Friday, August 15, 2008

"$15.9 billion doesn't mean squat to me if you don't tell me what it's based on."

Harper-Brown: Highway fund getting short-changed

August 5, 2008

by Mark Lavergne
Volume 15 , Issue 3
The Lone Star Report
Copyright 2008

IRVING - The Transportation Summit abounded with big transportation ideas to meet the state's big future transportation needs. Meanwhile, the state itself is coming up short on funds to meet transportation needs of the present.

The House Appropriations Subcommittee on Transportation met Aug. 13 to examine problems in funding for the state's highways old and new, and possible solutions.

In the spotlight was Fund 6, the state fund that, in theory, is designated for building and maintaining the state's highways. The problem, said committee chairman Linda Harper-Brown (R-Irving), is not merely funds that go to Fund 6 that are then diverted to things other than roads, but also funds that ought to go to Fund 6 but never make it there in the first place.

Harper-Brown said she anticipates that in 2009 "we will have an opportunity to make it a transportation session," as TxDOT is under Sunset and because of gas prices and new funding needs. "This is the time if there ever was one," she said.

What Fund 6 pays for

Thomas Galvan, of the Legislative Budget Board (LBB), told the subcommittee what percentage of the Fund 6 money goes where: 86.2 percent to the Texas Department of Transportation (TxDOT); 7.1 percent (about $1 billion) to the Texas Department of Public Safety (DPS); 5.1 percent to benefits for employees at Texas Department of Transportation, the Attorney General's Office, and a few other agencies; a few hundred million to other small agencies, salary increases for the various agencies, etc.

That's just the beginning. Some funding for SB 10, the healthcare bill from last session, is coming from Fund 6 this biennium ¡V about $107 million for medical transportation. DPS's $1 billion a year pays for employees benefits including insurance and retirement. The Texas Education Agency receives $100 million each biennium for public school transportation. (The recent school finance summit hosted by Commissioner Robert Scott featured a veritable choir of superintendents saying they will need more.)

The Health and Human Services Commission gets $20 million each biennium for ambulance services. Also $66.9 million goes for (mostly TxDOT but a few others) employee salary increases (for salaries altogether it's about $623 million). The Texas Transportation Institute gets $12.8 million each biennium, and the Office of the Attorney General $11.5 million. The latter went towards transportation-related cases such as right of way acquisition.

The Texas Historical Commission also is receiving funding from TxDOT's portion of Fund 6, about $500,000 a year. Another $6.3 million each biennium goes to the State Office of Administrative Hearings (SOAH), for DPS' license verification program. The Public Integrity Unit at the Travis County District Attorney's Office receives about $1.9 million a biennium to prosecute motor vehicle tax fraud cases. The unit has received money from Fund 6 as far back as LBB's records show, which is 1990, Galvan said. Most other diversions started after 2000.

Jim Smith, a financial analyst for the Comptroller's Office, told the subcommittee that currently 10 state agencies receive appropriations from Fund 6. As of July 31, Fund 6's cash balance was $4.3 billion. But Harper-Brown questioned how much of that was going to local communities for local transportation needs.

What Fund 6 should be getting paid, but isn't

Harper-Brown asked for a consolidated list of revenue that should be going to Fund 6 but isn't. "One of the things that concerns me is that we're always talking about diversions out of Fund 6 that need to be paid for from that fund," Harper-Brown said. "But there are a lot of funds that don't go into Fund 6 and not only are there funds that go into GR that are transportation-related and never made it to our transportation funding, but then some of those ¡K fees are going into the general revenue side, but the expenditures are coming out of the Fund 6 side."

TxDOT's chief financial officer, James Bass, told the subcommittee that a lot of revenue generated by operations managed and paid for by TxDOT, which thus should go to Fund 6, is going instead into the state's general revenue (GR) fund.

Among these are the Automobile Burglary and Theft Prevention Authority, which assesses a $1 fee for each auto insurance policy in the state. That fee is deposited into GR, and paid for by Fund 6. Likewise, historically there has been a $20 permit required to drive oversized and overweight vehicles. From each of those $20 fees, Fund 6 only got 30 cents. Recently the fee was upped to $40, and now the fund receives $20.30, Bass told the subcommittee.

Bass said that if those funds were directed back into the state's highway fund, it could save the state each year about $15 million for the auto theft prevention program, and $7.5 million for overweight permits, or $45 million in Fund 6 per biennium.

TxDOT executive director Amadeo Saenz said lack of funding for Fund 6, along with diversions from there, were preventing TxDOT from "building and maintaining highway systems."

Rep. Dan Gattis (R-Georgetown) told Saenz, "We need transparency to know what certain agency's budgets are being spent on and making sure that they are being spent on the appropriate things."

Another TxDOT-produced study

Members of the subcommittee balked when Saenz told them that TxDOT had hired two analysts to produce yet another detailed study forecasting the state's future transportation funding needs. The study's magic number: $15.9 billion more per year. Members were skeptical of the report's findings, saying its assumptions and methodology were unclear.

Gattis told study co-author Allan Rutter of Cambridge Systematics that "$15.9 billion doesn't mean squat to me if you don't tell me what it's based on."

Harper-Brown said TxDOT's credibility was in question because of how the agency had crunched numbers.

Rutter defended the report, saying that neither he nor co-author David Rose was told what to put in the report.

Rutter said the number is attributable to the state's booming population, saying vehicle miles traveled (VMTs) will go up 70 percent by 2030 with increased population and affluence.

But Terri Hall of Texans United for Reform and Freedom, the transportation watchdog group that has opposed TxDOT's recent toll road policies, told LSR that the premise of VMTs varying directly with population increase is "totally bogus," citing a 2005 study from the University of Texas-Austin showing that although the state's population is indeed growing, much of the new population is older and making less money, and thus not driving their own vehicles. Harper-Brown also observed that the baby-boom generation was getting ready to retire.

She also criticized the report for not taking high-speed rail, which she believes will play a big role in the state's future infrastructure, into account for determining the state's future funding needs. "Shouldn't we look at a total big picture?"

"Maybe high-speed rail's time has come," she said. "We just can't continue to build these roads. We can't get them done quick enough."

© 2008 The Lone Star

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