Saturday, January 06, 2007

"Tolling a road that's already been paid for by taxes should be against the law, if it isn't already."

Free Ride Is Over On Central Texas Tollways

Jan 6, 2007

Gregg Watson Reporting
CBS 42 (Austin, TX)
Copyright 2006

Drivers now have to pay to use Central Texas toll roads. That has some people are clamoring for TxTags and others protesting.

A group called Austin Toll Party is fighting to keep the roads free, at the same time others are paying for the privilege to drive out here.

Some say the toll road is a faster way to get to where they're going.

"I live up north and it makes it tremendously convenient to hop on the toll road as to oppose to waiting in traffic," Bobby Williams said.

Those who have not bought a TxTag must now pay. The free ride continues for TxTag holders until the end of the month.

"I'm going to take advantage of the month of January being free with the tag," Monica Hurt said.

But not all embrace the toll roads. Harris Harold is out on Highway 71 to warn folks about coming toll roads.

"They're going to toll this highway, if we don't stop them," Harold said.

And he's not alone. Several anti-toll protesters spread the word that drivers shouldn't pay for roads their taxes paid for.

"Tell them no, we've already paid for this road, no tolls," said Virginia, who didn't want to use her last name.

"Somebody has got to stand up and say, hey is time to stop, you are being taxed enough,� Harris Harold said.

Some drivers don't want see Highway 71 become a toll road.

"Tolling a road that's already been paid for by taxes should be against the law, if it isn�t already," Joe Nichols said.

What some call highway robbery, others call convenient--even if they have to pay for it.

The tolls that kicked in Saturday morning are for Phase One. Tolling on Phase Two of the turnpike project is still open to public debate.

There are two public hearings coming up. The first is next Wednesday at LBJ High School, then Thursday at Kyle City Hall.

Most of the tolls cost 50 cents each way, but that price jumps to a $1.50 at the toll plazas along Highway 130.

© 2007 CBS Stations Group of Texas:


Friday, January 05, 2007

"The CAMPO politicians know that their buddies have been de-elected, and they know that they can be de-elected as well. "

Austin Toll Party Trying To Stop Phase 2 Of Toll Roads

Jan 5, 2007

KXAN TV (Austin, Texas)
Copyright 2006

Starting Saturday, you'll have to pay to drive on Austin's new toll roads, which is known as phase one of the toll road project. Phase two is still up in the air.

A group is hoping to stop that toll plan dead in its tracks.

The phase two project calls for tolls on roads already built, including parts of Highways 71, 290, 183 and 360.

If some elected officials have their way, it'll cost you to drive on those roads. These are roads built by your taxes.

The phase two toll road project has been stopped once and comes up for another vote in early January.

Friday, the Austin Toll Party group was passing out flyers hoping to educate drivers keep the roads free.

Austin Toll Party is trying to stop the phase two toll roads on Highways 71, 290, 183 and 360. They are calling it the knock-out punch campaign.

The group handed out flyers trying to educate people. They vow there's more to come.

"That's just the beginning because they're running amok here taking our existing roads," Richard Reeves with the Austin Toll Party said.

Reeves is talking about the elected officials who voted to make you pay tolls on roads that are already paid for. The activists are targeting those elected officials in a new online video.

"As soon as the public is educated that one of these elected officials voted to toll a road we've already paid for, it is the kiss of death," Sal Costello with the Austin Toll Party said.

Costello says the group has already held elected officials accountable by claiming to be instrumental in the last election and ousting a county commissioner and the vice chair of CAMPO. Costello is hoping the current politicians will hear their message.

"They know that their buddies have been de-elected, and they know that they can be de-elected as well," Costello said.

The phase two toll project will gather the public input on January 17. The vote on the phase two project is slated for February 10.

Until then, the campaign continues on the streets and online.

"Our politicians, our representatives need to learn to stand up, get a spine, get a backbone and say, 'No.' And we the people will get behind them if they'll do that," Reeves said.

Councilmember McCracken and Representative Strama did vote to toll the roads, but now say they're reconsidering tolling these existing roadways.

Whether you're for or against the toll roads, Austin Toll Party's Web site has set-up an automatic e-mail, where you can offer your opinion and send it to the 23 CAMPO board members with one click.

© 2007 WorldNow and KXAN:


"Dethroning Craddick would seem like a righteous reckoning. "


Flush with victory?


David Lowery
Austin American-Statesman
Copyright 2007

There is a lot of back room scheming and horse-trading going on in the challenge to Texas House Speaker Tom Craddick, and good reasons for all of it.

There's the speaker's power to appoint committee heads and have them do his bidding if they want to keep their jobs. There's the lofty seat up there on the podium, and the big gavel to wield with authority when things get a little rowdy on the floor.

There's power over the budget, setting the agenda for the state, making and breaking political careers, blah, blah, blah.

What's really important in the speaker's race is who gets to live in the fine new digs Craddick and his wife Nadine have fixed up in the Capitol.

Forget muscle and prestige — what matters when the speaker is chosen Jan. 9 is who gets to live in the Speaker's Apartment.

The Craddicks spent more than $1 million renovating the 2,000-square-foot apartment in the Capitol (the nation's only living quarters in a state capitol).

It wasn't their money, you'll recall, but they still had to twist some arms and box some ears to get it.

And now, after all the grief they've endured and work they've done choosing the proper drapes and such, they may not get to live in it any longer.

To Craddick's political enemies, his dethroning would seem like a righteous reckoning. They'll see his being tossed out of the apartment during the final touches as just reward for his hubris. The Craddicks' stuff won't be stacked on the lawn like some deadbeat renter's, but it's an image his opponents must treasure.

A lot of Texans have wondered about those $1,000 toilets in the speaker's pad. And the $7,000 refrigerator, the $1,400 washing machine and the $36,000 New Zealand wool carpets that were ordered, only to be cut up for area rugs after it was decided hardwood floors would look better.

Not just any old boards would do for the Speaker's Apartment floors, either. The Craddicks thought original wood from the 1880s and 1890s would go best in their redone crib, so they ordered it up at a cost of $87,000.

Now, no one would be happy about being evicted from his domicile after going through all the work it takes to find the right carpets to chop up, the matching window treatments, hand-crafted knobs, $1,000 toilets and all the other headaches.

That is surely one of the reasons Craddick is not going to leave the speaker's post without putting up a heckuva fight.

But the folks who really will be upset if the Craddicks get the boot from their abode are the lobbyists who paid for the extreme makeover.

After some lawmakers groused about the project, Craddick said he'd seek private donations to fix up the place. That meant he would milk the necessary cash from the lobbyists for special interests. After all, it's their job is to seek favors from the Legislature and his job to grant or deny them.

Lobbyists for special interests such as AT&T, Maxxam Inc., the beer distributors and other big players who have a lot of business at the Capitol came across with the dough. They didn't have much choice if they want the speaker's ear this session.

But how are they going to feel if the members give Craddick the boot? Not too sprightly, I imagine, after they were pushed to the pay window and told to put $1 million on the No. 1 horse to win — or else.

So those lobbyists' money will have been flushed down the expensive toilets if Craddick loses power. Not only that, but under a different speaker, it might be awhile before their Guccis touch the fancy rugs and aged hardwood floors that they paid for.

Oh, they would get up there eventually, but it would cost them. They'd have to spread some more special interest money around for the new speaker and the new committee leaders.

That's how the game is played.

But they'd be in good company if they never make it inside the second-floor apartment.

Most Texans won't get that far, even though it sort of belongs to them. The Craddicks said the redo is "a gift to all Texans," but they haven't let the press in for a gander and won't answer questions about it.

Craddick may well win re-election as speaker and be able to settle into the apartment comfortably for a couple of years.

If Craddick loses, though, the new speaker should hold an open house to show off the refurbished crib. He could do it up right, with a rope line, attendants and docents to point out the more interesting features of this gift to all Texans.

After the intrigue in the speaker's race and questions about the apartment, I'd stand in line to see it.; 445-3611

© 2006 Austin American-Statesman:


Austin Toll Party mobilizes "Knock-Out Punch” campaign


Citizens Group Forms Flier Brigades to Stop Phase II Tolls

Public Feedback Deadline Nears


Austin Toll Party
Copyright 2007

AUSTIN – After nearly 30 months of attempting to stop Central Texas Phase II tolls from charging drivers on Hwys 71, 290, 183 and 360, citizen group declares they are ready to deliver the Double Tax Toll “Knock-out Punch” with a well planned campaign. CAMPO Phase II

Re-Vote is coming soon with public feedback ending Jan 17th.

WHO/WHAT: Flier Brigades

WHEN: Friday, Jan. 5th 2007 at 4:00pm

WHERE: Ben White (Hwy 71E) and Montopolis and other East Austin intersections.

The heat is on; the re-vote for CAMPO Phase II is approaching quickly with public feedback
opportunities ending on Jan 17. will mobilize volunteers until then with its “Knock-Out Punch” campaign by hitting the streets to spread the word on how Phase II toll will permanently shift public expressways to tollway for the first time in the country.

As a part of the “Knock-Out Punch” campaign, ATP released a scathingly funny video, called “Circle of Payola”. The online video stars local elected officials and was released yesterday (Thursday) at Just hours after its release, the new online cartoon was deemed viral after well over 1,000 visitors have viewed the piece.

The group was created as a means to influence the wrongful doings of representatives who ATP says 'represent special interests, not the people.’ founder, Sal Costello said, “The politicians take our tax dollars, pay for toll roads and then claim they’ve run out of money to build freeways. That’s highway robbery!”

After its creation in 2004, has claimed various victories including South MoPAC at Wm. Cannon tolls being pulled from the Phase II plan. “The SW Austin community saves millions of dollars a year, by not having to pay a toll for stretch of MoPAC we’ve already paid for. We seek to remove 71E and 183S tolls from the plan next, as they are 100% paid for as well” Costello said.

For more information or to view the new video, visit:

© 2007 Austin Toll Party:


Thursday, January 04, 2007

"Fed up with the state's insistence on building toll roads."

Business Owner, Commissioner Unite To Stop Toll Roads

January 4, 2007

KSAT (San Antonio)
Copyright 2006

SAN ANTONIO -- Two prominent men from the city's North Side have joined forces to urge local leaders to keep toll roads out of Bexar County.

Ancira automotive owner Ernesto Ancira and Lyle Larson, Precinct 3 county commissioner, plan to lead a charge against toll roads in the county.

Ancira said he's fed up with the state's insistence on building toll roads to relieve congestion.

"We can certainly stop it; it's not too late," Ancira said. "We can certainly come up with alternative plans of being able to make improvements to our existing roads."

Ancira said he sent a letter to members of the local Metropolitan Planning Organization to urge them to back off on toll roads on US Highway 281.

He said he spent millions of dollars to build a dealership along Highway 281 with the understanding it would remain a freeway.

Ancira said tolling it would have a catastrophic impact on his businesses and others.

"You'll see that no retail has ever developed adjacent to a toll road," Ancira said. "So, you've got a lot of small-business people who put in their whole life savings, and all of the sudden they're going to be bypassed."

Larson said the effort wouldn't have been necessary if lawmakers hadn't spent billions of dollars from the gas tax on non-transportation projects.

"(Lawmakers) diverted 9.3 billion dollars from the (state) highway fund, which has created this crisis of funding," Larson said.

"If you look at what the county's share of that $9.3 billion is, it would be a billion dollars," Larson said.

Larson said that amount would be enough to fix Highway 281, Loop 1604, and Wurzbach Parkway.

In 2005, $775 million was diverted from the state highway fund to pay for programs in the state Department of Commerce and the Texas Historical and Arts Commission.

Larson said if the state would stop the diversions and replace the pilfered money with a surplus of an estimated $15 billion that he expects to come out of the next legislative session, the state could start fixing its transportation woes.

House Speaker Tom Craddick said if the Legislature stopped using those funds for non-transportation needs, lawmakers would be forced to cut many programs or raise taxes and fees.

Copyright 2007 by All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

© 2007 by


Rick Perry's Texas Transportation Commission: Mouthpiece for private toll road consortiums

Forward Momentum: A report to the 110 th Congress, 1st Session

Comment Draft

January 25, 2007

Texas Transportation Commission
Copyright 2007


A year ago, with the passage of the “Safe, Accountable, Flexible and Efficient Transportation Equity Act – A Legacy for Users” (SAFETEA-LU), the guiding principle of TxDOT’s federal legislative activities was “Building on Success.” This principle has notchanged; however, in order to ensure the future reliability of our state’s transportation infrastructure, we must now move forward and begin the process of educating ourpartners on the importance of both building on our past successes and forging new ones.

When Congress passed and the president signed SAFETEA-LU, federal highway, highway safety and transit programs were reauthorized through fiscal year 2009. What seemed far away at the time is now a mere 30 months down the road.

For more than two decades, the Texas Department of Transportation (TxDOT) has been actively engaged in federal legislative advocacy; however, our greatest challenge may yet be upon us. Experts in and out of the transportation industry predict that the funding levels authorized in SAFETEA-LU will exceed revenues to the Highway Trust Fund within the next few years, effectively rendering it bankrupt. The traditional modes of funding, operation and thinking are no longer working for our state or nation. TxDOT worked hard during the course of SAFETEA-LU to lay the groundwork for the use of new and innovative financing tools in transportation infrastructure delivery.

In many ways, TxDOT has already begun the education process through the many public meetings it holds throughout the state and the publications it distributes each month. During the 110th Congress, the department will work with members of Congress, the Bush administration and our other federal partners to not only protect the gains of SAFETEA-LU, but to strengthen them.

Contained in this report are brief synopses of our 2007, or post-SAFETEA-LU, federal priorities.

Questions regarding this report should be directed to Cindy Mueller ( at 202/434-0230, Patrick Mullane (
at 202/434-0209, or Christopher Lippincott ( at 512/463-9957 in the department’s Government and Business Enterprises Division, or in writing to:
125 East 11th Street, Austin, Texas 78701.


During the development of SAFETEA-LU, TxDOT and its partners —both public and private— fought hard to achieve advances in funding and policy flexibility. At the end of the day, success was achieved. Since the bill’s passage, we have worked, through the federal rulemaking process, to ensure congressional intent is maintained and that lawmakers understand that new laws are creating important new opportunities in Texas. As we move into the new 110th Congress, it is absolutely critical that we further our successes.


The following is an overview of broad policy issues. None of these issues can be considered new, but they continue to be important to the future of our state’s transportation infrastructure delivery system. TxDOT strongly advocated for and achieved success on many of these items during the passage of SAFETEA-LU. Other items, such as Aviation Reauthorization and the Water Resource Development Act (WRDA), are an element of timing. All of the issues in one way or another reflect the department’s commitment to achieving its five core goals of reducing congestion, enhancing safety, expanding economic opportunity, improving air quality, andincreasing the value of transportation assets.



When looking into the future and exploring possibilities for funding Texas’ transportation infrastructure, the watchword is “flexibility.”

TxDOT has always been a leader in the nation’s transportation community. Legislative successes in SAFETEA-LU and at the state level have put Texas at the forefront when it comes to finding new and innovative financing. However, because of a traditional overreliance on fuel taxes, finding success has at times been challenging, making it even more apparent that the current system of funding transportation via motor fuel taxes is no longer sufficient.

In SAFETEA-LU, Congress called for the establishment of the National Surface Transportation Policy and Revenue Study Commission (Revenue Study Commission) to examine the nation’s surface transportation system, as well as alternative revenue sources to support the Highway Trust Fund (HTF). TxDOT believes that the Revenue Study Commission and Congress must upend traditional thinking and embrace innovation. We must strive to achieve a more results-driven funding process with clearly stated goals and objectives.

Over the years, countless studies and panels have been commissioned in an effort to address the future of the HTF and fuel taxation. It is our hope that, as a result of its work, the Revenue Study Commission will be able to develop a set of sound recommendations for Congress and the administration. For that to happen, the commission will need to keep meeting beyond their current deadline of July 1, 2007.

Transportation Secretary Mary Peters and others have called for the commission’s charge to be extended to year’s end. We support the proposed extension and remain ready to share details of the Texas experience with our federal partners.

Pursuing flexibility will allow Texas and other states to do more with the funds they have regardless of whether additional funds are made available for transportation projects. Formula programs would provide states with more certainty in funding. Since the formulas are established in authorization acts, the resulting distributions of apportionments to the states are known fairly soon after the legislation is enacted, and the formula programs would not be subjected to the earmarking process that dilute the impact of those funds.

Flexibility in federal funding and accountability from state transportation departments are not mutually exclusive. Federal funds sent to states with the proviso that certain goals be achieved with those funds will demand the responsibility and creativity that are the hallmarks of locally-driven problem-solving processes.

We Propose To:

• Work with the National Surface Transportation Policy and Revenue Commission and our other federal partners to ensure flexible and innovative federal funding for transportation infrastructure needs; and

• Support an amendment to federal law to extend the current tenure of the National Surface Transportation Policy and Revenue Study Commission.

• Support the expansion of goal-oriented formula or block grant funding for transportation.


Transportation is in need of additional sources of capital. With the passage of SAFETEA-LU, Congress expanded our ability to issue debt and eased a variety of associated restrictions, allowing for greater private-sector participation in transportation infrastructure.

We must now take the next step by urging Congress to allow for expanded means of investment such as equity capital. The use of equity capital for investment in transportation infrastructure is gaining attention. Pension funds, both public and private sector, have $7 billion of capital and comprise the largest potential source of investment for future transportation projects.

We Propose To:

• Work with Congress to amend federal law to allow equity capital to be utilized as a transportation investment source.

• Work with Congress to amend federal Tax Code to exempt partnership distributions or corporate dividends related to ownership of toll road from income taxation.


TxDOT’s successful advocacy for the expansion of the SAFETEA-LU Private Activity Bond (PAB) program to include highway, rail and intermodal projects has paved the way to raise more than $1.8 billion in private funds for work on State Highway (SH) 121 outside Dallas.

PABs are used to attract private investment for projects that have a distinct public benefit, such as water and sewage facilities, and public and low-income housing. The tax exemption increases the normally low value of the investor return, allowing public infrastructure projects to better compete for private investment dollars. Until now, airports and maritime ports were the only eligible transportation projects.

In adopting the new provisions, Congress did not provide guidance regarding federal limitations on the investment and expenditure of the revenue generated by issuance of these bonds. As a consequence, there are questions regarding arbitrage limitations, and limitations on right-of-way acquisition and use of PAB funds for the purchase of existing infrastructure within the given project.

These limitations could significantly limit the ability of departments of transportation to fully utilize PABs for projects such as SH 121. TxDOT will continue to work with its partners in both the legislative and regulatory arenas in an effort to find workable solutions to these issues.

We Propose To:

• Pursue legislative remedies to amend restricting provisions and remove limitations on PAB issuance.

• TxDOT will also work with the Department of the Treasury to adapt regulations to accommodate for the unique needs of highway, rail and intermodal projects under the PAB program.


SAFETEA-LU recognized the importance of tolling and expanded the ability of state DOTs to utilize tolls on certain types of federally funded projects. It also created three new opportunities to utilize vehicle tolls as a means to finance interstate construction and/or reconstruction, reduce congestion and improve air quality.

TxDOT has been at the forefront of using all available federal tools, and we have seen other states follow our lead to meet their mobility needs. The Government Accountability Office released a report in June of 2006 that cited Texas (and Governor Perry specifically) as a leader in using tolls to reduce congestion. Tolling isn’t an easy or popular decision for states, but TxDOT is leading a national trend toward innovative financing.

Despite our successes in SAFETEA-LU to expand tolling options, federal law still severely curtails states’ ability to use tolling to meet their financing and mobility needs. History has shown that it is unlikely the next reauthorization will fully supplement a federal gas tax that has decreased in value for decades. For this reason, states cannot afford to be denied reasonable and efficient funding solutions, such as tolling. TxDOT will work to educate Congress of the importance to include new, innovative federal funding resources in the next reauthorization bill.

We Propose To:

• Reduce restrictions on tolling programs and remove their pilot project status to give states, such as Texas, as many opportunities as possible for new funding alternatives; and

• Authorize states to implement interstate tolling options beyond current SAFETEA-LU pilot programs and allow toll revenues from toll financed facilities to be used for other critical system needs; and

• Allow states to “buy back” or reimburse the federal government for its share of investment in interstate segments.


SAFTEA-LU amended federal law to allow for the use of “design-build,” an innovative method of project delivery that combines the design and construction of a toll project into one contract rather than the traditional “design-bid-build” method. FHWA opened its rulemaking process during the summer of 2006 to amend design-build contracting provisions. Unfortunately, elements of the proposed rules did not follow congressional intent in some regards. TxDOT worked closely with its partner states and associations and submitted comments detailing its concerns with the draft, and we will work actively with U.S. DOT and our partners to create the appropriate rules.

We Propose To:

• Work with our federal partners to ensure that final administrative rules follow legislative intent and do not impose more cumbersome restrictions on the design-build process.


Finally, because of issues related to matching earmarks to transportation plans, DOTs often run the risk of their contract authority lapsing. At other times, states’ contract authority can lapse because they do not have sufficient non-federal funds to match these dollars. TxDOT believes states that have available non-federal funds should be able to provide financial assistance to other states by purchasing their unused contract authority (e.g. demonstration projects, surface transportation program, safety, bridges, etc.).

We Propose To:
• Amend federal law to provide a state authorization to purchase unused federal contract authority from other state departments of transportation prior to the lapse date.


Currently, each state DOT is required to set aside 10 percent of its federal Surface Transportation Program formula funds for use on transportation enhancement projects such as hike-and-bike trails, education, beautification, and historical preservation. With the passage of SAFETEA-LU, Congress dedicated over $333 million of Texas’ federal funding to the Transportation Enhancement Program. While this program is important, its lack of flexibility severely hampers the ability of state DOTs to maximize federal funds to meet more pressing mobility needs, such as highway construction and maintenance for congestion relief and safety. A review of other states found DOTs exercising little creativity or flexibility with their enhancement dollars. The Enhancement Program would benefit from provisions that more clearly support using those funds to support states’ mobility needs.

We Propose To:
• Amend federal law to allow state DOTs greater flexibility in their use of enhancement funding.


While well intended, demonstration projects, or “earmarks” as they are more commonly known, can create significant financial problems for state and local entities. This issue is particularly evident in authorization legislation such as SAFETEA-LU, yet can also be seen in annual appropriation processes. In SAFETEA-LU, a sum of over $669 million was earmarked for highway-related transportation projects throughout the State of Texas. While this may seem like a substantial and useful sum, approximately a third of the total dollar amount was designated for projects that had not been approved via a local or regional planning process. Furthermore, authorization bill earmarks do not bring additional funds to the state. As a consequence, communities throughout the state have to "rob Peter to pay Paul." Mobility projects that have been approved for funding by local officials must be moved off priority lists so that funding can be reallocated in an effort to fully fund the newly authorized demonstration projects. These local entities, working with TxDOT, must make the agonizing choice about which approved high- priority projects will lose funds to underfunded, lower priority demonstration projects.

This issue is neither new, nor isolated to Texas. DOTs throughout the nation are struggling with how best to address this issue. TxDOT will continue to work with the Texas Congressional Delegation, and regional and local governmental entities in an effort to ensure that that funding appropriated for projects throughout Texas can beutilized in the most efficient manner possible.

We Propose To:

• Seeking further public input to formulate a Commission position.



General aviation plays a vital role in Texas and supports local economies. It is a necessary access link to business and industry throughout the state. In addition to access benefits, the state’s general aviation industry has an annual impact of over $5.9 billion. As a participant in the Federal Aviation Administration’s (FAA) State Block Grant Program since 1993, TxDOT is responsible for taking the lead in carrying out the state’s Airport Improvement Program (AIP) for all reliever and non-reliever general aviation airports in Texas. As such, TxDOT supports a stable, reliably funded federal Airport Improvement Program.

VISION 100, or the Century of Aviation Authorization Act, expires on September 30, 2007. As Congress begins work on the aviation authorization bill, TxDOT will be educating members and emphasizing the need for a more stable source of funding for general aviation and opposing any efforts to divert funding from the Airport Improvement Program. As airport congestion continues to grow, providing air service to smaller communities will become an even greater issue.

As previously discussed, demonstration projects can be a challenge for Block Grant states such as Texas. These states do not always receive discretionary funding from the FAA to for congressionally designated AIP demonstration projects, requiring them to work with local communities to reallocate funding from one project to another.

We Propose To:

• Work with Congress and our other federal partners through theaviation reauthorization process to ensure and protect a stable Airport Improvement Program funding source; and

• Work with Congress and FAA to ease discretionary funding restrictions placed on Block Grant states in receipt of AIP demonstration projects.


A Water Resources Development Act (WRDA) reauthorization has not been passed by both houses of Congress since the Act expired over four years ago in 2002. The most recent reauthorization report proposal passed both the House and Senate; however, the conference failed to reach consensus in the final days of the 109th Congress.

WRDA reauthorizations are traditionally project-driven processes. As in the past, TxDOT will provide key legislators with a list of projects from throughout the state that have been deemed in need of funding by our local and regional partners.

TxDOT’s greatest concern in passage of WRDA is the establishment of a more stable source of funding for the continued operation and maintenance of the Gulf Intracoastal Waterway.

We Propose To:

• Work with Congress to ensure a more stable source of funding for the continued operation and maintenance of the Gulf Intracoastal Waterway.


With the passage of SAFETEA-LU, public transportation received an increase in federal funding. However, even with the increase, the gap between available funding and the operating and capital needs of the state’s transit providers continues to grow. Operators have found themselves in a position of having to trade off critical investments for short- term operating expenditures. We must continue to work with Members of Congress and the Federal Transit Administration (FTA) to explore alternative funding methods to bridge this ever-growing gap.

Earlier in this document, we stated that earmarks do not help the highway funding big picture. Transit can be a different story. With limited budgets that often cannot cover routine maintenance, much less new vehicles, Texas’ rural and small urban transit providers are searching for ways to fund their programmatic needs. As individual units, these small providers simply do not have the ability to actively pursue discretionary funding for much needed capital equipment; however, as a collected group they are much more powerful. We believe the pursuit of a “statewide” earmark for transit vehicles is both worthy and important, and will continue to work with our state’s transit providers and the Texas Transit Association to achieve this goal.

To further expand the impact of a statewide earmark, we are researching the possibility of creating “Regional Maintenance Facilities” throughout the state. Regional maintenance facilities would relieve local providers of many of their maintenance and training costs and focus funding in a manner that could provide the maximum benefit possible.

The FTA is now in the process of proposing and promulgating new administrative rules based on actions from SAFETEA-LU. Just recently, TxDOT submitted comments expressing our concerns and suggestions to the FTA regarding their proposals for the new Job Access and Reverse Commute, New Freedom and Elderly Individuals and Individuals with Disabilities Programs. We will continue to do the same as the FTA works through their post-SAFETEA-LU rulemaking processes.

We Propose To:

• Work with the Texas Congressional Delegation to pursue a statewide transit earmark during the annual appropriations process.

• Research the concept of Regional Maintenance Facilities to focus limited funds and relieve local providers of budget-draining maintenance costs.

• Continue to monitor FTA’s post-SAFETEA-LU rulemaking and work to ensure TxDOT’s policy positions/comments are taken into consideration in these processes.


In order to mitigate the adverse effects of rail traffic on safety, motor vehicle flow or community quality of life, SAFETEA-LU established a grant program to authorize $350 million per year for local rail relocation and improvement projects. Although the program has not yet been funded, TxDOT will strongly encourage Congress on the need to fund not only the existing SAFETEA-LU authorization, but also to expand innovative financing options to include giving states the ability to use surface transportation funds for the acquisition or relocation of rail lines and facilities. Federal support is critical to meet the state’s approximately $15 billion in rail relocation and improvement needs.

We Propose To:

• Work with members of Congress to ensure a maximum level of funding is appropriated to the state to assist with meeting its rail relocation and improvement needs.

• Amend Chapter 3 of Title 23 to allow states to use surface transportation funds for the acquisition and/or relocation of passenger or freight rail lines and facilities.


TxDOT is committed to working with our state and federal partners to expedite commercial and private vehicle flow through our ports while still doing our part to ensure safe and secure borders. TxDOT does not view those goals as mutually exclusive. The Corridor/Border Program was restructured in SAFETEA-LU by dividing it and making the border portion a formula program. This restructuring has greatly benefited the State of Texas. The new formula program directs funding to U.S. border states for the promotion and facilitation of trade across U.S. borders, as was originally intended.

Texas has the most ports of entry and the longest contiguous U.S.-international border. As such, there is a great need for these funds in Texas and the new formula program acknowledges this need.

Unfortunately, funding alone will not solve all the mobility problems along the Texas/Mexico border. TxDOT will continue work with its federal partners, including Federal Motor Carrier Administration and Homeland Security’s Customs and Border Patrol to develop safe and efficient border crossing facilities for the movement of people and freight across our international border.

We Propose To:

• Work with federal partners to identify and employ best methods for expediting commercial and private vehicle flow through our ports of entry while ensuring a maximum level of safety and security.

© 2007 Texas Department of Transportation:


Wednesday, January 03, 2007

Open road tolling is proving to be penny wise and pound foolish

Toll tags urged for travelers on 121

State trying to work kinks out, end bills for meager amounts

January 3, 2007

Denton Record-Chronicle
Copyright 2007

The Texas Department of Transportation is urging exasperated motorists using the new State Highway 121 toll road to purchase toll tags, which can cut the cost of using the road by a third and eliminate the hassle of a monthly bill.

Department spokeswoman Kelli Petras said drivers have objected to receiving bills of as little as 25 cents for using the road, the first all-electronic toll road in Texas.

"There have been some complaints about being billed small amounts," she said.

The Texas Turnpike Authority Division in Austin, which governs the billing process, is working to resolve bugs in the system so that bills won't be sent out for totals that low, she said.

Motorists have also complained about toll tag malfunctions, Ms. Petras said, while others have said they didn't realize the 5.9-mile stretch of Highway 121 had become a toll road.

Motorists have two options to pay the toll: purchase a toll tag or receive a more costly monthly bill.

Toll tag users have a windshield transponder that deducts the toll from their account. For vehicles without a toll tag, a camera records the license plate number and the vehicle's owner receives a bill, which amounts to about 33 percent more than toll tag users have to pay.

The Transportation Department began collecting tolls on the road Dec. 1.

Gas taxes, the traditional funding option for highways, are not generating enough revenue to keep up with demand, said Mark Ball, a spokesman for the department. He said toll roads could help offset the funding needs and prevent gas taxes from rising.

New sections of Highway 121 are to open as toll roads in the coming years, including a portion of road from Old Denton Road east to the Dallas North Tollway and a section east of the tollway to Central Expressway.

Denton County Judge Mary Horn said tolls are the only sensible way to get funding to build the roads the county needs.

"Building roads is just outrageously expensive, and bridges are even worse than that," Ms. Horn said. "If we were to wait on TxDOT to build these roads, they wouldn't get to it until around 2030."

To purchase a toll tag, call 972-818-6882 or visit the North Texas Tollway Authority's Web site at


© 2007 WFAA-TV:


“One of the most dramatic coups in recent Texas political history.”

2 GOP foes of Craddick join forces to oust the speaker

Jan. 03, 2007

Fort Worth Star-Telegram Austin Bureau
Copyright 2007

AUSTIN - Waxahachie Republican Jim Pitts, the head of the powerful Texas House Appropriations Committee, won the endorsement of his one-time rival Brian McCall of Plano on Wednesday in the effort to oust House Speaker Tom Craddick when the Legislature convenes next week.

Several House sources said Pitts will announce Thursday that he has enough Republicans in his camp to end Craddick’s four-year reign as speaker - but only if the 14-year House veteran can secure the backing of the bulk of the House Democrats to get the 75 votes needed for victory.

If the effort succeeds, Craddick’s opponents will have executed one of the most dramatic coups in recent Texas political history.

“Both members had substantial support, but they thought it would be best to consolidate that support behind Jim and move forward,” said one Republican House member close to the negotiations who asked that his name be withheld because of the sensitivity of the talks.

While reports that Pitts and McCall had joined forces reverberated through the Capitol, Craddick’s camp maintained an air of calm. Spokeswoman Alexis DeLee said she was unaware of any agreement that would lead to the House leader’s ouster when the 80th Legislative session begins Tuesday.

Craddick support

Several Craddick loyalists said they had no plans to abandon the long-serving lawmaker in his quest for a third term at the helm.

“Last I heard, the people that were supporting Craddick were solid,” said state Rep. Rob Eissler, R-The Woodlands.

The race for speaker has dominated news from Austin during the usually quiet holiday season. Whoever wins the post will wield great power in state government, controlling the flow of legislation to the House floor and making all of the members’ committee assignments. Bills that do not have at least tacit support from the speaker seldom make their way into the law books.

McCall, an eight-term Republican, announced his challenge to Craddick just before Christmas and soon won the backing of a substantial bloc of House Democrats. Pitts joined the race last week, saying that he could bring more Republicans, thereby avoiding the appearance that the outnumbered Democrats had retaken control of the 150-member House by default.

Both men have sharply criticized Craddick’s leadership as heavy-handed, saying that many members were often pressured to vote against the interests of their constituents to advance the speaker’s agenda.

The GOP House member close to the negotiations said the names of Pitts’ supporters will be made public today, but one key Democrat cautioned that the deal was not yet done.

“Democrats believe McCall would be a good speaker,” said state Rep. Garnet Coleman, R-Houston. “I don’t think Democrats have had a good opportunity as a whole to discern whether they think Pitts falls into that same category.”

State Rep. Lon Burnam, D-Fort Worth, said either would be an improvement from the status quo.

“I find a great deal of satisfaction in the notion that Tom Craddick will not be speaker anymore,” said Burnam, the only House member who voted against Craddick when he became speaker in 2003.

A high-risk bluff?

Some Craddick backers suggested that Pitts and McCall had concocted a high-risk bluff in a last-ditch effort to bring pliable members to their side. And Craddick has insisted that he had the support needed to win a third term as speaker, but implicitly acknowledged that some of that backing had eroded in recent weeks. Soon after the Nov. 7 elections, Craddick released the names of 109 members supporting his re-election. Then on Dec. 28, he revised the list saying that he had the “unequivocal support” of 84 members.

But the list included the name of Pitts, and he announced his challenge within hours of Craddick’s decision to release it.

State Rep. Todd Smith, a Euless Republican and a Craddick critic, said he plans to attend Pitts’ news conference, scheduled for 4 p.m. in the Capitol.

“I’m voting for Jim because I think he’ll be a good speaker,” Smith said, “not because he does or does not have the votes to win.”

© 2006 Fort Worth Star-Telegram:


"Money down a $1,000 toilet."

'Craddick's Castle' controversy heats up

January 3, 2007

WFAA-TV (Dallas/Ft. worth)
Copyright 2006

As two lawmakers face off against Tom Craddick for Texas speaker of the house, controversy has intensified surrounding an apartment recently remodeled by Craddick and his wife using hundreds of thousands of dollars in corporate donations.

Critics call it "Craddick's Castle."

Craddick, of Midland, could soon be evicted as leader of the Texas house.

"I wouldn't be standing here today if I didn't feel like I was going to win overwhelmingly," said Rep. Jim Pitts of Waxahachie, who is a fellow Republican challenging Craddick.

If Craddick loses, he also faces eviction from the speaker's apartment in the Capitol and may never get to enjoy his controversial improvements.

In a University of Texas documentary on the apartment, Craddick called the place historic.

"We really feel like it's part of Texas history, and everyone needs to enjoy it," he said.

But the taxpayer owned apartment is not open to the public and not a stop on Capitol tours.

Craddick started remodeling the apartment last year and raised a million dollars in private donations not covered by state ethics and campaign finance laws.

Telecom giant AT&T, Maxxam; which owns horse tracks in Texas, and Dallas billionaire Harold Simmons were among those who chipped in.

But watchdog groups claim that the use of money was a conflict of interest for Craddick.

"And it's no accident that the people who are ponying-up these large contributions are major commercial interests that have business in front of the state legislature," said Andrew Wheat, Texas for Public Justice.

A Craddick spokeswoman said donors are interested in historic preservation, but what got attention were the contractor's suggestions - a $1,300 custom shower door, an almost $15,000 range, a $7,000 freezer and two $1,000 toilets - after Craddick's wife said she wanted the apartment redone in "grand style."

The spokeswoman claims no $1,000 toilets were installed, but didn't know about the rest.

Texans for Public Justice isn't sure the commodes weren't put in, but knows if Craddick loses it could mean a big loss for the Craddicks.

"I guess it could be money down a $1,000 toilet," Wheat said.


© 2007 WFAA-TV:


TxDOT springs Big Brother tolling on an unwitting public

Third way to pay toll added: Drive through and get a bill

State decides at last moment to allow 'open-road' tolling on three Central Texas roads

January 03, 2007

By Ben Wear
Austin American-Statesman
Copyright 2006

So, you don't have a toll tag, but you still don't want to stop at toll booths?

No problem, Texas Department of Transportation officials said Wednesday, just three days before the agency will begin charging for cash customers to drive on the three Central Texas toll roads that opened late last year.

Drivers will be given a third way to pay to drive on the toll roads, a new approach in the rapidly evolving world of toll roads typically called "open-road tolling" or "video tolling." It will be more expensive than paying cash or using a toll tag.

Under the plan, drivers who don't have a toll tag nonetheless will be able to remain on the main lanes at the 70 mile-per-hour speed limit and use the faster, nonbooth lane on entrance and exit ramps.

Cameras suspended on overhead gantries (alongside equipment that reads electronic toll tags) will shoot pictures of the license plates of such drivers and the registered owner of the car will be billed. Invoices would come once a month, and the toll charges would be approximately 33 percent higher than the normal cash rate of about 12 cents a mile.

"It's something we talked about several months ago, but not seriously until very recently," said David Powell, the Transportation Department's director of toll information technology and operations. "It wasn't until literally just a few days ago that we said, 'You know, we are able to do this, and we should.' "

Those cameras already had been installed at the overhead gantries on the Texas 130, Texas 45 North and Loop 1 tollways (41 miles of which opened in November and December) to capture license plate numbers of scofflaws so they could be mailed a violation notice. Those violations were to carry a $5 added charge, which the Transportation Department had said was its estimated cost to process them.

Under this new approach, however, that added cost to the driver will be much smaller.

For instance, the charge at most ramps is 50 cents at toll booths, meaning that the surcharge would likely be 15 cents. At the Texas 130 mainlane plazas, on the other hand, where the cash charge is $1.50, the surcharge might be 50 cents. Powell said that the Texas Transportation Commission will have to decide on the exact numbers at its meeting late this month. Until those charges are set, open-road customers will pay the same amount as people who stop at toll booths.

So how will the processing cost go from $5 to just a few cents? Powell said human involvement for video tolling will be minimal, particularly after the department works out the kinks on computer software that can read the license plate numbers from the photos. With video tolling, there will be one mailing a month instead of a separate mailing each time a scofflaw runs through a toll point. People who don't pay after receiving that first invoice will get a second invoice, Powell said. Then, if they still don't pay, they'll get a violation notice. And that $5 charge will apply to each toll transaction on the bill.

The last-minute change raises other questions:

•Why now? After several months of publicity about the two ways to pay — at cash booths and with toll tags — adding a third way could confuse the public. But it also could increase the volume of customers, and tamp down ill-will in the long run. Drivers who blunder onto a toll road inadvertently and then get a bill with a small surcharge on the toll will be happier than if they got a similar mailing carrying $5 violation charges.

Powell said that the department's November and December opening of two "open-road" tollways in Dallas and Tyler (the first in the United States, Powell said) convinced the agency that the billing system could work. And the agency had already planned to have open-road tolling — no booths, that is — on the Texas 45 Southeast toll road that will begin construction later this year and connect to Texas 130 in Mustang Ridge.

Having two connecting roads with different billing approaches would be confusing to the public, Powell said.

"This was something we were going to be faced with eventually anyway," he said.

•Won't that be a problem with the 183-A tollway? That toll road, under construction by the Central Texas Regional Mobility Authority and due to open in March, at least as of now will not have open-road tolling. It will connect seamlessly (through flyover bridges) with Texas 45 North. So, in theory, a customer without a toll tag could find himself getting an invoice from the state transportation department for one part of a trip and a violation notice from the mobility authority for traveling that extra mile or two.

