Transportation Secretary Mary Peters warns of "bailout," telegraphing the Bush Administration's latest push for privatized toll roads

Federal Highway Fund Running Out of Money

Secretary's Remarks| Trust Fund Fact Sheet (Department of Transportation)

September 5, 2008

By DAVID STOUT
The New York Times
Copyright 2008

WASHINGTON — An important account in the federal Highway Trust Fund will run out of money this month, which could hamper completion of road and bridge construction projects across the country, Transportation Secretary Mary E. Peters said on Friday.

Because the fund is draining away so fast, the Transportation Department will have to delay payments for the local projects, or reduce their amount, Ms. Peters said at a mid-day news conference.

Ms. Peters said her department will begin to dole out money from the fund on a pro-rated basis. For instance, if there are only enough funds to cover 80 percent of the payment requests the department receives for federally financed local projects, the agency will pay only 80 percent of each request.

“Time and again, the president has warned Congress of the pending shortfall and submitted fiscally prudent budgets to close the gap,” Ms. Peters said, in remarks that reflected the political nature of the long-running debate over how to pay for road-building.

State transportation officials reacted to the announcement with alarm. The development will have “grave repercussions for the states, for hundreds of thousands of workers in the construction industry and the driving public,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials.

“It will worsen the financial crises many states are already facing, and it will delay or halt needed transportation projects and leave contractors and suppliers with I.O.U.’s instead of cash to pay their workers,” Mr. Horsley said in a statement.

Whether Mr. Horsley’s dire prediction will come true, or whether the money shortage will be corrected when Congress reconvenes and the lawmakers hear from their constituents, is anybody’s guess. But at least for the moment, the trust fund’s problems have cast a shadow over highway work from coast to coast.

The trust fund’s highway account is being rapidly depleted because Americans have reacted to the high price of gasoline by driving less, Ms. Peters said. The fund gets its money from federal excise taxes on motor fuel: 18.4 cents a gallon on gasoline and 24.4 cents a gallon on diesel. But for months, Americans have been driving fewer miles than before it has been costing them more.

One possible solution would be to transfer money to the highway account from the separate account that the trust fund maintains to finance mass transit projects. That account is much smaller, though, and in any case, Ms. Peters said such a transfer would merely rob Peter to pay Paul. Lawmakers from large cities that rely on trust-fund aid for their transit systems could be expected to resist a transfer.

In July, the House passed a bill that would use $8 billion of general federal revenue — from income and other taxes, not the dedicated motor fuel tax — to finance highway projects. The measure has not gained much traction in the Senate, and until Friday the White House had been hostile to it. But Ms. Peters said on Friday that the administration now endorses the measure, because “immediate action” is required to ensure that the states do not suffer.

© 2008 The New York Times:www.nytimes.com


U.S. Highway Fund Needs $8 Billion Bailout This Month

Sept. 5

By John Hughes
Bloomberg
Copyright 2008

A U.S. trust fund that finances highway construction needs $8 billion from Congress by the end of next week to cover a shortfall as a drop in driving shrinks fuel-tax receipts, Transportation Secretary Mary Peters said.

The federal government will have no money in the fund by month's end and may need to cut payments to states should Congress fail to act, Peters told reporters today on a conference call.

``The cash-flow problem we face is serious,'' Peters said in Washington. A ``significant, precipitous drop-off'' in road travel boosted the shortfall beyond expectations, she said.

Her announcement is a policy reversal for President George W. Bush's administration, which dismissed a congressional bailout plan as a ``gimmick'' a little more than a month ago. Starting next week, Peters said she'll slow state payments to conserve cash, the first time her agency has taken such a step.

Motorists reduced driving for eight straight months through June, when gasoline at U.S. pumps reached $4.09 a gallon. That cut the flow of dollars for road projects from the federal gasoline tax of 18.4 cents a gallon.

The highway fund had an $8.1 billion balance when this fiscal year began Oct. 1, and payments are exceeding collections by $8.3 billion, according to the Transportation Department. The U.S. House approved an $8 billion bailout for fiscal 2009, though the money will be needed this year instead, Peters said.

Bush's budget office threatened a veto on July 23, calling the House transfer ``a gimmick and a dangerous precedent'' that would boost the deficit. The proposal is pending in the Senate as the Democrat-led Congress returns from a recess on Sept. 8.

Conserving Cash

``I'm glad the administration has for once set aside its blind ideology and come on board with what Congress has been trying to do,'' said Representative Peter DeFazio, an Oregon Democrat who chairs the House highways subcommittee, in a statement.

Peters said she is taking other steps to conserve cash. Starting Sept. 8, her agency's Federal Highway Administration will reimburse states for construction projects on a weekly basis rather than the current twice daily.

Reimbursements will be prorated, so that if the fund only has enough money to process 80 percent of pending requests, only that share of each payment will be made, Peters said. The next week, the balance of unpaid requests will be paid, she said.

`Grave Repercussions'

Such ``rationing'' will have ``grave repercussions'' for states counting on federal assistance for road projects, the Washington-based American Association of State Highway and Transportation Officials said in an e-mailed statement.

The government also had more state construction bills come due than anticipated, hastening the drawdown of the trust fund's reserves, said Jack Basso, director of management for the state group, in an interview.

The fund had $23 billion in reserves in 2000. Even before the drop in driving, that money was being drained because Bush and Congress agreed to boost spending in recent years while leaving the gasoline tax unchanged since 1993.

``No one had the guts'' to raise the tax as needed in 2005 when Congress, then controlled by Republicans, and Bush approved highway-funding legislation, said Stephen Sandherr, chief executive officer of the Associated General Contractors, in an interview.

``That's why we're suffering,'' said Sandherr, whose Arlington, Virginia-based trade group represents highway construction companies. Employers' purchasing power has eroded 50 percent under the frozen federal tax, and they may resort to layoffs without swift congressional action, he said.

The peak of the highway construction season, following several months of driving declines, exacerbated this year's shortfall, Peters said. In September, for example, the fund will take in $2.7 billion and spend $4.4 billion, her agency said.

To contact the reporter on this story: John Hughes in Washington jhughes5@bloomberg.net

© 2008 Bloomberg:www.bloomberg.com

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"For private equity investors, the sheen is wearing off purchases of public asphalt."

The Trouble with Transportation

High gas prices have dimmed private equity's hopes of rosy returns on infrastructure and transportation projects. Government could be the loser

September 5, 2008

Catherine Holahan
BusinessWeek
Copyright 2008

Watch the Video…

For private equity investors, the sheen is wearing off purchases of public asphalt. A year ago, banks and private investment firms were racing to pour money into infrastructure projects such as highways and light-rail systems. Compared with an investment in stocks, buying or leasing a highway seemed like a low-risk bet with easily estimated, long-term returns. After all, competing highways or mass transit systems couldn't just spring up overnight to divert toll- and ticket-paying customers.

But $4-a-gallon gasoline slowed the enthusiasm for such projects. Many commuters are choosing to leave their cars in the garage and take mass transit, or don't have a job to drive to anymore. "If you look at the publicly reported forecasts for the Chicago Skyway or Wall Street estimates of global traffic, they are completely different now," said George Bilicic, a managing director at NYC private equity firm Kohlberg, Kravis, Roberts who spoke on a panel held Sept. 3 at the University of Minnesota. "It goes into the risk assessment associated with the investment decision."

The purpose of the panel was to bring politicians in town for the Republican National Convention together with business representatives in a discussion that fits into GOP efforts to find privatized solutions to large public problems such as crumbling infrastructure. "Transportation is both broke and broken," said panelist Bruce Katz, vice-president and director of metropolitan policy at independent research firm the Brookings Institution. "How do we have the collaboration with the private sector so we can really deal with the totality of this issue?"

Power to Private Equity

One answer may be to accept that private equity gets to dictate more terms, and use up-front revenues from long-term infrastructure leases to provide tax breaks offsetting higher commuting costs. That solution dovetails with the Republican convention theme of lower taxes.

But higher risk means investors are going to demand larger returns. And that's not welcome news for government officials. Some of those present at the panel discussion said they don't want to slam voters with higher commuting costs but do want private investment to fund improvements in roads and mass-transit systems (BusinessWeek, 5/7/07) not to mention provide immediate cash for other government projects. "We are acutely aware of transportation challenges in this community," said St. Paul Mayor Chris Coleman, referring to the difficulty of getting a light-rail system constructed between St. Paul and Minneapolis. "I think there is a lot of room for private investors to invest in our community."

Despite the economic downturn, private sources could still account for $240 billion of the capital needed for infrastructure worldwide each year, according to a September 2007 report by Ernst & Young. "The pools of private capital are gathering," says Bilicic. "And these pools are forming with a global point of view."

Renegotiating the Terms

But investors are adjusting by lowering their bids on long-term public infrastructure leases and demanding more assurances that the managing firms can raise tolls or adopt controversial measures such as peak toll pricing. (On one privately owned road in California, tolls jump from less than $2 to more than $20 during rush hour under the peak pricing model.) "Nobody will bid on [a toll road] at the fare of $1.50 per person," said panelist and former Washington Senator Slade Gorton.

Strapped commuters obviously are in no mood to pay for higher tolls. What investors are counting on is that taxpayers are even more averse to paying the higher taxes needed to repair century-old roads, bridges, and other public facilities. The American Society of Civil Engineers estimated in 2005 that it would cost $1.6 trillion to simply bring the nation's infrastructure up to "good" condition. That doesn't include the amount it would cost to add environmentally friendly mass-transit systems and other infrastructure upgrades needed to help people move closer to the cities where they work, thereby reducing vehicle-related pollution.

Many taxpayers are already skeptical about federal and state transportation expenditures, panelists said, because they often get allocated to politically powerful districts rather than where they are most needed. "It never made sense to me why we would tax ordinary people and use that money to subsidize this type of sprawl development," said panelist Tom Darden, CEO of Cherokee Investment Partners, a firm that works with government to invest in land development around new transportation hubs.

Congestion Plagues Cities

"It's hell trying to get around any city in America today, from sea to shining sea. We are just at a stall in congestion," said panelist John Mica, the ranking Republican on the U.S. House Transportation & Infrastructure Committee. "Some people think I have been smoking the funny weed and hanging out with college students when I say we need more than a trillion dollars… But we have got to do something."

Holahan is a writer for BusinessWeek.com in New York.

© 2008 BusinessWeek:www.businessweek.com

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"We have idiots steering the ship."

Toll You So

The Trinity River Project should be floating right along. Instead it's sinking under the weight of its own folly.

9/4/08

By Jim Schutze
The Dallas Observer
Copyright 2008

On November 6, 2007, a referendum to kill the Trinity River toll road failed at the polls. I was for the referendum. The side I was on lost. I think I was fairly open about what my attitude would be from then forward. Sour grapes.

What's wrong with sour grapes? I like sour grapes. They suit my personality. Where the Trinity River Project is concerned, go ahead and put me squarely in the sour grape column.

I also said something right after the referendum that was more significant, I do believe, than my personal grapes. This road will never be built. Not the road they're talking about—a high-speed, multi-lane, limited-access throughway between the flood-control levees, right along the river. It will not happen. And other major elements of the project also will not happen.

