Sunday, October 14, 2007

"This agency [TxDOT]... can't be trusted. They will use every dollar they get to become a taxing authority and shift our public highways to tollways."

Propositions add funds for projects but boost state debt


Peggy Fikac, Austin bureau
San Antonio Express-News
Copyright 2007

AUSTIN — Billions of dollars for highways, student loans, lockups, parks and a slew of other projects will be on the line as Texas voters decide whether to add to the state's debt with four bond proposals.

The Nov. 6 ballot propositions illustrate a simple truth about Texas: It's a pay-as-you-go state, as often proudly noted by state leaders — except when it isn't.

"We are a pay-as-you-go state, which basically means we take debt very seriously — and yes, we do have to get voter approval when the state does decide to issue debt," said Dale Craymer, of the Texas Taxpayers and Research Association.

Voter approval is required because the Texas Constitution forbids most state debt. That means it must be amended for officials to issue general obligation bonds backed by the state's full faith and credit.

If approved, the new debt — some $6.75 billion in four bond proposals for highways, student loans, water infrastructure and state facilities, and $3 billion in a separate proposal for cancer research — wouldn't be issued all at once.

Backers say the proposals serve the greater good and that it makes sense to use bonds, with many going toward infrastructure improvements traditionally funded by borrowing.

"You can do it faster, with cheaper money," said George Bristol, who is promoting Proposition 4, which includes money for park repairs.

But some are wary of the new debt — including Americans For Prosperity-Texas, which opposes every bond proposal on the ballot.

"Every government bond is a delayed tax increase," said Peggy Venable, the group's director.

Twist on road bonds

The biggest chunk of proposed new debt is in Proposition 12, which would authorize up to $5 billion for highway improvements and allow state road debt for the first time to be repaid with general revenue.

Texas in the past has paid for roads directly with general revenue, and it can issue road bonds repaid in other ways.

Lawmakers haven't specified how the program would work, so there could be a long lag before the bonds are issued. But backers say it's crucial that the program be authorized because gas tax revenue falls far short of meeting road needs and there's a battle over how much toll roads should be used to bridge the gap.

"Because of the near depletion of available transportation funds in Austin, it's critical that voters provide this additional funding option for highway construction," said Sen. John Carona, R-Dallas, chairman of the Senate Transportation and Homeland Security Committee.

But Sal Costello, a critic of the Texas Department of Transportation, said he and like-minded Texans will fight the proposal because they believe TxDOT has an unhealthy interest in promoting toll roads above all else.

"You have this agency that has proven it can't be trusted," Costello said. "They will use every dollar they get to become a taxing authority and shift our public highways to tollways."

Some lawmakers who support the bonds said one option for bond proceeds would be publicly financed toll roads. But that decision will be made by lawmakers later, and Carona said such a move would be politically impossible.

Those who fight the proposition because they oppose toll roads will achieve the opposite of what they want, he warned.

"The passage of these bonds will mean we will be less dependent upon toll roads," Carona said.

TxDOT didn't have an estimate of the interest cost over the life of the bonds. There are many variables, particularly because the enabling legislation hasn't yet been written.

Plenty of projects

In contrast to one-issue propositions, there's something for almost everyone in Proposition 4, which would authorize up to $1 billion in bonds for state facilities.

Projects range from a new Texas Youth Commission facility to repairs for state parks and the Battleship Texas; from the chance of new prisons to renovation of state facilities for people with mental retardation; and from county courthouse renovations to a new driver training facility for state troopers.

"It gives us an opportunity to long-term finance our capital investment," said Rep. Warren Chisum, R-Pampa, chairman of the budget-writing House Appropriations Committee. "That's a good deal."

A call for more parks spending highlighted this year's legislative session, and this bond proposal was part of the answer.

"There's all kinds of different projects — some big, some small — spread out all over the state," said Bristol, vice chairman of the State Park Advisory Committee.

Venable of Americans For Prosperity-Texas gave a thumbs down. "Though many of these projects appear deserving of some funding, with a state budget surplus, we should not be obligating ... future taxpayers to fund them."

The bonds are projected to cost some $526.5 million in interest over 25 years.

Proposition 2 would allow up to $500 million in bonds for student loans in a program that relies on loan repayment and other sources to support itself.

"Because the rising costs of attending college and the increasing number of college-bound students are quickly diminishing the program's financial reserves, this is critical," said Sen. Judith Zaffirini, D-Laredo, Senate Finance Committee vice chairwoman, noting that without the proposal, it has been estimated that student loan funding could run dry by 2009.

Venable said student loans are offered by others and that funding more of them "while allowing tuition to climb and requiring little fiscal accountability on how higher education dollars are spent is not in taxpayers' best interest."

Proposition 16 would authorize an additional $250 million to build water and wastewater infrastructure for economically distressed areas. "If we don't do that, we wind up with health issues," Chisum said.

A total of $225 million is expected to be used to provide grants, at a projected interest of $163 million over the life of the bonds. The remaining $25 million would be used for loans, with repayment covering debt service.

Venable said the program "appears to be a black hole where the more money available, the more building will take place in unincorporated and hard-to-serve areas."

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