Toll transactions for all four roads are being handled by the same contractor, the Washington Group, out of one customer service center near the Loop 1 tollway.

"We've had discussions about this with them," Powell said.

Mike Heiligenstein, executive director of the mobility authority, said that his agency for now has decided against adding the open-road option. Heiligenstein said that because of problems with defunct, foreign or obscured license plates, the agency might find itself unable to collect on up to 20 percent of tolls.

With a mixture of toll booths and toll tag readers only, he said, that "error rate" would be 3 percent or lower. And the mobility authority's ability to pay back the $234 million it borrowed to build the 11.6-mile road depends solely on toll revenue.

The state, on the other hand, can turn to gas tax revenue if toll revenue comes up short.

"The right people are working out the kinks in video tolling, that being TxDOT," Heiligenstein said. "We can't be the ones working out the kinks."

•What about all those toll booths? Was it a waste to build them? The Loop 1 tollway plaza near Merrilltown Drive has 16 cash booths (the plazas on Texas 45 North and Texas 130 are much smaller). If enough people use toll tags and open-road tolling, many of those booths might become unnecessary.

"I honestly hope we have a surplus" of booths, Powell said. "I can't say we would have done anything different if we'd have known (about video tolling plans). When you have a multimillion dollar project, you want to be careful not to make any mistakes. And to undersize the toll plazas would be a big mistake."; 445-3698

How to get a TxTag

Drivers with a TxTag, a windshield sticker with a tiny transponder, will be able to drive toll roads statewide without stopping at booths and will pay 10 percent less than cash customers. The tag is free (for now), but you'll have to establish an account and prepay $20 in tolls. You can get a tag by calling (888) 468-9824, going to or visiting the state's tollway customer service center at 12719 Burnet Road.

Three ways to pay

Cash: Drivers would stop at booths on some entrance and exits ramps and, at certain points in the run of the tollways, would have to pause at toll plazas to pay charges. The cash charges — 50 cents at most ramps and 75 cents to $1.50 for the mainlane plazas — are considered the basic toll rates.

Toll tags: Motorists can get a prepaid toll tag and affix it to their windshield. With a tag, which communicates with overhead detectors, drivers can remain on the main lanes of the tollways at full speed and can enter or exit on toll ramps without stopping at a booth. Cars with toll tags will not be subject to tolls until February, when they will pay 50 percent of the basic toll rates. Then, in March, toll tag users will begin to pay their permanent rate, which is 90 percent of the cash toll rate.

Open-road tolls: Cars without a toll tag can still stay on the main lanes or avoid ramp booths, but will pay a surcharge of about 33 percent over the basic cash price. Overhead cameras at toll plazas will record a car's license plate number and the owner will be mailed a monthly invoice with the charges.

© 2006 Austin American-Statesman: www.


Tuesday, January 02, 2007

"We don’t deserve Tom Craddick."


A Reminder To Texas House Members About Craddick

January 2, 2007

John Cobarruvias
Fort Bend Now
Copyright 2007

It is hard to believe, with Speaker Tom Craddick’s record, that anyone, especially any Democrat, would ever consider voting for him as one of the most powerful individuals in Austin who will set the course for our state in 2007. Maybe the 84 members who have pledged to him need to remember a few things about Craddick.

Craddick has been in office twice as long as Tom DeLay. He has been a State Representative for 38 years. He is a professional politician and when he retires, will receive a pension bigger than most Texans will ever see after spending their entire life at one company. Craddick, like Tom DeLay, is the poster child for term limits. No one should be in office for 38 years.

In just a few short years as Speaker of the House, Craddick renovated the Speakers apartment inside the Capitol with over $700,000 in donations from lobbyists. This included $250,000 from the AT&T Foundation and $250,000 from billionaire investor Harold Simmons . The renovations included not one, but two, $1000 toilets. Most Texans spend $2000 to renovate their entire bathrooms. Craddick instead buys $2000 in toilets for his and her’s thrones. Clearly Craddick is out of step with the working class in Texas.

Since becoming Speaker in 2003, Craddick has hid over $31,000 in expenditures behind credit cards, which is against ethics rules. He also has an enormous water bill from Ozarka for over $14,000 maybe for flushing his $1000 toilets. Again, Craddick is out of step with those who drink tap water and who follow the laws that he creates.

Craddick’s heavy handedness is second only to Tom DeLay, but it is a leadership method that was rejected by the voters with the 2006 elections. It has no place in our government. It has no place in Austin.

The 84 members supporting Craddick need to decide who they really support, the lobbyists and the heavy handed politics of a professional politician or the people of the state who own $50 toilets, drink tap water, and are held accountable for breaking the laws of the state.

This is a simple decision. How can you vote for someone to represent the hard working, law abiding citizens of the State of Texas while he sits upon his $1000 throne, drinks $14,000 of bottle water, and believes the laws are only for those he serves?

Tom Craddick doesn’t deserve to be Speaker of our House. And we don’t deserve Tom Craddick.


© 2006 Fort Bend Now:


Monday, January 01, 2007

"People are coming to the realization that tolls may not be the best way to build every road."

Report new weapon in toll-road fray

Gas-tax backers tout findings, but researcher says their interpretation is on a detour

Jan. 1, 2007

Houston Chronicle
Copyright 2007

Toll-road skeptics and others who oppose long-term leases on Texas roads to private companies, especially foreign ones, are citing the work of a Texas Transportation Institute scholar to make their case for traditional road financing with fuel taxes.

Ironically, the findings by associate research scientist David Ellis appear in a report by the Governor's Business Council. And the council, reflecting Gov. Rick Perry's own strong views, is very much in favor of tolls.

Caught in the middle, Ellis says his work is being misinterpreted.

"People find in there what they want to find and read what they want to read," he said. "This report says tolls are an important part of this proposition."

That's true, but the report, "Shaping the Competitive Advantage of Texas Metropolitan Regions," also explores the option of increasing the gasoline tax — a move many conservationists say would have the additional benefits of encouraging fuel efficiency and discouraging unnecessary travel.

The researchers began by asking how much road construction would be needed to eliminate the worst bottlenecks in the state's eight largest metro areas, said Texas Transportation Institute researcher Tim Lomax.

Accomplishing that, they calculated, would result in a typical rush-hour trip in the Houston metropolitan area taking 18 percent longer than one when traffic flows freely.

At present, Lomax said, that trip takes about 25 percent longer than during free flow.

Without the added capacity, he said, congestion and delays in Houston and the other metro areas will rise sharply over the next 25 years as population and commerce increase.

Construction funding

The construction cost the researchers came up with was $66 billion over 25 years. That's close to the Texas Department of Transportation's estimate of $68 billion.

TxDOT also estimates it would cost $9 billion each to do the same for smaller urban areas and rural roads, for a total of $86 billion statewide.

Then Ellis looked at ways to raise the needed money.

"We have an $86 billion problem out there that gets worse every year and three sources of revenue that lose value to inflation every year," he said. These are:

•The state gasoline tax of 20 cents a gallon.
•Vehicle-registration fees based on vehicle weight.
•The 18.4-cent-per-gallon refund of federal gasoline tax to Texas.

Ellis said none of the three is based on costs, so when these go up, the purchasing power of the revenue falls. For example, he said, "The 20-cent gas tax was put in effect in 1991 and is now worth 14 cents in purchasing power."

Among Ellis' proposed solutions is a one-time increase in the gasoline tax, followed by automatic adjustments for inflation in the cost of road-building over the 25 years.

He concluded — and this is what excited toll opponents — the state could raise $66 billion for the eight metro areas by hiking the 20-cent tax to 28 cents and tying it to the Highway Construction Index, a sort of Consumer Price Index for road builders.

'Every available tool'

Another method he proposed is toll financing, but that was old news.

"Whether we toll, raise the gas tax, index the tax or issue bonds (against the expected tax revenue), we get these benefits as long as we get the job done," he said. "We have to employ every available tool."

Although the Texas Transportation Institute and the Business Council did not look at rural areas and smaller cities, Ellis noted that the fuel tax would have to be raised higher to cover their needs, too. "You have a lot of roadway out there," he said.

Nor did the study address Perry's grand plan for the Trans-Texas Corridor, a network of massive toll road, rail and pipeline facilities linking urban areas. Staggering tax increases would be needed to pay for such huge projects, and Perry's plan would lease corridor segments to private companies to build and operate.

Support for the report

One who welcomed the report is David Stall, a former Columbus city manager who opposes the corridor plan and the increased reliance on toll funding generally on the Web site

"People are coming to the realization that tolls may not be the best way to build every road," Stall said — although he said they are appropriate for roads that let motorists choose to pay a fee for a faster ride.

Stall does not support allowing a company to build and operate a state-owned toll road for 50 years and reap the profits. "They're just taking money out of your own pocket and giving it back to you while they keep a piece of the action," he said.

Although fuel-tax increases are unpopular, Stall says that a driver who gets 20 miles to the gallon and drives a toll road at a typical fee of 15 cents a mile is paying the equivalent of a $3-per-gallon gas tax.

Toll-road leasing

TxDOT spokesman Randall Dillard noted that "the Legislature sets transportation-funding policy, and to date, the Legislature has given us options that do not require an increase in the gas tax.

"These options focus on innovation, private-sector investment and choice for users," he said.

Supporters of leasing toll roads to private firms say the money to build them can be raised quickly by tapping the equity market — investors who will put up construction dollars now and are willing to wait for long-term profits.

This gets concrete poured a lot faster than waiting for voters to approve a bond issue or legislators a fuel tax hike, they contend. And time is money.

"Public-private partnerships can mobilize these investments much more quickly," said New York state transportation Commissioner Thomas J. Madison Jr. "And by moving projects up faster, you're saving a lot of money lost to inflation."

In all, said TxDOT's Dillard, the report has had a good effect: "More people are discussing and working on the transportation problem."

© 2006 Houston Chronicle:


"There have been very few independent assessments of whether these projects are good for taxpayers — or just for the corporations and bankers."

Private Highways: Road to Riches — or Ruin?

Study says taxpayers lost out on "very large" revenues in Indiana deal.

