Report: