"The session is over, but the battle goes on. "
Moratorium preserves big chunks of Perry's Trans-Texas Corridor
by Eileen Welsome
The Texas Observer
The conservatively dressed representatives of the Texas Department of Transportation who walked into the Capitol rotunda this spring found themselves engulfed in a perfect storm. For months, bloggers had been at their keyboards, whipping up fractious constituents. Demonstrations had been held, bumper stickers passed out, and alliances forged between groups that normally find themselves at opposing ends of the political spectrum. They had a common goal: slaying the Hydra-headed monster—the Trans-Texas Corridor—a network of supercorridors with lanes for cars, trucks, trains, and pipelines, as well as other infrastructure.
Ric Williamson, who chaired the monthly Texas Transportation Commission meetings with the benign indifference of Henry the Eighth, could have looked out a window of the gothic Greer Building on 11th Street and seen the gathering clouds at the Capitol. But Williamson, an old friend of Gov. Rick Perry and an ex-legislator himself, was not concerned with such piffle. He had more important things on his mind, like the $86 billion shortfall that TxDOT faced in a few decades, when there would not be enough money to maintain roads. Williamson felt the best way to solve the $86 billion problem (a figure state auditors would later say was inflated) was to let deep-pocketed multinational companies build gleaming new tollways that would be paid for by Texas drivers for the next two, three, or even four generations.
To Williamson and his bevy of engineers, lawyers, consultants, and flacks, the “noisies,” as one journalist described the grassroots groups, could be waved off like flies. But TxDOT officials soon realized that virtually every member of the House and Senate was buzzing mad, too, because lawmakers had just survived elections in which toll roads were a key issue.
TxDOTies came to the Legislature with an ambitious wish list, including finding money to build their very own railroad. Lawmakers were in no mood to give them anything. They wanted blood, particularly Williamson’s blood, for stoking an already volatile situation by alienating transportation authorities from Dallas and Houston.
Once Williamson’s forces realized how much ill will they had engendered, they abandoned their grandiose dreams and played defense. What ensued was a good old-fashioned Texas brawl. While Perry holed up in the Governor’s Mansion, Rep. Mike Krusee, a Round Rock Republican and Perry’s go-to transportation guy, tried to stamp out the populist uprising with arguments about interest rates, bonds, and the efficiency of private equity partners. Williamson began to look less like Henry the Eighth and more like a trussed-up Marie Antoinette, sitting in a horse cart and headed for the guillotine.
Peter Samuel, an irreverent Australian who publishes a pro-toll road newsletter, watched the Texas goings-on from his headquarters in Maryland. A history buff, Samuel likened the movement to halt the TTC and other toll roads to France’s capitulation to the Germans in 1940: “This whole wild campaign for a toll road concession moratorium in Texas could be seen as the biggest and most dramatic setback for the forces of enlightenment and progress since mid-May 1940, when Reich Gen. Heinz Guderian’s XIX army corps Panzers burst out of the Ardennes forests of Belgium, established pontoon bridges over the Meuse, and cut off the bulk of the French and British armies, leading to the fall of France to the Nazis—despite France’s numerical superiority in soldiers, tanks, and artillery, its equality in airplanes, and its strong defensive positions.”
What’s more, it wasn’t the French-loving Dems who led the campaign, but freedom fry-crunching Republicans like state Sens. John Carona of Dallas and Steve Ogden of Bryan. The TxDOTies went into a swoon after the defection of state Sen. Robert Nichols, a freshman Republican legislator from Jacksonville who had served on the Transportation Commission for eight years.
White-haired, bearded, and extremely bright, Nichols worked his way through Lamar University selling fireworks and ironing clothes for other students. In 2006, he won the Senate seat vacated by Todd Staples, and soon had a spot on Carona’s Transportation and Homeland Security Committee.
On March 1, when the committee held the Legislature’s first public hearing on the TTC and related toll road projects, Nichols listened attentively, stroking his beard, occasionally asking a pointed question. A few days later, he filed a bill imposing a two-year moratorium on toll projects governed by comprehensive development agreements. In the House, Brenham Rep. Lois Kolkhorst, another Republican representing a rural district, filed an identical measure.
Nichols was worried by several aspects of the comprehensive development agreements. He didn’t like the noncompete clauses, which could require the state to reimburse developers for lost revenue if Texas built a free road that competed with the toll facility. In a letter circulated on the Internet, Nichols noted that in 2004 both transportation officials and Cintra-Zachry, the American-Spanish partnership chosen to build the corridor, had promised there would be no noncompete clauses. “Put simply, the state is enacting a policy that forces Texans to drive on a toll road with very few alternatives. In high-growth areas, the private toll operator will be free to increase tolls as demand for the road increases. New road construction by the state would be penalized, thereby setting up a classic monopoly, agreed to by the state, forcing Texans to pay ever-increasing tolls.” Nichols used a devastatingly simple metaphor to drive home his point: “Imagine if you could make a deal with the state to build a store in your hometown, use the state’s power of eminent domain to take the land needed for your store, and then get the state to agree to refrain from building another store in your hometown for 50 years. Now imagine your hometown was projected to have double-digit growth. While it may be hard to fault any business for pursuing such a deal, the taxpayers would hold elected officials accountable.”
Nichols was also worried about the absence of clear language stating how much the state would pay to buy back a toll project. In some cases, he estimated the buyback price could be 48 times the original cost. He wrote, “The private companies prefer to put off addressing the buyback issue until another day. This means the private companies would be free to hire experts to determine what they think the road is worth. It does not take a genius to figure out the companies will calculate the price in a way that enriches shareholders and leaves taxpayers holding the bag. Therefore, before any contract is signed, the state should negotiate an agreed-upon formula.”
Hundreds of citizens showed up at the Capitol for Carona’s hearing. Unlike the lobbyists, who gathered outside with their palms and Palm Pilots out, the citizens didn’t come to the Lege asking for anything. Instead, they wanted to give something—more taxes—so their grandchildren and great-grandchildren wouldn’t have to pay tolls. “Tax me,” begged one man, flinging open his arms.
The state motor fuel tax, which historically has been used to build and maintain highways, stands at 20 cents a gallon, with a nickel diverted to education. Krusee, whose enthusiasm for tolls remains undiminished, on two occasions pushed legislation allowing the gas tax to rise with inflation. Both efforts flamed out, but Krusee scored a subtle victory that may well come back to haunt legislators during the next election season: “Everyone’s on record as to whether they want to tax or toll,” he said. “They don’t want to tax.”
After the hearing, the toll road issue disappeared into hallways and backrooms where lobbyists, lawmakers, and other interested parties diced, spliced, seasoned, smoked, and stuffed language into bills. Local officials from Houston and the Dallas-Fort Worth area began lobbying hard for toll road projects in their heavily congested cities. Representatives from the governor’s office, high-level TxDOT operatives, and members of the highway lobby trolled the corridors. The moratorium movement seemed to run out of gas.
Then Kolkhorst tacked her moratorium proposal onto House Bill 1892, a transportation bill sponsored by Wayne Smith, a Baytown Republican. The bill burst from the House Calendars Committee and galloped onto the floor on April 11. When Speaker Tom Craddick called for a record vote, the board behind him lit up in a sea of fluorescent green lights—137 yeas and two nays. Krusee, predictably, was one of the dissenting votes. (The other was Richardson Republican Fred Hill.) Krusee said the bill was “seriously flawed” and would jeopardize federal highway funding. “I knew at the time the governor would veto the bill and that the Legislature would not be able to override the veto,” Krusee said.
The moratorium bill passed the Senate 27-4 and went to the governor. True to Krusee’s prediction, Perry vetoed the bill on May 18, saying it jeopardized billions of dollars in infrastructure investment and federal funding. Perry, who for five years had been tirelessly promoting the Trans-Texas Corridor, was disturbed by language that would have allowed the local yokels in Houston to seize TxDOT’s right of way, jeopardizing its ability to issue bonds and leading to all kinds of legal problems.
Perry made it known he would sign Senate Bill 792, a bill by Republican Sen. Tommy Williams of The Woodlands that mysteriously became the vehicle for all new highway legislation. Grassroots groups felt whipsawed and confused. Lawmakers knew what to do: They put their butcher’s aprons back on and began making more sausage.
