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: