Friday, March 23, 2007

"Even if the bill fails to win the committee’s recommendation, the measure is not necessarily dead."

Texas' moratorium on P3 Tollways sits idle


Richard Williamson
The Bond Buyer
Copyright 2007

DALLAS — A two-year moratorium on public-private financing of toll highways in Texas was parked in a Senate legislative committee after Tarrant County government officials pleaded for exclusion of billions of dollars worth of projects.

Jerry Hodge, transportation director for Grapevine and chairman of the Metroport Cities Partnership, said the moratorium could stop toll projects on several major highways in the rapidly growing Dallas-Fort Worth area. Of particular concern, he said, is the DFW Connector Project, also known as the Funnel, which ranks as the largest in the history of the Texas Department of Transportation.

Joining Hodge in seeking a Tarrant County exemption from the proposed moratorium was county Commissioner Gary Fickes.

“To put a moratorium on these projects is like a stake to the heart,” Fickes said. “We feel like we’re going to be severely, severely damaged. It’s not going to be a two-year wait. It’s going to be four years or longer.”

After hearing the testimony, Sen. John Carona, R-Dallas, chairman of the Transportation and Homeland Security Committee, said that he did not plan to move the bill out of his committee.

SB 1267, which would create the two-year moratorium, is sponsored by Sen. Robert Nichols, R-Jacksonville, a former Texas transportation commissioner and member of the Transportation and Homeland Security Committee. Nichols called for the moratorium to allow more time to study the implications of multibillion-dollar public-private partnerships. Rep. Lois Kolkhorst, R-Brenham, sponsors an identical House version of the bill.

Even if the bill fails to win the committee’s recommendation, the measure is not necessarily dead, according to committee director Steven Polunsky. The bill could be amended or could bypass the committee. Among the ideas being discussed is raising the state’s fuel tax according to an inflation gauge that would allow the state to fund more projects without relying on private financing.

Exempting certain counties because of urgent transportation needs would lead to intense political wrangling, committee members said.

“There are projects all over the state that have started some sort of work,” said Sen. Florence Shapiro, R-Plano. “At a certain point, we’re going to hear requests for all of those projects to be taken out. The what-about-me issue comes into play.”

Nichols introduced his bill in the wake of Spanish developer Cintra Concesiones de Infraestructuras de Transporte’s selection as private developer for State Highway 121 toll road in the populous suburbs of Dallas.

Under terms of that deal last month, Cintra would pay $2.1 billion upfront and $700 million over its 50-year contract for the right to operate Highway 121 toll road in Collin and Denton counties.

The deal developed after the U.S. Department of Transportation in October authorized Texas to issue nearly $2 billion of tax-exempt private-activity bonds for the SH 121 project. Republican Gov. Rick Perry last year signed legislation allowing the P3 deals, the first of which would be SH 121.

Another big P3 is the proposed Central Texas Corridor, designed to ease congestion on heavily traveled Interstate 35. The Trans-Texas Corridor would be a $184 billion 4,000-mile network of toll roads, rail lines, and utilities.

In a potentially related development, the House passed a proposed constitutional amendment that would allow the Legislature a chance to override vetoes that come after the regular session ends. Currently, only the governor can call a special session, but if the constitutional amendment won voter approval, a brief session could be held after gubernatorial vetoes, in which lawmakers could override by a two-thirds majority.

Perry could veto the override provision itself, but the House bill won by more than two-thirds majority, 109-to-29, and a Senate version is co-sponsored by 26 out of 31 senators.

The amendment could clearly not take effect until the next legislative session in 2009. When the current session ends in May, Perry could veto any bill creating a moratorium on public-private toll-road financing. The Republican governor is a major backer of the financing model.

Meanwhile, the House Appropriations Committee voted 24-to-2 in favor of a $150.1 billion biennial budget that increases spending for public education and health and human services. The budget bill HB1 is expected to be debated in the full House next week.

© 2007 The Bond Buyer

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