Wednesday, February 06, 2008

"This is screwed up. This is bad."

TxDOT gets earful at Senate hearing


Patrick Driscoll
San Antonio Express-News
Copyright 2008

AUSTIN — There was plenty of blame to go around but little trust Tuesday as Texas senators probed Texas Department of Transportation finances, promises and actions — scrutiny that could last another year.

Lawmakers, trying to figure out why the department this year suddenly faces funding shortfalls, didn't like what they heard at a joint hearing of the Senate finance and transportation committees.

Sen. Tommy Williams, R-The Woodlands, after listening to state auditors and budget officials describe the agency's bookkeeping, jumped the gate before TxDOT even got a word out.

"It doesn't matter what they come up and tell us, if they have poor internal controls," he told his colleagues. "I don't have a lot of confidence with what's coming out of that shop over there."

More than half a dozen senators took turns slinging similar barbs. The sharpest accusation, verbalized by a few, was that TxDOT may have created a funding crisis after the Legislature last spring put a leash on private financing of toll roads and tasked another committee to study the merits.

"There are many, many people, myself included, who believe this is a ploy to pressure us to go back to toll roads," said Sen. Judith Zaffirini, D-Laredo.

Last July, after state lawmakers went home, the agency took another look at its finances. There were federal cutbacks, more state diversions, inflation and some expected drying up of private toll investments to deal with.

Bottom line: TxDOT was headed into the red — $3.6 billion by 2015. The agency said it would have to slice out $1.1 billion in projects this fiscal year, on top of $900 million pushed back months before because projections had been too optimistic. That left just $3.1 billion for construction, way down from $5 billion in 2006, dubbed the "go-go year."

But what wasn't widely known, until Tuesday, was that the $1.1 billion was an accounting error. That money was never there to begin with — some bean counters or planners had tallied some bond proceeds twice.

"Let me state right off that we should have done a better job of anticipating this state of affairs," TxDOT Director Amadeo Saenz said in a written statement to senators.

Senators were aghast.

"You've got to be kidding," said Sen. Kip Averitt, R-Waco.

Zaffirini said TxDOT officials should have pointed the finger at themselves months ago instead of blaming lawmakers for their woes. She said a Dec. 5 talking-points paper, just handed to her, never mentions the agency's own goofs.

Saenz, pointing to a Dec. 10 talking-points paper in front of him, said it does mention the inflated projections.

They literally were on different pages.

Meanwhile, Saenz recently reorganized staff so that planners, schedulers and bill payers will all report to the finance director.

"We have a system and that system needs to be improved," he told the senators. "We're working on that."

Finance Committee Chairman Steve Ogden, R-Bryan, said something definitely needs to change. While holding a TxDOT balance sheet, he said he knows how to do a cash-flow statement and what he was looking at wasn't that.

"I mean, this is screwed up," he said. "This is bad."

The other big questions of the day had to do with why TxDOT won't use $2.9 billion in available bonds, or include another $5 billion approved by voters in November in financial projections.

Transportation officials said it's because they don't know if legislators will pay debt service on the $2.9 billion. Otherwise, some road maintenance would have to be deferred.

And as far as the $5 billion, which would be paid back with an infusion of general funds rather that relying on existing flows of gas taxes and other driver fees, the Legislature still has to make that appropriation, which could happen next year.

"We want to make sure that we do not leave this agency in debt," said Hope Andrade, chairwoman of the Texas Transportation Commission, which oversees TxDOT. "As long as we can work together on how we can pay the debt, we will be open to any option."

Trust us, senators replied. But, they added, with construction inflation outstripping interest rates, it's best to put the $2.9 billion in bonds into action.

"We expect you to issue that debt," Transportation Committee Chairman John Carona, R-Dallas, said.

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