Why? This all has to do with issues that were fully aired before the referendum. Mainly, no one has ever built a major highway between flood-control levees before anywhere in the country, because it's a stupidly dangerous idea, sort of like building an orphanage on top of a dam. Why would you do that?
Right now, at this particular juncture, I just want to point out that all of the things that have happened since the referendum are bearing me out and making fools of the political leaders pushing this project, especially our mayor, Tom Leppert.

Is it only sour grapes? Maybe it's more: I want to be sure that some kind of record is kept. A certain focus must be maintained along the way, so that when the ridiculous elements of the project do collapse into an inevitable puddle, the public will see clearly which folks are to blame.

The Trinity River Project, by now, is really a bunch of big public works projects all lumped together, some of which are absolutely wonderful. The dream is to transform the big, ugly, neglected sump along the Trinity where it flows through downtown and Southern Dallas into a vast, grand Central Park for the whole city.

Ultimately the vision is for small lakes, a white-water kayaking stream, formal and informal public gathering places, miles-long paths through forested areas, and more. Some pieces of that vision are going to come true, and they will be wonderful for the city.

The problem is that other pieces—notably the toll road down the middle but also the so-called signature bridges—are ill-conceived, dangerous and insanely expensive in ways that threaten to suck the air out of the rest of the project.
Bridges first. In all, three major bridges are to be built across the Trinity, all designed by Spanish architect Santiago Calatrava. City Hall insists it already has the money for two. The third one's a toss-up. But whether they really have the money depends on the price.

You may remember that a few weeks after the election, Mayor Leppert orchestrated a major media event to show he was pushing for speedy completion. The Dallas Morning News quoted him as saying, "None of the timetables that are sitting out there are acceptable.

"We are going to be going forward much more aggressively. For us to be successful, we have to move forward very quickly."

Fast-forward with me to August 26 when the Morning News carried a story revealing that construction of the first so-called "signature bridge" in the project has been delayed at least 10 months. That story included the following line:

"Asked whether the delay was reasonable, Mr. Leppert, a former top construction executive, simply raised his eyebrows and called it frustrating."

The Morning News story conveyed the impression that the Margaret Hunt-Hill bridge was being held up because Cimolai Costruzioni Metalliche, an Italian company hired to pre-fab some of the steel, "had difficulty creating a model of Mr. Calatrava's design."

Really? Maybe you're like me. You have to wonder how hard it can be to make a model? Ah, but it turns out the story is a bit deeper than mere model-making.
I'm not casting aspersions on the Morning News. Yet. It's a daily paper. They can't cross every t and dot every i. In fact, like most daily newspapers around the country, they've laid off so many copy editors by now, they probably can't even dot every t and cross every i. But in this case, they really got the story wrong.

I spoke at some length with Bill Hale, who is the district engineer for the Dallas district of the Texas Department of Transportation. Hale explained that the model in question is not a scale-model or a rendering or anything like that: It's a computer model to test the engineering of the entire design.

"They have to make sure it can handle the stresses," he said.

Now we have to dip back again in time to recall that the bids for building this bridge, which Calatrava had estimated would cost $57 million, came in at a low bid of $113 million.

The lesson to be drawn at that point was simple. Calatrava is notorious for low-balling the costs of his designs. The city should have seen the handwriting and realized it couldn't afford this extravagant architectural folly.

Remember, please, that most of the sexy items in the overall plan for the Trinity are "unfunded"—the trails, the white water, even the water in the lakes, for example. No money for that. The citizens of the city are still to be taxed for their share (the lion's share) of those elements.

The city skirts that fact every little chance it gets. On September 10, the city will unveil a scale model of the whole project. On its Web page the city invites people to "see the large model that accurately depicts major components inside and outside the levees including replicas of the Calatrava signature bridges."

I checked with Rebecca Dugger, head of the city's Trinity River Project office. She confirmed my suspicion that there will be no labels or legend or other indication on the model to show which elements have been funded and which are just pie in the sky. She said, "We felt that labels would be a little too cumbersome."

OK. My point here is that the city did not have any extra money lying around for the Hunt-Hill bridge when the bids came in double what the dummies had been telling people it would cost. But rather than back down, City Hall got Calatrava to say he could re-design the bridge to cost $69 million, close to half as much.

Amazing. The city said some of the savings would come from "value-engineering" and from using Cimolai to fabricate some of the elements.

Now come back to the present with me, if you will, and my chat with Hale of TxDOT. The modeling endeavor, he explained, is not being done by Cimolai. It's not their lookout. It's being done by a contractor working for Calatrava.

Calatrava has to get the model to work, before he can tell Cimolai what to build. That's the hold-up. Think about it. The bridge is going to be 10 months late, because Calatrava couldn't get his engineering model to work. Now it works? We hope. But at what cost?

A significant element in the hold-up, beyond the wobbly model, is money. Hale said there have been negotiations between various contractors involved in building this bridge and their bonding companies. That's a bit of inside baseball, but it's worth understanding in this case.

A contractor promises to do a job for a set price when he signs the contract. But the client makes him provide a bond, which is basically a guarantee from a third party, usually a big insurance company. The bonding company guarantees the price. In other words, if the contractor can't complete the job at that price and the job winds up costing more, the bonding company will make up the difference.

I asked Hale if the negotiations to which he referred meant the contractors were having trouble coming in at the prices they had agreed to. He said he thought that might be the case, but he said everything has been worked out.

I just want to make sure we mark this moment. After all the mayor's public-relations talk about how fast he was going to push the project, the signature bridge part of it just slipped a year. And the slippage may well have to do with basic engineering and money problems.

That's not nothing.

I found another interesting development while poking around. I wondered how the North Texas Tollway Authority was coming along with its design for the Trinity toll road, now that the location of the road between the levees has been approved by the voters. I read recently on the Observer's blog, Unfair Park, that there had been significant delays. Sherita Coffelt, spokeswoman for the tollway authority, confirmed for me that they haven't actually started on the design yet. She said the authority has delayed until next year the public hearing that is the official first step in choosing a path to put the toll road on.

What? They haven't decided where to put it yet? Wasn't that what the referendum was about?

Right. The people voted to put it between the levees. Sure. But Coffelt told me the authority had to delay the process of officially and finally choosing a route because of some little, itsy-bitsy problems they're having with the environmental impact study or EIS.
They have to finish the EIS before they can have a public hearing to launch the process of officially choosing a route. It's like the house that Jack built. You have to go in steps. But the EIS is a big step. Any number of agencies—the state or federal highway departments, the U.S. Army Corps of Engineers to name three—could put the kibosh to the whole thing, depending on how it comes out.

I'll tell you why it's taking so long to do the EIS. Because this whole thing is about Katrina and what happened to New Orleans. Katrina happened because the U.S. Army Corps of Engineers allowed local politicos and development interests in New Orleans to pressure it into building sub-par levees. The levees here are dirt walls along both sides of the Trinity River designed to hold back flood waters from downtown on one side and Oak Cliff on the other. The area between the levees is called the floodway. It's the pipe, so to speak, that carries the water away.
The city's plan is to build an expressway down the middle of that pipe. There is no way to do that without clogging the pipe. If you clog the pipe, you risk pushing the waters higher until they spill over the levees, then rip the levees down and send rampaging floods through downtown or Oak Cliff or both.

The fact that the toll road is being held up by the environmental impact studies is serious and scary. The fact that the Calatrava bridge is being delayed by engineering and money problems is significant. And, if I may say, hilarious.

But the really important fact, embedded in all of this, is that we have idiots steering the ship. You may call that sour grapes. I think of it as a fine wine, aging in the barrel. I'm planning my little tasting for some time in 2012. That's my motto. No sour grape before its time.

© 2008 The Dallas Observer: www.dallasobserver.com

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FHA's simple tools for decreasing road fatalities are often ignored because they don’t generate revenue

Nine Ways To Improve Traffic Safety That The Government Will Ignore....

Because They Are Too Busy Ticketing You

9/4/08

National Motorists Association
Copyright 2008

The Federal Highway Administration has strongly recommended nine tools for decreasing road fatalities. You can find them at the end of this article. Most of these tools are fairly basic and simple to implement. So why aren’t they already universally used?

They’re not universally used because they don’t make money for anyone.

The government (local, regional, and national) has become more and more greedy. Instead of federal grant money going to the programs below, it goes to holiday ticketing binges, congestion charging, toll roads, red-light cameras and speed cameras — none of which have shown any positive impact on key traffic safety metrics.

These kind of enforcement and fee-based programs do make plenty of money though. Unfortunately, they do it by picking the pockets of motorists.

They get away with this blatant money grab by using powerful public relations tactics — and the implicit trust that many citizens still have in government organizations — to convince the average driver that it’s for their own good.

Shameful.

FHWA’s Nine Tools for Decreasing Road Fatalities

1) Roadway Safety Audits
State DOTs should formalize the use of these audits, which are comprehensive evaluations of existing or planned roads or intersections to identify potential safety improvements.

2) Rumble Strips and Rumble Stripes
Used in centerline and shoulders, these cost-effective devices have shown demonstrable improvement in warning drivers of lane departure, reducing by 14 percent head-on collisions and opposite-direction sideswipe crashes. Shoulder rumble strips and stripes have shown a 38 percent reduction in run-off-road crashes on freeways, and between 13-18 percent on rural roads.

3) Median Barriers
Used to separate opposing traffic on divided highways, these barriers have a long track record of reducing cross-median collisions. States are encouraged to consider using cable median barriers where appropriate to further heighten roadway safety.

4) Safety Edge
This paving technique, giving a 30 to 35 degree slope to the road’s edge, reduces the risk to drivers if their tire inadvertently falls over an otherwise near-vertical road-edge leading to loss of vehicle control and rollover crashes. Safety Edge makes such notoriously severe crashes far less likely.

5) Roundabouts
Roundabouts have demonstrated a 60 to 87 percent reduction in crashes.

6) Turning Lanes at Stop-Controlled Intersections
At intersections with significant turning volume, turning lanes for right and left turns on major road approaches can dramatically reduce crashes — in some cases, by as much as 55 percent.

7) Yellow Change Intervals
Red-light running crashes at intersections, which too frequently result in fatalities, can be reduced by properly setting yellow-light signals. Studies show a one-second increase in the yellow signal interval can reduce red-light violations by as much as 50 percent.

8) Medians and Pedestrian Refuge Areas in Urban and Suburban Areas
Raised medians or pedestrian refuge areas at pedestrian crossings at marked crosswalks have shown a 46 percent reduction in pedestrian crashes. FHWA recommends that medians be between 4 and 8 feet wide to improve pedestrian safety.

9) Walkways
Ensuring a sidewalk or pathway exists near a roadway can reduce pedestrian crashes by as much 88 percent. FHWA recommends a pathway of at least 4 feet wide of stabilized or paved surface in areas routinely used by pedestrians.

© 2008 National Motorists Association:www.motorists.org

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Politicians use $1 trillion to bail out Wall Street and banks but cry 'poverty' for our nation’s highways.

Privatizing What the Public Paid For

Privatizing taxpayer-funded roads and utilities means you can still use them — if you can afford to pay again for the "privilege"

9/3/08

Ed Wallace
Fort Worth Star-Telegram
Copyright 2008

"Right. It takes unconventional and courageous thinking to come up with a plan that clears a highway lane for the well off, while the middle class and working poor are left to inhale each other’s $5-a-gallon exhaust fumes. The worst thing about this ill-conceived decision … is it allocates freedom of movement according to income."

— From "Diamond Lanes for the Rich," by Tim Rutten (Los Angeles Times, April 26, 2008)

Few think of it this way, but America already has a major flat tax that we all pay equally: the 18.4-cent federal tax that is applied to each and every gallon of gasoline we purchase, or the 24.4 cents on every gallon of diesel.

Say a young person, who just lost his job at McDonald’s, buys a gallon of gas to get to an interview at Burger King at the same time Warren Buffet buys a gallon of gas to get to the airport in Omaha to board his personal jet: Both the unemployed, below-minimum-wage worker and America’s richest billionaire contribute the exact same amount toward the nation’s highway system on that day.

Now, however, we are being told – to an increasingly urgent drumbeat – that America can no longer afford the luxury of building new infrastructure or even maintaining our current road system, because there’s just no funding for these programs. It’s here that the complete absence of critical thinking about America’s future should astonish and dismay anyone who looks at the facts even casually.

Just for the Rich?

In just a few months America has come up with nearly $1 trillion to cover foolish losses on Wall Street and in the nation’s banking system – losses primarily self-caused in the investor-driven buildup to the mortgage crisis over the past three years. But at the same time we’re being told flat out that Social Security is a disaster waiting to happen, because it will be $1 trillion in default somewhere around mid-century. Yes, you read that right: We can save our financial centers today in mere weeks when it looks like they are over $1 trillion upside down, but there’s no way we can find that much money over the next 40 years to secure all working Americans’ retirement.

And on Wall Street, many firms are pleading poverty and demanding federal intervention, claiming to be incapable of rescuing themselves from the disaster they have brought on the nation. But, according to a New York Times article from August 27th on privatizing the nation’s infrastructure, "Kohlberg Kravis Roberts, the Carlyle Group, Goldman Sachs, Morgan Stanley and Credit Suisse are among the investors that have amassed an estimated $250 billion war chest – much of it raised in the last two years [emphasis added] — to finance a tidal wave of infrastructure projects in the United States and overseas." (The last Federal Highway Bill appropriated $286 billion over a multi-year period, only $36 billion more than Wall Street has escrowed to buy up our infrastructure now.)

Likewise, Washington cries poormouth when asked how much we can spend in our next highway bill to fix and expand our nation’s highway system. Yet in less than one month Washington easily found $168 billon to send out in tax rebate checks to spur the economy – so the second-quarter GDP figures would look stronger.

Yes, America once found it necessary to "kick start" our economy in tough financial times. But back then the sudden infusion of $168 billion was spent on things everyone could use, like new highway projects: The money still had the same impact on the economy, but America gained something of lasting value to show for it. Long after the economic slowdown turned around and became a recovery, we would all benefit from better transportation.

It’s the bitterest irony of all that today elected officials talk about how great our economy has been on Monday, then on Tuesday say America doesn’t have the money to improve our nation’s infrastructure.

Which is it? Are we rich or broke?

Happy Motoring Now Has a Price

What’s even sadder is the fact that Washington is actually paying out taxpayers’ money to take the highways away from everyone who contributed to them; your dollars are being used to carve out separate lanes, so that those who can afford to pay additional tolls every day can drive unfettered by the congestion that traps the rest of us.

In Los Angeles the federal government allotted $213.6 million to convert many of that city’s HOV lanes into toll roads, on which drivers pay variable surcharges based on peak driving periods. Keep in mind that the unemployed of LA who bought gasoline paid the exact same highway taxes toward the construction of those roads as did the wealthiest individuals in Beverly Hills. What that means is that we have all contributed equally to create a system of motoring exclusion. Then again, that’s how flat taxes work. Everybody pays, most are excluded.

Recently it was mentioned that, just like LA’s, Interstate 30’s new HOV lanes could be turned into toll lanes for the well off. As they do in other cases around the nation, advocates of this divisive and unfair move claim that it will cut congestion and save fuel; but a daily casual observation of the road quickly exposes the difference between reality and that PR spin.

For if you really wanted to cut congestion and save fuel, those lanes should be immediately opened to everyone when an accident turns I-30 into a parking lot. That way, thousands upon thousands of motorists could start moving again – saving untold gallons of gas and tons of air pollution – not just the chosen few. Of course, that’s not the plan.

Just Plane Elite-Friendly

It should also be mentioned that a relatively large infrastructure campaign is now going on to improve the nation’s secondary airports. For the most part those airports are serving the ever-growing number of private aircraft; personal jets have become all the rage in the last decade. As David Cay Johnston points out in his excellent book, Free Lunch; How the Wealthiest Americans Enrich Themselves at Government Expense, airport expansions for private jets continue unabated, but it’s the average American taxpayer footing the bill.

Johnston further discusses the $31 million airport expansion for the field that serves the Bandon Dunes Golf Course in Oregon, where 5,000 private jets land each year; that’s up from three or four landings a year as recently as 1999. That airport expansion’s costs are covered by taxes paid by all fliers on commercial airlines and by a hefty chunk of the monies paid by Oregon Lottery gamblers – even though the improved airport mostly benefits executives flying in for a round of golf.

A similar report, put together by the Institute for Policy Studies, shows that private jet ownership has risen from 1,000 in 1970 to 10,000 in 2006; and, while these jets use 16 percent of the nation’s total air traffic services, they pay just 3 percent of the costs. Although this is assuredly on a different plane (pardon the pun) than selling off the nation’s already paid-for highways, the overall concept is the same: The majority of the people pay to build and improve infrastructure that will benefit and convenience only a tiny minority: the ultra-rich.

Private and Public: Don’t Mix

This is the modern politics of exclusion. But privatizing a country’s public infrastructure has already proven to be a bad business model, one that can and will reverse a half-century of smart economic expansion. One has only to look at England to find the truth behind today’s political spin.

Today England’s largest airports "… are in shambles. Terminals and runways are so overcrowded that flights depart late and bags are lost. Faulty plumbing has become a point of pride for many visitors from Africa; the lavatories at the airports back home work better." And that’s the opinion of the very conservative Economist magazine, which blasted the fact that 21 years ago the Thatcher administration’s sold London’s three largest airports to one private company.

When I returned from London in June, my plane’s passengers were all loaded onto buses and driven to our jumbo jet, which was parked nowhere near the terminal; there aren’t enough passenger gates to handle all of Heathrow’s flights. Of course, private industry’s job is to cut expenses and maximize quarterly profits; but that’s never the priority in intelligent long-term planning for public transportation — whether it is for highways or airports. England privatized its utilities, airports and other government functions in the eighties, and today that nation is paying an enormous cost, with their equivalent of our Treasury Secretary calling its recent economic downturn the worst in 60 years.

Then again, now England is saying that the current private owners should divest of many of their airport holdings to other private ownership groups (and possibly back to government hands), but this will only extend the country’s current problems. It could even make them worse.

It’s true that many things our government does, it does poorly; but there are things that government does exceptionally well. The problem today is that our government wants to sell off what it does best and keep what it demonstrably isn’t very good at.

We’ve paid for all of it; yet now government is asking the majority of us to pay so the smallest minority can enjoy the benefits. Not only is that not a sustainable plan, it’s not even remotely American.

© 2008 Ed Wallace

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and is a member of the American Historical Society. He reviews new cars every Friday morning at 7:15 on Fox Four’s Good Day, contributes articles to BusinessWeek Online and hosts the talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF. E-mail: wheels570@sbcglobal.net

Private industry’s job is to cut expenses and maximize quarterly profits; but that’s never the priority in intelligent planning for public transportation — whether it is for highways or airports.

© 2008 Fort Worth Star-Telegram:www.star-telegram.com

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"It’s time for Lt. Governor Dewhurst to drive his cattle out of the shadows and into the sunlight.”

TPJ Urges County Attorney To Compel Dewhurst To Disclose Trust Assets

Lt. Governor Apparently Violated Disclosure Law

9/3/08

News Release
Contact: Craig McDonald, PH: (512) 472-9770
Texans for Public Justice
Copyright 2008

(Austin) Texans for Public Justice filed a complaint today with Travis County Attorney David Escamilla. The complaint urges the prosecutor to determine if Lt. Governor David Dewhurst violated state disclosure laws by failing to publicly disclose assets held in the David Dewhurst Trust.

Under Texas law public officials with non-blind trusts have certain disclosure obligations. Namely, they must list in their personal financial statement every asset in the trust that earns more than $500 a year. TPJ believes that Dewhurst’s trust, which is a non-blind trust earning more than $25,000 per year, likely contains assets that are earning more than the disclosure threshold of $500 per year.

Dewhurst, whose wealth has been estimated at several hundred million dollars, has filed 11 annual disclosure statements since 1998.* In his first three filings covering 1997 through 1999, he listed Falcon Seaboard Investment Co. as the only asset in the David Dewhurst Trust that earned in excess of $500. In his four filings covering 2000 through 2003 Dewhurst listed no assets earning more than $500. In his four most recent filings covering 2004 through 2007 Dewhurst reports that he does not know if any asset in the trust earned more than $500.

According to press accounts, Dewhurst’s attorney said that the Lt. Governor can’t identify which assets are producing more than $500 because the proceeds are “mixed up all together.” TPJ believes such a defense is ludicrous. Income generated by assets in a non-blind trust are readily knowable to the trust beneficiary.

“The Dewhurst Trust is blind to the public but not to the Lt. Governor,” said Craig McDonald, director of Texans for Public Justice. “The Lt. Governor should fulfill his disclosure obligations under the law. One of the most powerful state officials should not be allowed to hide his assets from the public. When you’re the Lt. Governor, the public has an absolute right to know how many cattle or other assets you own. It’s time for Lt. Governor Dewhurst to drive his cattle out of the shadows and into the sunlight.”

TPJ asked Mr. Escamilla to review Governor Dewhurst’s disclosure filings and take any action
appropriate under the law. The penalty for failing to properly disclose assets on a personal financial statement is a Class B misdemeanor.

*Personal financial statements for a given calendar year are filed in April of the following year.
Disclosures filed in April 2008 cover financial information for calendar year 2007.


© 2008 Texans for Public Justice: www.tpj.org

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Billion dollar accounting error pushes back 349 contract date

TxDOT Answers Questions About "La Entrada"

9/2/08

CBS 7 (West Texas)
Copyright 2008

Motran is the "Midland Odessa Transportation Alliance," where they work together to get the best highways they can for the region.

TxDOT was set to let the contract on the third and final phase of the 349 reliever route next month.

Now they've moved it back to December, and Motran says they might keep moving it until it falls off the stove.

Last month, a special audit found TxDOT a billion dollars short.