Samuel, the Aussie back in Maryland, watched these goings-on with a queasy stomach. His column no longer contained references to cowardly French generals, unstoppable Panzer tanks, and blitzkriegs. This was sausage-making at its bloodiest and ugliest: “At Texas Lege Sausage Treats Unlimited, a close watch of operations generates that bad stomach feeling,” he wrote. “At least when they finally do put their bad product on the street, they immediately go to work on a recall.”
The new transportation bill zipped through the Senate’s Transportation and Homeland Security Committee, the full Senate, and the House County Affairs Committee. It bogged down in the House on May 17, when members had taken to shadowboxing with one another in the aisles. Legislators paused from their diversions long enough to tack 20 amendments onto the bill, forcing the measure back into conference committee. A couple of days later, the bill reappeared and was passed by both chambers. Then it was shipped off to Perry, who had until June 17 to sign the bill, veto it, or let it become law without his blessing. “We’re still reviewing and reading the fine print,” Perry spokeswoman Krista Moody said as the Observer went to press.
On Memorial Day, the last day of the session, legislators sleepwalked through offices piled high with decaying fruit, stale baked goods, candy, and half-drained bottles of booze. In the Senate chamber, frigid as Alaska as usual, Nichols strode to his desk. His posture was not that of a broken French general, but the chin-up, chest-out thrust of George Patton. Nearly everyone, including the TxDOT operatives, was still confused by language in the second moratorium bill. Nichols rattled off two of the bill’s most important components, stopping momentarily to inquire if he was speaking too fast. “What this moratorium means is, No. 1, more than 99 percent of the Texas highway system is now protected from private toll builders. No. 2, all counties that fall under local toll authorities are armed with the right to be at the table and will have the first option to build the toll road themselves—or veto it.” The new measure, he added, was only the beginning of the Legislature’s effort to deal with transportation issues. “It’s a good first step,” he said. “And there will be more to come. It may take several sessions to solve these problems.”
The grassroots groups weren’t so positive. “I think we’ve been had,” said Terri Hall, spokesman for the San Antonio Toll Party. The bill is so loaded with exemptions that it resembles Swiss cheese. More than $20 billion worth of toll projects, mostly in the Houston and Dallas-Fort Worth areas, will continue to move forward. Carona conceded that the two-year freeze was “more porous in urban areas,” but he added that other provisions significantly reined in how toll road contracts could be structured.
The moratorium does put the brakes on toll projects planned for State Highway 281 and Loop 1604 in San Antonio. In the El Paso area, toll projects not approved by the metropolitan planning organization prior to May 1 can’t go forward. The Trans-Texas Corridor also falls under the moratorium. But two road projects that likely will become part of the TTC network—Loop 9 in the Dallas-Fort Worth area and State Highway 130 east of Austin—will be allowed to proceed. Finally, a southern portion of TTC-69, the megacorridor that will begin at the border, skirt Corpus Christi and Houston, and run in a northeasterly direction toward Louisiana, also has the green light.
Although the TxDOTies had hoped to get the toll road contracts extended for 70 years or more, the Lege said the deals couldn’t last more than 50 years. What’s more, the bill allows contracts to be structured in 10 year increments. That way, said Carona, voters can see the plusses and minuses of longer-term packages. The bill also creates a committee to study public-private partnerships in a less politicized environment over the next year.
One of the least understood sections of the bill establishes what’s called a “market valuation” process for determining how much money a toll road project can generate. That means private companies and public entities alike might wind up paying huge, up-front concession fees in exchange for toll roads.
Hall sees this process as the most sinister aspect of the bill and predicts it will lead to the highest possible tolls for the driving public. “The grassroots will not stand idly by and allow Rick Perry and Ric Williamson’s market-based incarnation of extorting money from the traveling public to drive on highways we’ve already built and paid for. We will not let this governor unleash a whole new policy initiative hatched in some backroom deal with legislators who lack spines.”
In other words, the session is over, but the battle goes on. A World War II buff like Peter Samuel might see it as the next phase of the struggle between Vichy France and the Free French Forces led by Charles de Gaulle.
But this is a Texas fight, and both sides are likely to be more inspired by George S. Patton, the gawky young colonel once stationed at Fort Bliss, who said, “You’re never beaten until you admit it.”
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