January 1, 2007

Mother Jones
Copyright 2007

As James Ridgeway and Daniel Schulman note in a Mother Jones investigation, in the rush to privatize the nation's aging roads and bridges there have been very few independent assessments of whether these projects are good for taxpayers — or just for the corporations and bankers who structure the deals. One of the few such efforts to have been examined from a variety of angles is the privatization of the Indiana Toll Road. In November, NW Financial, a New Jersey-based municipal finance firm that advises governments on public financing projects and includes "privatizations and regionalizations" among its areas of expertise, released a study of the deal. The analysis was spearheaded by Dennis Enright, one of the firm's founders and the former planning and development director for Jersey City, New Jersey.

The study concludes that because of the Toll Road deal, Indiana will lose out on significant revenues, and that the state could have easily financed the road itself. "Indiana’s sale of the Toll Road," it says, "while helping fund transportation projects for the next ten years, will result in depriving the public transportation funding network of very large and much needed future revenues in the final 65 years of the concession agreement to pay for publicly needed capital projects both on and off the toll road. Instead these revenues are directed to private corporate profits and shareholders. If road users are willing to pay higher tolls, these funds should be captured for the public good."

The study goes on: "Public financing at the same (or even greater) monetization levels would have been very feasible for the Indiana Toll Road transaction and should be considered as a public policy alternative to privatization. Public monetization produces the upfront economic benefit but leaves the control of the road and the future cash flows in the hands of the public sector to fund transportation needs."

© 2007 The Foundation for National Progress:


Public-private toll road monopolies: "Plundering the resources of the New World."

The Highwaymen

Why you could soon be paying Wall Street investors, Australian bankers, and Spanish builders for the privilege of driving on American roads.

January 1, 2007

By Daniel Schulman with James Ridgeway
Mother Jones
Copyright 2007

"The road is one succession of dust, ruts, pits, and holes." So wrote Dwight D. Eisenhower, then a young lieutenant colonel, in November 1919, after heading out on a cross-country trip with a convoy of Army vehicles in order to test the viability of the nation's highways in case of a military emergency. To this description of one major road across the west, Eisenhower added reports of impassable mud, unstable sand, and wooden bridges that cracked beneath the weight of the trucks. In Illinois, the convoy "started on dirt roads, and practically no more pavement was encountered until reaching California."

It took 62 days for the trucks to make the trip from Washington, D.C., to San Francisco, and another 37 years for Ike to complete a quest, inspired by this youthful journey and by his World War II observations of Germany's autobahns, to build a national road system for the United States. In 1956, President Eisenhower signed the Federal-Aid Highway Act, which called for the federal and state governments to build 41,000 miles of high-quality roads across the nation, over rivers and gorges, swamps and deserts, over and through vast mountain ranges, in what would later be called the "greatest public works project in human history." So vital to the public interest did Eisenhower, an old-style fiscal conservative, consider the interstate highway system, he even authorized the federal government to assume 90 percent of the massive cost.

Fifty years to the day after Ike put his pen to the Highway Act, another Republican signed off on another historic highway project. On June 29, 2006, Mitch Daniels, the former Bush administration official turned governor of Indiana, was greeted with a round of applause as he stepped into a conference room packed with reporters and state lawmakers. The last of eight wire transfers had landed in the state's account, making it official: Indiana had received $3.8 billion from a foreign consortium made up of the Spanish construction firm Cintra and the Macquarie Infrastructure Group (mig) of Australia, and in exchange the state would hand over operation of the 157-mile Indiana Toll Road for the next 75 years. The arrangement would yield hundreds of millions of dollars in tax breaks for the consortium, which also received immunity from most local and state taxes in its contract with Indiana. And, of course, the consortium would collect all the tolls, which it was allowed to raise to levels far beyond what Hoosiers had been used to. By one calculation, the Toll Road would generate more than $11 billion over the 75-year life of the contract, a nice return on mig-Cintra's $3.8 billion investment.

The deal to privatize the Toll Road had been almost a year in the making. Proponents celebrated it as a no-pain, all-gain way to off-load maintenance expenses and mobilize new highway-building funds without raising taxes. Opponents lambasted it as a major turn toward handing the nation's common property over to private firms, and at fire-sale prices to boot.

The one thing everyone agreed on was that the Indiana deal was just a prelude to a host of such efforts to come. Across the nation, there is now talk of privatizing everything from the New York Thruway to the Ohio, Pennsylvania, and New Jersey turnpikes, as well as of inviting the private sector to build and operate highways and bridges from Alabama to Alaska. More than 20 states have enacted legislation allowing public-private partnerships, or P3s, to run highways. Robert Poole, the founder of the libertarian Reason Foundation and a longtime privatization advocate, estimates that some $25 billion in public-private highway deals are in the works—a remarkable figure given that as of 1991, the total cost of the interstate highway system was estimated at $128.9 billion.

On the same day the Indiana Toll Road deal closed, another Australian toll road operator, Transurban, paid more than half a billion dollars for a 99-year lease on Virginia's Pocahontas Parkway, and the Texas Transportation Commission green-lighted a $1.3 billion bid by Cintra and construction behemoth Zachry Construction to build and operate a 40-mile toll road out of Austin. Many similar deals are now on the horizon, and mig and Cintra are often part of them. So is Goldman Sachs, the huge Wall Street firm that has played a remarkable role advising states on how to structure privatization deals—even while positioning itself to invest in the toll road market.

Goldman Sachs' role has not been lost on skeptics, who accuse the firm of playing both sides of the fence. "In essence, they're double-dipping," says Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, a truckers' group that opposes toll road privatization. "They're basically in the middle, playing one side against the other, and it's really, really lucrative."

Despite such concerns, the privatization model has the full backing of the Bush administration. Tyler Duvall, the U.S. Department of Transportation's assistant secretary for transportation policy, says dot has raised the idea with "almost every state" government and is working on sample legislation that states can use for such projects. "This is a ground battle in the United States right now," he says. "States just need to be convinced that this is basically something they should be considering."

The financial stakes are potentially huge. "You're buying the infrastructure of the economy, and it's enormously valuable," says John Schmidt, who served as associate attorney general in the Clinton administration and as counsel to the city of Chicago on the $1.8 billion privatization of the Chicago Skyway, the 7.8-mile freeway that connects the Dan Ryan Expressway in the west to the Indiana Toll Road in the east. "[Private road operators] haven't been able to get in here previously. There's been a demand, and it's been bottled up because we just haven't had privatized infrastructure in this country, so they've been buying toll roads in Chile and in France. Now, they suddenly have the opportunity to come into this country."

At the western end of the Indiana Toll Road, just over the Illinois border, the scenery rolls by like the lyrics to a particularly forlorn Bruce Springsteen song. Passing over Wolf Lake, infamous in these parts as the site where "thrill killers" Nathan Leopold and Richard Loeb dumped the body of 14-year-old Bobby Franks in the 1920s, the highway skirts ghost factories and decaying main streets until, outside Gary, the smokestacks give way to cornfields and Christmas tree farms, and the scenery stays pastoral across the length of northern Indiana. If you've ever traveled cross-country on I-90, known here as the "main street of the Midwest," you've driven the Toll Road.

Privatizing this 157-mile interstate artery was the brainchild of Indiana governor Mitch Daniels, a former Eli Lilly executive and the director of the White House Office of Management and Budget between 2001 and 2003—a position in which he was known, for his budget-cutting fervor, as "The Blade." Daniels, by all accounts, began plotting the privatization of the Indiana Toll Road soon after he took office in January 2005. The new governor was inspired by Chicago's $1.8 billion Skyway deal but had something far bigger in mind. Leasing out the Toll Road would be the centerpiece of his transportation plan, "Major Moves," a name—borrowed from a Hank Williams Jr. album—that Daniels said he came up with while singing in the shower. Under the plan, Indiana will spend nearly $12 billion over the next decade on highway construction projects funded, in part, by the proceeds from the Toll Road lease.

By September 2005, the governor was soliciting bids for the project, with Goldman Sachs serving as the state's financial adviser—a role that would net the bank a $20 million advisory fee. The winning company would maintain and improve the highway, with the lease agreement spelling out its responsibilities down to the maximum time allowed for clearing roadkill. In return, the company would collect tolls, which it would be allowed to raise by a specified percentage each year after 2010. The deal (including the 75-year term chosen for the lease) was structured so the companies would gain a huge tax advantage; to further sweeten the pot, the state instituted the first toll increase in 20 years shortly before the agreement went through, nearly doubling the rate for passenger cars and gradually raising truck tolls 120 percent. (The toll for cars was promptly frozen pending the installation of electronic tolling, sometime before mid-2008; in the meantime, the state is paying mig-Cintra the difference.)

Driving the Toll Road on a temperate late-summer morning, the sun squinting through a thick covering of stratus clouds, it was hard to find anyone who approved of Daniels' deal. "Our economy's already bad," said Amber Kruk, an 18-year-old starting her shift at a Perkins just off the highway in South Bend. "We don't understand why we're giving this road to a foreign company." Gassing up his flatbed at a service station off the Toll Road, 62-year-old trucker Richard DeRohan said he runs the road less now because of the increased tolls. "It should have stayed in state hands," he said. "I didn't like when they did it in Chicago. It should be run by a public entity—they're the ones who created it."

In a New York Times op-ed published in May, not long after Indiana's state Legislature approved the Toll Road deal, Daniels acknowledged that public sentiment had run almost 2-to-1 against the idea, and then summarily dismissed the opposition: "Their hearts were in the right place, but not their logic." Indiana, he argued, "very nearly tore up its equivalent of a Powerball check" as Hoosiers convinced themselves "either that our proposal borrowed from the future, or that it gave away a part of America to 'foreigners.'"

In fact, Daniels argued in a paper he wrote for the Reason Foundation last spring, "any businessperson will recognize our decision here as the freeing of trapped value from an underperforming asset, to be redeployed into a better use with higher returns." Yet his administration failed to commission an independent financial analysis of the Toll Road project until the deal was almost done—and when it did, internal emails obtained by Mother Jones show, the motivation was primarily political. "Current criticism from opposition is 'no independent analysis' and Scott and his team have kindly volunteered to fill this void," one high-level state official wrote in a February 2006 email, referring to Scott Nickerson, an executive at the accounting firm Crowe Chizek, which conducted the analysis.

The emails suggest that Daniels' administration remained preoccupied with how to deploy the analysis to best political advantage—for example, by releasing it through a third party, such as a think tank. "The Governor is of the opinion that in order for our response to be politically independent, he would prefer that Crowe not be formally engaged to do this work," one email states (emphasis in original). According to another, "Upon further discussion, the group decided that it would be beneficial to be engaged by a separate entity to allow us to perform the consulting project and avoid the appearance of a lack of objective, independent examination."

In the end, the "independent" analysis, released just days before legislators were set to vote on Daniels' plan, found exactly what the state had been arguing all along—that the private-sector bid far surpassed what the state stood to earn on its own. Near midnight on the final day of the legislative session, after contentious debate, the bill squeaked through the House in a 51 to 48 party-line vote.

Not everyone bought Crowe Chizek's conclusions, though. Roger Skurski, a professor emeritus of economics at Notre Dame, analyzed the deal extensively on behalf of an Indiana law firm that brought suit to block the transaction. (The lawsuit ultimately failed.) It was Skurski who found that the value of the road, over a 75-year term, could be as much as $11.38 billion; in a letter to Rep. Thomas Petri, the Wisconsin Republican who chaired the U.S. House Subcommittee on Highways, Transit, and Pipelines, the economist wrote that "based on the State of Indiana's own studies and seems that the conclusion changes from 'deal' to 'no deal.'"

"The public was ignored on this; public opinion was ignored on this," says Dave Menzer, an organizer at Citizens Action Coalition, an Indianapolis-based advocacy group that also joined the anti-privatization suit. "I think that increasingly the public feels like what's driving politics, what's driving these decisions, is multinational corporations and deal-makers like Goldman Sachs, Merrill Lynch, and Morgan Stanley. They're the ones making tens of millions of dollars ultimately at the public's expense."

Shortly after the coalition launched its campaign to stop the deal, Menzer says, its six phone lines lit up with callers from around the country seeking to help pay for the lawsuit. In less than a month, it had helped raise nearly $120,000 toward the legal bills. "We saw so many different interests coming together saying that they didn't like this," he says. There were libertarians and Republicans, who felt the state was giving away too much for too little; long-haul truckers, who viewed the deal as the first stage of a national trend that could threaten their livelihoods; and environmentalists, who in the fine print of Daniels' "Major Moves" plan had noticed an effort to revive (and possibly privatize) a long-stalled project to construct Interstate 69, the so-called nafta highway, through the farmlands of southern Indiana.

So why did Daniels insist on pushing the project through in the face of so much opposition? Daniels' office turned down Mother Jones' requests for an interview, but quite a few Hoosiers have come to believe that the governor could have been taking his cue from Washington. In this scenario, Indiana, a bellwether state in many ways, would serve as a test case. "Working to make Indiana one of the first states to pave the way for road privatization, to make a bad pun, was definitely his motivation," Menzer says.

in mid-September, as the 61st United Nations General Assembly convened in New York, the Waldorf Astoria's dim, ornate lobby was teeming with diplomats and dignitaries who sat huddled in armchairs, conferring in a multitude of languages. Rumor had it that President Bush himself had dropped by the hotel the night before.

Down the hall, in the chandeliered entryway that leads to the Waldorf's Park Avenue entrance, 300 sharply dressed men and women were carrying on a different sort of diplomacy. These delegates, as they referred to themselves, were representatives from white-shoe investment banks and consultancies; high-powered lawyers; executives from the world's leading infrastructure companies; and, sprinkled here and there, federal and state officials, who never seemed to go long without being pulled into a conversation and handed a business card. They were at the Waldorf for North American ppp 2006—a conference dedicated entirely to infrastructure privatization in the United States.

As the conference opened, on the morning of September 19, Tom Nelthorpe, the editor of the trade magazine Project Finance, addressed the audience, drawing a laugh when he joked about pirates "plundering the resources of the New World." "I hope you'll find today's varied program evidence of a more sophisticated approach," he said.

Emerging markets rarely emerge solely on their own, and would-be road operators have spent years working to convince state and local officials that privatization is a no-lose proposition. It has created something of an echo-chamber effect, says John Foote, a senior fellow at Harvard's Kennedy School of Government who specializes in transportation issues. "If you've got enough people whispering in the ears of governors and mayors and so forth saying that this is the greatest thing since sliced bread and don't miss the boat, pretty soon people start believing it."

Perhaps the most tireless of the privatization advocates is Mark Florian, the chief operating officer of Goldman Sachs' municipal finance division, who advised Chicago and Indiana on their toll road deals and says he has personally visited more than 35 statehouses to "help spur the market." Florian was a speaker at the Waldorf conference, and after his remarks in the hotel's lavish ballroom, the Goldman Sachs executive—who bears a mild resemblance to Stephen Colbert—was instantly mobbed, rock star style, by delegates, all of whom seemed to be on a first-name basis with him.

"I at times tell my colleagues that I kind of feel like a missionary—out trying to sell the religion," Florian told Mother Jones. "We have been heavily invested in this."

Florian's employer isn't just any old Wall Street firm. It is one of the nation's most active and most profitable investment banks, and top Goldman Sachs officials have served in numerous administrations. Last summer, President Bush tapped its ceo, Henry "Hank" Paulson, as secretary of the treasury. Another former Goldman Sachs ceo is New Jersey governor Jon Corzine, who in September commissioned an analysis of whether state assets, including the New Jersey Turnpike, should be turned over to private companies. In addition to advising Indiana on the Toll Road deal, Goldman Sachs has worked with Texas governor Rick Perry's administration on privatization projects, and according to Schmidt, the former adviser to the Chicago mayor's office, it was a Goldman Sachs representative who first pitched the city on the idea of leasing out the Skyway.

That deal, which yielded $9 million in fees for Goldman Sachs, was "an eye-opener" for the company, Florian recalls: "That was a pretty phenomenal transaction. As soon as we were involved in that and saw the potential application of doing this more broadly, we were very excited about doing that." After the Skyway lease closed, Florian says, Goldman Sachs was inundated with calls from investors worldwide who wanted a piece of America's transportation infrastructure. "We said, 'Well, gee, if all these people are interested in investing, perhaps we can create a vehicle for them to invest through,'" he explains. To that end, Goldman Sachs put together an infrastructure fund that, by the time Florian addressed the conference, had already surpassed its original $3 billion target. Other investment firms, including Morgan Stanley and the Carlyle Group, began putting together their own funds. So appealing is the infrastructure market that Goldman Sachs has made significant changes to its municipal finance group to better position itself for a coming boom.

When Goldman Sachs began advising Indiana on selling its toll road, it failed to mention to the state that it was putting together a fund whose sole purpose would be to pick up infrastructure for the best price possible in order to maximize returns for its investors. Nor did the bank advertise the fact that, even as it was advising Indiana on how to get the best return, its Australian subsidiary's mutual funds were ratcheting up their positions in mig—becoming de facto investors in the deal.

"The firm is an established adviser, but we also have this big investment arm," Florian told Mother Jones, arguing that Goldman Sachs' dual nature typically doesn't cause a problem in corporate deals. "But this is a trickier marketplace, and people are cognizant of that because it is so public. It's so new.... We're going to really feel our way along here." A Goldman Sachs spokesman later contacted Mother Jones to stress that there is "a wall" between the firm's investment and advisory divisions. "Asset management makes its investment decisions independently of the rest of the firm," he said. Asked whether the firm has a system to prevent conflicts of interest, the spokesman demurred.

Florian says Goldman Sachs does have a system for avoiding conflicts in situations when Goldman is a principal investor in a deal. "We put in a voice mail and some information about that situation and what our role might be, and it literally goes around the world.... It's a good system, but it's not always perfect." Indeed, the system didn't stop Goldman Sachs last spring from vying to advise the city of Chicago on a deal to privatize Midway airport—even as it was seeking, along with other partners, to take over British Airports Authority, one of the companies likely to bid on the airport.

"One of the things we've learned in these recent corporate scandals is that those firewalls may not be very soundproof," says Duane Windsor, a professor of business management at Rice University and an expert on business ethics. "There is a lot of leakage back and forth...that kind of problem where the motives are so mixed that it's hard to tell why you are getting a certain piece of advice.

"There's no reason to think the people in these companies are abnormally honest," he adds wryly.

Dennis Enright, a principal at NW Financial Group, a New Jersey-based investment banking firm that advises municipal governments, says that in transactions involving vital public assets, investment banks such as Goldman Sachs should be carefully watched. "It does seem odd that they are effectively teeing up assets for their corporate clients to buy," he says. "In most situations, that wouldn't be deemed ethical." John Foote, the Kennedy School fellow, also suggests that Goldman Sachs has "some decisions to make. People don't want them playing on both sides of the fence."

So, we asked Florian, does Goldman Sachs want to be an adviser or an investor in the business of roads? "Both," he replied.

Since its emergence as a major political issue in the Reagan era, privatization has become a default option for politicians of both parties aiming to off-load everything from prisons and welfare offices to Social Security. The movement has spawned its own industry of contractors, consultants, think tanks (with the Reason Foundation in the lead), and lobbyists; as a result, private companies now do everything from feeding soldiers in Iraq to taking welfare applications and even operating entire city halls for towns such as Sandy Springs, Georgia, a city of 85,000 that has outsourced its public works, administration, and finance to the Colorado-based firm ch2m hill. But the brass ring has long been seen to be the nation's enormous, and aging, infrastructure.

Roads, in particular, are ripe for the picking. Congestion is increasing, and the Federal Highway Administration estimates that it will cost $50 billion a year above current levels of federal, state, and local highway funding to rehab existing bridges and roads over the next 16 years. Where to get that money, without raising taxes? Privatization promises a quick fix—and a way to outsource difficult decisions, like raising tolls, to entities that don't have to worry about getting reelected.

More often than not, those entities are foreign—primarily because, unlike U.S. firms, foreign companies have years of experience operating private toll roads in South America, Europe, and Australia. One of the biggest among them is mig, a $6 billion subsidiary of Macquarie Bank Ltd. The company operates roads in the United Kingdom, Canada, and Germany, among other countries, but, as ceo Stephen Allen told the Australian TV show Business Sunday in 2005, "The attractive market to us is the U.S.... We're well positioned in what we think could be a huge market." The company's annual report offers an upbeat illustration of mig's business: a picture of a sad-faced terrier alone in a living room at 6:10 p.m. ("Before"); a picture of the same terrier with attractive couple, in the same living room, same time ("After"). "Our motorways deliver people to places faster than if they used the often heavily congested, slower alternative routes," the copy notes.

MIG once owned 40 percent of Cintra (Concesiones de Infraestructuras de Transporte, S.A.), a Spanish company whose holdings include 21 roads across Europe and the Americas. Cintra's 2005 annual report describes the company as "one of the world's leading private transportation infrastructure developers," and reassures investors that it offers the magical combination of high profits and "a low risk profile." Investors in toll roads face stable revenues as well as expenses—and, best of all, "limited competition."

Indeed, private road operators often insist on noncompete clauses that limit governments from expanding nearby roads. In 2003, Orange County bought back the lease for a set of pay-to-drive express lanes in the median of Route 91, just so it could finally expand the adjacent road. Toll road companies can even get governments to do their enforcement for them: In July 2004, the consortium that owns Toronto's 407 etr, a 67-mile highway that relies on transponders and cameras to collect tolls, sued the provincial government to force it to deny license plate renewals to motorists who hadn't paid their tolls. In the end, the consortium, which included mig and Cintra, was successful.

Over the past few years, the federal government has rolled out the welcome mat for private road companies. The 2005 highway bill changed the tax code to allow private firms to raise tax-exempt financing for road projects, something that only governments were able to do up to now. (For congressional pork buffs, this was the same legislation that contained Alaska Republican congressman Don Young's "bridge to nowhere," and that, by way of homage to Young's wife, Lu, was named the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users, a.k.a. safetea-lu.) The bill also expanded eligibility for a transportation subsidy program that includes loan guarantees and lines of credit, and created a pilot program that lets participating states use tolling to finance interstate highway construction and invite private-sector participation on the projects. "It's a very, very sweet deal," says a veteran congressional transportation committee staffer who requested anonymity because of his role advising members on highway policy.

One morning last May, Congress took up the issue of highway privatization in a hearing of the House Subcommittee on Highways, Transit, and Pipelines. In attendance were D.J. Gribbin, a former chief counsel to the Federal Highway Administration who went to work as a lobbyist for Macquarie early last year; Goldman Sachs' Mark Florian; and Governor Mitch Daniels, who was then a little more than a month away from sealing his historic deal with Cintra and MIG.

Referring to Indiana's decision to privatize its toll road, Daniels told the committee that so far, no one in government has come up with a workable solution to patch the gap between transportation needs and available funding. "All across our state, hundreds of road and bridge projects have been promised for years, in some cases decades, with no source of funding and no hope of becoming reality unless bold new steps are taken.... We looked at every option to address this funding shortfall, from raising the state gas tax [to] issuing more debt, increasing heavy truck fees, and increasing vehicle registration fees, to name just a few. It was clear that very few of these 200-plus projects would become reality on a business-as-usual basis."

He later remarked, "Just as many business units are more valuable if separated from their conglomerate parent, an asset like a highway can be worth vastly more under different management."

The hearing was a fairly docile affair—that is, until Oregon's Peter DeFazio, the ranking Democrat on the subcommittee, got his turn questioning Daniels. "So you're saying that there's no political will to raise the tolls," he began, "but if you enter into a binding contract which gives a private entity the right to infinitely raise tolls, then that'll happen—but politically you couldn't say we're going to go out and raise the tolls."

"Well, you're a busy man, Congressman," Daniels responded dryly. "I don't expect you to understand our state."

"No, sir. I'm just asking a question," DeFazio shot back, his voice rising. "Are we outsourcing political will to a private entity here?"

When DeFazio spoke with Mother Jones months later, he was still seething. Daniels, he said, "just screwed the state of Indiana and the people of the state of Indiana." In his view, MIG-Cintra has "a license to print money here. They do the deal, put money up front, turn around and go to a bank, which will gladly give them whatever they want, and pay themselves back, and they are left with equity and debt. They are projecting that they already would have broken even around the 15th year. So we've committed an asset for 75 years and after 15 years the state could have been making money on it."

DeFazio continued, "When you look at the Chicago Skyway, that's even worse. They are not even reinvesting the proceeds of the sale in transportation. They're using them for operating costs. That would be like anybody selling their assets in order to live. You can't sell your assets very long to put food on the table—before long you're out of assets. Chicago has sold an asset, which will be extraordinarily profitable for the company that got it."

DeFazio's take harkens back to Eisenhower and his vision of a national highway system as vital to economic development, commerce, and even national security. "It's a scam, basically," he says. "And you lose control of your transportation infrastructure. It means you fragment the system ultimately. It just does not make sense for an integrated national transportation system."

The transportation committee staffer echoes DeFazio's broad concerns. "You're replacing a federal-state partnership with a public-private partnership," he says, "and the whole idea of developing a national transportation system may go by the wayside." When asked whether private interests will begin to drive transportation decisions, including when and where roads are constructed, he responded, "Absolutely. They would definitely only go to where the profit is." Just as the creation of a National Highway System promised, in Eisenhower's words, to "change the face of America," so too could its demise.

Ralph Nader, too, has been vocal in opposing the privatization deals. Last February he wrote a scathing letter to Mitch Daniels, comparing the toll road lease to the Louisiana Purchase, "only Indiana is the France of this deal. You are taking a minuscule up-front payment in return for a large downstream private profit to a foreign company which is being handed a captive customer base." Nader says he and other consumer advocates were late to recognize the trend. "Who would have dreamed" that the nation would begin actually selling off its core assets, he told Mother Jones. "That's new. They caught everybody napping."

Some conservatives are also sounding the alarm. Phyllis Schlafly, writing for the conservative publication Human Events in September 2006, tore into the recent privatization deals under the colorful heading "Greedy Politicians Seduced by Siren Song of Filthy Foreign Lucre."

"Why the rush to sell our transportation systems to foreigners?" she queried. "'Follow the money' explains all. State and local governments pocket the money upfront and get to spend it here and now, so politicians can cover their runaway budget deficits and enjoy the political rewards of spending for new facilities. They ignore the fact that U.S. citizens must pay tolls to foreign landlords for the next two or three or even four generations."

In some places, highway deals have already become campaign fodder: In Texas, where Governor Rick Perry has proposed a $184 billion, 4,000-mile network of toll roads, which is expected to be financed largely through public-private partnerships, the notion proved widely unpopular, and independent gubernatorial candidate Carole Keeton Strayhorn made the proposal a key target of her campaign. "I don't think the people want anything that is riddled with personal profiteering and enrichment, and this is riddled with all of the above," she told Mother Jones last July. "This is critical infrastructure and you are turning it over to a foreign company with a secret contract."

Perry has refused to release many of the details of the $1.3 billion contract his administration has signed with Cintra for a toll road from Austin to Seguin. The Spanish company has enjoyed a cozy relationship with the governor's office: Perry's former legislative director, Dan Shelley, worked as a Cintra consultant and lobbyist prior to joining the governor's staff, and in September 2005, he went back to work for Cintra. Both he and his daughter, Jennifer Shelley-Rodriguez, now have lucrative contracts to lobby Texas legislators on the company's behalf.

More and more, the argument over private roads comes down simply to the bottom line. Dennis Enright, the infrastructure expert at NW Financial, says the most common argument for privatization deals—that government simply can't come up with the kind of big money private companies can mobilize—is a myth: "If the public sector wants to raise $1.8 billion or $3.8 billion, they can do it themselves" with standard financing techniques. The problem with public-private deals, Enright argues, is that the companies will cherry-pick the most profitable roads and leave much of the public stuck in the slow lane. He offers this hypothetical: "If you want to go on the Chicago Skyway during rush hour, they can charge you a much higher price because it's premium travel time. Now what does that do to the rest of the transportation system? It puts all of those people who can't use the Skyway onto the adjacent roads. Now the adjacent roads are backed up further. Now [the Skyway] can charge even more because they have more of a time advantage."

Enright concludes, "The private operator's fidelity is to his stockholders—not to the public transportation system, not to the people who use the road. His duty is to get the most possible revenues out of the asset." Enright's firm did a study showing that if a pricing scheme similar to the one agreed to in Chicago had been applied to New York's Holland Tunnel for the past 70 years, the toll would stand at $185 rather than the current $6.

Higher tolls and a proliferation of private roads are certainly in the nation's future unless the federal government delivers some other solution to a looming funding crisis. The federal highway trust fund, which is financed by the proceeds of the federal gas tax, is running out of money—in part because lawmakers have not dared to raise the tax, currently 18.4 cents per gallon, since the mid-'90s. At this rate, the fund, which is the primary source of money for federal highways, will be spending more than it takes in by 2009. "A question has been raised about what the proper federal role in transportation is," the transportation committee staffer says. That question now faces Congress, which has responded, in trademark fashion, by creating a commission. In 2005, as lawmakers hefted safetea-lu onto the president's desk, they convened the National Surface Transportation Policy and Revenue Study Commission, with the lofty mandate of exploring ways to "preserve and enhance the surface transportation system to meet the needs of the United States for the 21st century."

The commission's chair is Transportation Secretary Mary Peters, who is, as dot's Tyler Duvall puts it, a "tremendous champion" of privatization. Joining her is Paul Weyrich, the founder of the Heritage Foundation—the conservative think tank that advocates privatization. Another commission member, Cornell economist R. Rick Geddes, has suggested turning the U.S. Postal Service over to the private sector. Geddes told Mother Jones that, while he is not yet sold on the idea of private highways, he is "sympathetic" to the model; he said the commission's recommendations, due by July 1, will likely suggest a number of "tools in the toolbox."

DeFazio, however, fears the panel may have already made its choice. "My understanding is it's turning more and more and more toward a sole focus of how to justify the privatization of infrastructure—just like Bush's Social Security commission," he says. "You couldn't be on the commission to study the future of Social Security unless you signed off in favor of a privatization solution in the beginning. It sounds like they're trying to pervert the commission we created to take the same direction."

© 2007 The Foundation for National Progress:

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