Thursday, December 14, 2006

Ric Williamson: Texas Transportation Institute uses "bad math"

State knocks report touting gas tax hikes

Report from Governor's Business Council says indexing gas tax could eliminate need for most toll roads

December 14, 2006

By Ben Wear
Austin American Statesman
Copyright 2006

A private group tied to Gov. Rick Perry has released a study saying that state transportation officials have overstated by tens of billions how much additional money the Texas Department of Transportation needs for highways in the next quarter-century.

The report by the Governor's Business Council, released Nov. 28, also says the need for most new toll roads could be eliminated by allowing the state's 20-cents-a-gallon gasoline tax to increase with inflation and borrowing money based on the added revenue. A similar proposal died in the 2005 Legislature.

State transportation officials rebutted that analysis Wednesday, arguing that it understates future needs and overstates what the tax would raise.

"The individuals contracted to do that report were contracted to produce an intended result," Texas Transportation Commission Chairman Ric Williamson said. "But this is a great thing to put on the table and say, 'Let's talk about this.' "

The study contends that an $86 billion gap in transportation funding over the next generation, a bracingly huge figure that Williamson and others have brandished repeatedly in recent months, should more properly be about $56 billion.

Toll supporters have cited that gap, along with a resulting $1.40-a-gallon increase in the state gas tax that officials say it would take to close it, as justification for the state Transportation Department's wholesale commitment to toll roads.

The authors, who include Texas Transportation Institute researchers Tim Lomax and David Ellis and well-known transportation consultant Alan Pisarski, trimmed $22 billion from the state's $86 billion estimate by saying those costs were for city and county roads and are not the state Transportation Department's responsibility.

The authors said the state may have overstated future costs by an additional $8 billion or so.

Williamson and state Transportation Department staff members said eliminating that $22 billion local obligation is bad math and they are looking for a way to address all of the state's unmet needs.

That number, they point out, specifically grew from a request to localities to list projects they had the money to pay for and projects that at this point were beyond their fiscal reach.

It's unclear whether the Texas Legislature will want to talk about an increase in the gasoline tax, last raised in 1991.

Perry opposes any increase, and a bill in 2005 to raise the gas tax annually based on inflation (yielding a half-cent a gallon increase in year one) never made it out of committee despite an endorsement by House Speaker Tom Craddick.

Michael Stevens, a Houston real estate investor who chairs the Governor's Business Council, which commissioned the study, said most of the numbers in the report originated with the state Transportation Department.

Stevens said that the calculations showing how much an annual inflation adjustment to the gas tax could accomplish shocked even him and that he hopes the report will expand what up to now has been a toll-centric discussion about how to pay for the state's transportation needs.

"I hope the debate will be a public and healthy one," Stevens said, "and generate some improvements in our policy."

The study said $56 billion in road improvements between now and 2030 could be paid for simply by allowing the state's 20 cents-a-gallon gas tax to rise based on an inflation index tied to highway construction costs, then borrowing against that future revenue to build roads quickly.

The study assumes 3.4 percent annual inflation in construction costs (well below recent double-digit annual increases), pushing the state gas tax to 59 cents by 2030.

That would be in addition to the 18.4 cent-a-gallon federal gas tax.

Transportation officials also said that the report has significantly overestimated how much revenue a gas tax increase would generate by assuming that the average fuel efficiency of cars and trucks would rise to only 23 miles per gallon by 2030.

The officials say that hybrid cars and other technology will cause gas tax revenue to nosedive in coming years.

Even if gas tax revenue stagnates or falls, Stevens said, emerging satellite technology would allow the state to tax motorists based on actual miles travelled.

The study has reverberated through transportation and legislative circles because that volunteer council is peopled by Perry supporters, including Stevens. Stevens said he met with Perry before the study came out.

Given that the report would seem to undercut Perry's opposition to a gas tax increase and support of toll roads, was the governor unhappy with the council's handiwork?

"My view is that the governor is interested in good policy," Stevens said. "That Ric Williamson is unhappy with me doesn't necessarily mean that the governor is unhappy with me."

Perry "believes that we do have a sound transportation policy in place and moving forward," spokesman Robert Black said. "But his general reaction has been, 'Put the ideas on the table, and let's let the Legislature have a debate on them.' "; 445-3698

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