Turns out they had included as current revenue, money they expected to receive in the future from the Trans-Texas Corridor, which has been shelved.

Then they said they didn't have enough money to go ahead with some projects this fiscal year, which started Monday.

James Beauchamp, MOTRAN Executive Director says “Part of that's being taken care of by some of the one point five billion dollar bonding authority they have been asked to use by the Governor, the Lt Governor and the Speaker of the House. But at the end of the day, we're not sure that will cover our project or not.”

TxDOT says they had reported the accounting error before it was found in the audit.

And they have no intention of halting a project that is already underway, and the reliever still on the front burner.

The first two lanes of the road will be finished in late 2010.


© 2008 CBS-7 :www.cbs7.com

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Another power struggle between Gov. Rick Perry and the Legislature over TxDOT's direction is expected

TxDOT's Challenge

Under Scrutiny as FY '09 Kicks Off

September 2, 2008

By Richard Williamson
The Bond Buyer
Copyright 2008

DALLAS - The Texas Department of Transportation begins its fiscal year this week with new leadership, a record $8.3 billion budget, and $1.5 billion of newly mandated bonds amid a challenging political environment.

With another tough legislative session coming in four months, the department must justify its existence in the Sunset review process after taking sharp criticism in a special audit for a $1.1 billion accounting error.

The Sunset Review Commission, a 12-member legislative body that reviews the policies and programs of more than 150 government agencies every 12 years, may have already set up a power struggle between Gov. Rick Perry and the Legislature over TxDOT's direction.

Under its current structure, TxDOT is supervised by the Texas Transportation Commission, a five-member board appointed by the governor. The current 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.

If the Sunset Review Commission's report is adopted, the TTC board would be replaced by a single commissioner appointed for two years instead of the current six-year terms for board members. The Sunset report also recommends another review in four years instead of the standard 12 years to reconsider whether TxDOT should continue to exist.

"The Sunset review of the Texas Department of Transportation occurred against a backdrop of distrust and frustration with the department and the demand for more transparency, accountability, and responsiveness," the report stated. "Many expressed concerns that TxDOT was 'out of control,' advancing its own agenda against objections of both the Legislature and the public."

Last month, TxDOT took another blow to its image as 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 TxDOT executive director Amadeo Saenz had already 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.

The department also included $488 million in Texas Mobility Funds in the future award amount, even though those funds were required for existing projects, according to the audit.

In a prepared response last week, Saenz said the report "recognizes many of the same concerns we had identified and confirms many of our prior plans on addressing them. Implementation is already well underway for several of the recommendations. I am committed to increasing the department's transparency, and the recommendations identified in this audit put us another step closer to realizing that goal."

With the Proposition 14 fiasco behind it, TxDOT and the TTC last week laid the groundwork for the fiscal 2009 financing plan, authorizing $1.5 billion of Proposition 14 bonds that had already been authorized by the Legislature in the 2007 session.

Reluctant to issue the debt because of uncertainty over revenues to fund the debt service, the TTC agreed to proceed after receiving a strongly worded letter from Perry, Lieut. Gov. David Dewhurst, and House Speaker Tom Craddick on Aug. 22. The letter demanded that the TTC and TxDOT immediately take steps to issue the bonds, with the assurance that the next session of the Legislature would provide debt service by ending the use of fuel tax and state fees for non-transit purposes.

"The immediate sale of up to $1.5 billion of voter and statutorily authorized Proposition 14 bonds will ensure that greater road funding levels are maintained through the fall and spring until we can work with other elected officials to provide additional solutions," the letter advised.

"We had concerns about where the debt service would come from," said James Bass, chief financial officer of TxDOT. "The letter addressed the long-range concerns."

Texas voters approved $3 billion of Proposition 14 highway bonding authority in 2003, an amount the Legislature doubled in the last session. Under the new formula, the TTC can issue $1.5 billion per fiscal year instead of the previous $1 billion.

Since 2003, TxDOT has issued $3.1 billion of Proposition 14 bonds. The Proposition 14 bond program allows TxDOT to borrow money on a short-term basis to improve cash flow and cash management and to issue general obligation bonds secured by the State Highway Fund to accelerate transportation projects. The bonds are repaid with money from the State Highway Fund, including motor fuels taxes and vehicle registration fees.

"The funds generated by the sale of these bonds will enable TxDOT to get needed transportation projects back on track," Delisi said. "I have instructed TxDOT staff to begin identifying projects across the state that are ready to immediately move forward and make use of these additional funds. I expect the staff to present these projects to the commission in September."

Bass said the bonds are not likely to be issued at one time, but in two or more issues over the fiscal year. TTC ordered Bass to begin the process of seeking underwriters and other key players for the upcoming issue.

Meanwhile, TTC took another bond proposal before the state Bond Review Board Friday, a $150 million refunding of 2002B variable-rate Central Texas Turnpike System bonds that carried Ambac Assurance Corp. backing. Ambac lost its triple-A rating as the credit crunch escalated. Since early July, interest on the weekly variable-rate debt has been around 9.5%, a costly escalation from the expected 2.7%.

Those revenue bonds went before the Bond Review Board for approval on Friday. TxDOT has not set a date for the issue, Bass said.


© 2008 The Bond Buyer and SourceMedia Inc. :www.bondbuyer.com

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“This is a new concept, and it’s going to cost a lot of money....There’s a lot of private money chasing these ideas...”

Elevated transport rail imagined for city

August 31, 2008

BRANDY S. CHEWNING
Arkansas Democrate Gazette
Copyright 2008

TEXARKANA — The company selected to design Interstate 69 has revealed plans to also implement the world’s first air rail freight system in the corridor, possibly starting in Texarkana, Texas.

