Friday, December 05, 2008

"NTTA has borrowed billions of dollars against more aggressive than usual traffic forecasts."

NTTA likely will see slumping revenues in 2009


Dallas Morning News
Copyright 2008

The worsening U.S. recession will likely prompt fewer North Texas drivers to splurge on time-saving tolls, according to financial experts who urged the North Texas Tollway Authority to prepare for slumping revenues in the new year.

Michael Copeland of Wilbur Smith Associates, the national consulting firm upon whom NTTA and its bondholders rely for revenue forecasts, warned the authority today that its total revenue for 2009 could be $25 million, or nearly 7 percent, less than what had been anticipated in a preliminary 2009 budget presented in October.

Slumping traffic on NTTA's toll roads were seen as temporary and likely to rebound once gas prices decreased. That hasn't happened, he said.

"Now that we have actual toll receipts from September and October, we can see that traffic has not resumed as quickly as we thought as a result of lower gas prices," Mr. Copeland said. "We also didn't previously believe that North Texas would feel the brunt of the economic slowdown. Since then, we've seen articles and other reports that have convinced us that that's not the case."

As a result, the NTTA staff is recommending the board revise the 2009 budget downward, cutting $6 million from its operating budget and another $5.5 million in other expenses, including maintenance reserves and capital investments.

That won't entirely make up for the budget shortfall, but officials expressed confidence the cuts would be adequate. That's true in part because the agency expects to save about $18 million in debt service in 2009 because two major toll projects -- the Chisolm Trail and Southwest Parkway in Tarrant County -- are expected to get underway about six months later than previously expected.

If approved at its Dec. 17 board meeting, the new operating budget will be $92 million, instead of the $98 million NTTA had expected just weeks ago. No workers are expected to be fired, said NTTA spokeswoman Sherita Coffelt. But performance bonuses for workers and managers have been canceled for 2008, and a not-yet-specified number of vacant jobs will go unfilled, she said.

The toll authority's revenue is almost entirely derived from tolls on its quickly expanding network of highways and bridges.

As new roads come on to the system, total NTTA revenues are going up. For instance, even after the downward revision to the 2009 budget, the agency expects to collect nearly $50 million in Highway 121 tolls, up from $14 million from this year.

But to build those roads, NTTA has borrowed billions of dollars against more aggressive than usual traffic forecasts.

In 2009, Wilbur Smith is projecting that revenue will fall most steeply on the President George Bush Turnpike, which the firm now predicts will $111 million, nearly $10 million less than the road has produced in 2008.

As layoffs are ordered at businesses across North Texas, those workers who had been among the authority's best customers -- daily commuters eager to by pass traffic jams -- are no longer on the road 5 mornings a week. Instead, they are unemployed and looking for work.

Board member Gary Base, a Collin County banker, questioned the sharply changed predictions by Wilbur Smith, stressing just how subjective such predictions can be.

Others on the board were eager to cut expenses ahead of financial news that only seems to get bleaker each week.

"I think we are facing something that is unusual and unprecedented," said board member Dave Denison of Denton County. "I think this is very conservative and rightfully so."

Still others have kept their jobs but are simply looking at ways to reduce household expenses. As toll roads have proliferated in North Texas, many drivers have scarcely noticed, thanks in part of the authority's successful conversion to all-electronic tolling.

But with incomes stagnant, and worries about job security widespread, those extra costs are being tracked more vigorously.

© 2008 The Dallas Morning News:

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