Friday, August 22, 2008

Perry, Craddick and Dewhurst pledge create an infrastructure bank (Transportation Finance Corporation) for TxDOT

Texas officials urge TxDOT to issue $1.5B in bonds for new roads

August 21, 2008

Dallas Morning News
Copyright 2008

Gov. Rick Perry has joined leaders of the Texas Legislature in calling on the state transportation department to immediately issue about $1.5 billion in bonds to pay for more roads, a step the governor and department officials have resisted for months.

In a joint letter issued today by the governor's office, Mr. Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick urged transportation chairman Deirdre Delisi to take steps to issue the additional debt by as soon as September.

The extra debt has been a priority for lawmakers for nearly a year, ever since TxDOT began reining in spending as it confronted a long list of financial worries – from the growing construction costs, a soaring maintenance burden associated with Texas' aging roads, and a flat gas tax rate that hasn't been upped since 1991.

Despite those costs, and their own opposition to raising revenues, many lawmakers, including Mr. Dewhurst, accused TxDOT of painting an overly dire picture of its finances. The worry was that the poor-mouthing was aimed at weakening the legislature's opposition to toll roads as a new session looms in 2009.

For proof, many looked at the department's refusal to include in its financial plan the availability of the bonds, and to exclude another $5 billion in bonds made available by a constitutional amendment approved by voters last fall.

As TxDOT trimmed its spending, road projects got delayed across Texas, though in Dallas most of the impact was muted by the availability of money from the North Texas Tollway Authority.

Ms. Delisi, Mr. Perry's former chief of staff, insisted as recently as earlier this summer that issuing the extra debt without what she called a long-term solution would be irresponsible. TxDOT CFO James Bass warned that the bonds would cost so much interest over the next 20 years that their long-term effect would be negligible.

Gov. Perry, in an Austin speech in April, flatly refused to heed calls from Lt. Gov. Dewhurst and others to borrow more.

But Thursday's announcement changes all that, a spokesman for Gov. Perry said.

"The governor is tremendously pleased. We wanted a long-term solution," said spokeswoman Allison Castle.

The letter is just that, she said. It pledges that that in return for the governor's support for the immediate spending, the lawmakers will also provide new funds to cover the payments on the $5 billion in bonds approved by voters in November, and give TxDOT the legal authority to issue that debt.

More importantly, the letter pledges all parties end a practice that has become routine in the legislature: spending some $1.2 billion in gas tax money each session to fund the Department of Public Safety, a practice long decried by Gov. Perry and state and local transportation officials.

Just how strong a commitment the lawmakers have pledged to make is unclear, though, given that Thursday's letter makes no mention of how quickly the diversion of gas tax funds will actually end. The goal will be to fund DPS from the general fund, but the letter does not indicate where that money will come from.

All three leaders also pledged to support the creation of what they are calling a "Transportation Finance Corporation or similar entity that will allow public Texas based investment funds to invest directly in Texas transportation projects that offer a potential solid long term return."

How that will work, and who will be allowed to invest in such a company, will have to be determined when lawmakers return to Austin in January, Ms. Castle said.

© 2008 The Dallas Morning

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE