Thursday, December 18, 2008

"The decision would strip Gov. Rick Perry of his power to appoint the five members of the current Texas Transportation Commission"

Texas Panel OKs End to Texas Transportation Commission

Action Adds Fuel to Road-Funding Fire


By Richard Williamson
The Bond Buyer
Copyright 2008

DALLAS - A Sunset Advisory Commission vote to abolish the Texas Transportation Commission - the largest issuer of state debt in Texas - sets up another legislative showdown over highway funding when lawmakers convene in Austin next month.

The Sunset Advisory Commission, made up of state legislators, voted 7 to 5 on Tuesday to replace the TTC with a single commissioner who would answer to a special legislative oversight committee.

The commission made the decision as part of a review to determine whether to eliminate the Texas Department of Transportation under the sunset law.

The decision would strip Gov. Rick Perry of his power to appoint the five members of the current TTC from different regions of the state and shift more authority to the Legislature. Although the governor would still appoint the single commissioner, he or she would have to be approved by the Legislature every two years.

The move comes after a 2007 session in which several legislators called for the abolition of TxDOT, which operates on an $8.3 billion budget managed by the TTC. The battle over TxDOT in the 2007 session echoed in this week's Sunset Commission meeting.

"We have to send a really dramatic message to the public," said Rep. Ruth McClendon, D-San Antonio, a member of the commission.

The TTC annually prices billions of dollars of bonds for TxDOT. Since 2005, the TTC has issued nearly $5 billion of general obligation bonds and $2.3 billion of bonds backed by the state fuel tax. If the commission is eliminated, it is unclear under what name highway bonds would be issued.

In the session starting Jan. 15, legislators will reconsider models for funding highways while a two-year moratorium on privately financed toll roads comes to an end. Legislators have expressed anger at TxDOT for encouraging private toll roads and for failing to tap bond authority granted by lawmakers.

"Our goal is to move this agency forward and to make significant changes," commission co-chairman Rep. Carl Isett, R-Lubbock said after the vote. "We all now know that there is a long legislative process ahead of us on these issues."

Under the staff recommendation, the Legislature would review TxDOT again in four years to decide whether to eliminate the agency that some have criticized as a bloated bureaucracy that is unresponsive to public opinion.

"The Sunset review of the Texas Department of Transportation (TxDOT) occurred against a backdrop of distrust and frustration with the department and the demand for more transparency, accountability, and responsiveness," according to a Sunset Advisory Commission staff report.

"Many expressed concerns that TxDOT was 'out of control,' advancing its own agenda against objections of both the Legislature and the public," the report said. "Sunset staff found that this atmosphere of distrust permeated most of TxDOT's actions and determined that it could not be an effective state transportation agency if trust and confidence were not restored. Significant changes are needed to begin this restoration; tweaking the status quo is simply not enough."

The commission also approved hiring a consultant to conduct what would amount to a management audit of the agency. Four divisions of TxDOT, including vehicle licensing and its motor carrier office, would be broken off into a new Texas Department of Motor Vehicles.

The single new commissioner would be granted broad power to streamline TxDOT by reducing its nearly 15,000-member staff and reducing administrative obstacles to building of highways.

"As the professionals who design transportation infrastructure in Texas and around the country, our members believe that TxDOT's current project delivery practices must be improved and modernized," said Steve Stagner, president of Texas Council of Engineering Companies. "Regardless of any possible funding relief that may be recommended to the next Legislature, it is imperative that the commission insist that TxDOT focus on the execution of transparent business plans that provide predictability and accountability."

Amadeo Saenz, executive director of TxDOT, offered a sanguine response to the Sunset decision.

"Undergoing sunset review has been a highly productive process for this agency," Saenz said in a prepared statement. "The dedicated employees of TxDOT have worked hard over the last six months to implement several of the commission's recommendations. I look forward to working with the Legislature during the course of the session and remain committed to the continued improvement of the department's transparency and efficiency over the coming months."

Since the Sunset Commission staff report came out, TxDOT has taken a number of actions, including a new outreach effort where members of the commission and administration travel to various cities around the state to hold town hall meetings with local elected officials, members of the media, and the citizens of that area of the state.

TxDOT also plans to collect data on other forms of citizen contact for more analysis of comments from citizens. The agency also hired a consultant to help coordinate major marketing campaigns.

In addition to issuing debt under its own name, the TTC has become a backstop insurer for the North Texas Tollway Authority's $1.1 billion State Highway 161 project. Loan guarantees from the TTC allow the NTTA to build the project without seeking bond insurance or risking its credit rating amid a downturn in tolls.

TTC chairwoman Deirdre Delisi is Perry's former chief of staff, replacing the late Ric Williamson, who shared Perry's enthusiasm for privately financed toll roads and the mammoth Trans Texas Corridor toll project that has stirred widespread opposition in the state.

TxDOT suffered an embarrassing financial blow last summer as it sought to defend itself against critics. The state auditor's office issued a report that "ineffective internal communication, a complex reporting structure, and misunderstanding of reported data led the Department of Transportation to erroneously schedule $1.1 billion in planned contract awards for fiscal year 2008."

The accounting error, for which Saenz apologized before legislative committees, came in 2007 when TxDOT counted $581 million in Proposition 14 bond proceeds twice when developing the fiscal 2008 contract award schedule.

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