“You [Texarkana ] have railroads here, you already have an interstate, bringing I-69 is another interstate, you’ve got Oklahoma, you’ve got I-49,” said Gary Kuhn, senior project manager for Zachary American Infrastructure.

“This is what the logistics world likes to see — that opportunity to go from one mode to another very efficiently.” In a presentation to the Wilbur Smith Rotary Club, Kuhn said the freight shuttle is a new idea, under development by researchers at Texas A&M University.

“We started looking at this very intently relative to what we were doing on [Trans-Texas Corridor ] 35,” he said. “We stumbled upon this quite by accident as the technology we think we should use, and for the last two years we’ve been vetting it.

“ This was born in Texas, it should be done in Texas first,” Kuhn said.

The electric, automated shuttle would produce no emissions and would use steel wheels locked into a steel running surface, preventing derailment.

Raised 20 feet in the air, it uses electric impulses to move a pair of Amtrak-like “transporters” and can carry containers and trailers of various sizes.

Kuhn said 425-horsepower motors would be used to take the shuttle to full speed in seconds, then the engine drops to 40-horsepower.

“There’s more than enough power on the grid for this,” he said.

Property owners in the Trans-Texas 69 corridor will feel less impact because the elevated rail uses a smaller footprint. They can retain their land and get a return from easements allowing support structures.

Multimodal facilities are interchanges for the cargo, loading areas between trucks and rail. Bowie County, Texas, Judge James Carlow said that type of facility could easily be built on the Red River Army Depot property.

“This is a new concept, and it’s going to cost a lot of money,” Carlow said about the freight shuttle. “But when you can run it for a tenth of what the fuel cost will be, it pays back in a hurry.” No estimates were made on the cost of construction, but it would be built with private funds.

“There’s a lot of private money chasing these ideas because they see it’s the future,” Carlow said.

An electric rail can move 100, 000 pounds of cargo for 8 cents per mile. The same transport on a truck, with diesel $ 5 per gallon, would be 85 cents per mile.

“At the design speed, which is 62 miles an hour, we will be able to run 10, 000 loads per day each direction,” Kuhn said.

With the bulk of American freight moved by trucks, Kuhn provided statistics that suggested an electric rail could benefit the industry rather than cut jobs. He referred to a projection of truck traffic increases by the American Society of Civil Engineering. “By 2020, there’s going to be an equivalent of 10 million, 40-foot containers that no port in the United States can handle,” he said. “There’s going to be a new market that no one can deal with.” Kuhn said the freight shuttle combines the benefits of trucks and trains and is not intended to replace either but will fill in the gap of short hauls that trains don’t want. “Their market is 650 or more miles,” Kuhn said. “We’re on the truck side of things.” Use of the rail would be purchased by trucking companies who may have the option of owning their own transporters.

© 2008 Arkansas Democrate Gazette:www.nwanews.com

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"The trip is an opportunity to enjoy fly-fishing together, not to curry favor."

Montgomery County leader says he paid for Alaska trip
Excursion hosted by company with ties to government

Aug. 31, 2008

By RENÉE C. LEE
Houston Chronicle
Copyright 2008

CONROE — Montgomery County Judge Alan B. Sadler says he went on a four-day fishing trip to Alaska last weekend with the company that manages the county's road improvement program and paid his own way.

''I paid 100 percent of my fee," Sadler said on Thursday.
Questions have been raised about the trip because Pate Transportation Partners, the host of the trip, has worked for the county for about four years, and Sadler's or any county official's attendance could be seen as a conflict of interest. The county has paid Pate about $11.4 million over that time period, records show.

"I would never take a trip of that nature on someone else," Sadler said. "I don't want there to be an appearance of a conflict."
Pate Engineers, which started Pate Transportation Partners three years ago as a separate company, has organized the fishing trip for its private and public sector clients for the past 11 years, said partner Jennie Taraborelli.
Both companies have clients — developers and elected officials — across the state. The trip is an opportunity to enjoy fly-fishing together, not to curry favor, Taraborelli said.
''It's not unusual for firms to host casual trips," she said. ''It's legal." Pate typically pays for the trip but some clients choose to pay for their transportation, lodging and meals, she said. Sadler said he paid about $3,700 for the trip with a personal check.

Sadler was the only Montgomery County official who attended the trip, Taraborelli said. Montgomery County Commissioner Craig Doyal said he was aware of the trip. He said he didn't see anything wrong with an elected official going on the trip if he paid his own expenses.
''As long as you don't let it influence the way you vote on a contract, I don't see a problem with it," Doyal said.

Pate currently has no contracts pending before the Commissioners Court and purposely waited several years until all road contracts were approved before inviting county officials on the trip, Taraborelli said.

Pate Transportation, which has an office in a Montgomery County building, oversees the county's road program, handling each step of road projects from the environmental study to the construction stage.

In addition to the $11.4 million paid to Pate companies, the county has also paid Houston-based Property Acquisition Services, a strategic partner of Pate Transportation Partners, about $1.6 million over the past two years to purchase rights of way. Mark Heidaker, president of Property Acquisition Services, also attended the fishing trip, Taraborelli said.
The county's road program is part of the Texas Department of Transportation's "pass-through" toll program. The creative financing program allows the county to use bond money to pay for roads upfront and the state reimburses the county over a 10- to 17-year period based on the number of vehicles using the roads.

Three years ago, county voters approved a $160 million bond issue to widen five major thoroughfares as part of the state program.

renee.lee@chron.com


© 2008 The Houston Chronicle:www.chron.com

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