Saturday, December 27, 2008

"Given the alternatives of doing nothing and tolling more aggressively, indexing the gas tax is the smartest investment for Texas."

Gas tax indexing a good investment


San Antonio Express-News
Copyright 2008

New data from the Census Bureau puts Texas tied for third among the fastest growing states in the nation, with 2 percent population growth. Numerically, Texas was the growth winner, adding 484,000 new residents from July 1, 2007 to July 1, 2008.

Good times or bad, Texas is experiencing rapid growth. In fact, a weak economy may bring even more newcomers in search of jobs and affordable living. But the state's capacity to build and maintain a transportation infrastructure isn't anywhere close to keeping pace with that growth.

A group of civic and business leaders appointed by Texas Transportation Chairwoman Deirdre Delisi has put a price tag on state transportation costs over the next 22 years. The 2030 Committee estimates Texas will need $313 billion for transportation alone during that period, or more than $14 billion annually. TxDOT's entire budget for 2008 was $8 billion.

The 2030 Committee's findings are largely in line with a report Texas Comptroller Susan Combs issued last year. She found an annual $8 billion shortfall in needed highway, bridge and aviation project investments.

Texas needs more money for transportation, and it can only come from two sources: tolls [i.e. taxes] or taxes. Either way, Texans are going to need to pay for them. And while there's a necessary and proper place for toll projects in transportation planning, the first objective should always be for the state to make the proper investment in Texas roadways.
While the Texas population and the cost for road construction have been growing, the Texas motor fuels tax — which is supposed to fund transportation projects — has been stuck at 20 cents a gallon since 1991. No one likes a tax increase, and no lawmaker wants to propose one. But, the status quo makes no sense.

Gas prices are down from more than $4.00 per gallon this summer to about $1.50. Most consumers wouldn't mind paying a few extra pennies dedicated to transportation infrastructure, especially if they knew it would decrease road congestion and the need for toll roads.

The Legislature should, at the very least, index the motor fuels tax to the cost of highway construction. That way, Texas won't fall any further behind than it already it is. A similar argument can be made for the federal gas tax. The last time it increased was in 1997, from 18.3 cents to 18.4 cents per gallon.

Gas tax indexing isn't an excuse for more fiscal irresponsibility, such as the diversion of one-quarter of the State Highway Fund.

But given the alternatives of doing nothing and tolling more aggressively, it's the least bad alternative and the smartest investment for Texas.

© 2008 San Antonino Express-News:

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Thursday, December 25, 2008

The year in review from Uncle Jay

Merry Christmas!


"This lame duck [Bush] administration is going to force us to let big banks, foreign governments and foreign companies own our roads."

Law allowing privately-built toll roads may lead to higher fees


Copyright 2008

Changes to toll road regulations could make you pay up.

Instead of that money staying here it could go to foreign companies.

In its closing days, the Bush administration is pushing through a new rule that favors private companies building your toll roads.

Local leaders say that's bad for the region and will cost north Texans more to drive.

"I'm furious about it," said state representative Linda Harper-Brown of Irving.

She says public entities, like the North Texas Toll Authority, follow strict rules about toll increases.

Not so, with private companies.

"When it's a private entity that holds that road, then he's going to charge the highest market value for it. He's going to charge as much as he can get," Harper-Brown said.

Harper-Brown is one of many lawmakers - Democrat and Republican - who oppose the federal rule.

It gives private companies the first crack at building toll road contracts.

Currently, toll authorities, like the NTTA, get first dibs on toll road construction projects.

In some cases, a portion of their profit is returned to the region to fund other, free road, projects.

"This doesn't benefit the working Texan, or the working American," said Harper-Brown.

Who does it benefit?

Harper-Brown says big investment banks who lobbied for the new rule.

The banks back multi-billion dollar toll projects because they're so profitable.

She says the Bush administration is doing the banks an obvious favor.

"I'm furious that this lame duck administration is trying to push a rule down on us which is going to force us to let big banks and foreign governments and foreign companies own our roads," said Harper-Brown.

The NTTA opposes the new rule. So do eight other toll authorities in Texas.

They just wrote a letter to the Department of Transportation asking that the rule be withdrawn.


© 2008 WFAA-TV, Inc:

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Wednesday, December 24, 2008

“This is a truly radical rule that sets a dangerous precedent.”

New Federal Rule Requires Public Toll Roads to Mimic Profit Motives of Private Companies

Triggered by Government Reorganization, Ruling Sets Precedent Criticized by Congress

For more articles on "market based" tolling, click [HERE]


The Federation of State Public Interest Research Groups (PIRGs)
Copyright 2008

Last week a little-noticed action was published in the Federal Register that will make it difficult over time for states to keep their toll roads public or to operate them differently from private toll roads.

The final rule, issued by the Federal Highway Administration (FHWA) on December 19th applies to state reorganization or transfer of authority for operating public toll roads to require a market valuation process that would determine what private entities would bid for operating the road under a private concession agreement. The state would moreover be required to charge that market-determined value to the public entity, regardless of whether this is best for the public.

“This is a truly radical rule that sets a dangerous precedent,” said Phineas Baxandall, a Senior Analyst for the U.S. Public Interest Research Group. “Although the rule allows agencies to determine the criteria, it nonetheless dictates that public interest considerations must take a back seat and public entities must operate to maximize market value.”

Previously, public entities could transfer operations to another public entity while giving precedence to public interest concerns. States have transferred operations without raising tolls to levels that a private investor would charge to cover their upfront payments for a toll concession. Under the new rule public-interest-based transfers would need to be justified under market-based valuation.

The House Transportation and Infrastructure Committee chair, James Oberstar and Chairman of the House Subcommittee on Highways and Transit, Peter DeFazio had issued a strongly worded letter in protest of the proposal. They questioned the judgment of the Federal Highway Administration in declaring that its rule did not constitute a regulatory action. The letter closes by saying, “this proposed rule would mark a significant departure from existing federal policy and should be considered through the upcoming reauthorization of the nation’s surface transportation programs, not through a hastily written rule in the final days of this administration.”

According to Baxandall, “If extended to other areas of government, the logic of this action dictates that no public entity can reorganize without mimicking the pricing and financing of private shareholders that would operate to maximize profit. Since private entities currently operate some water works, schools, prisons, security services and even town administrations, none of these public functions could be reorganized without comparing private bids and mandating that public entities charge what a private company would extract based on what the market will bear.”

The U.S. House letter can be viewed here. A U.S. PIRG report on private toll roads can be found here.

© 2008 U.S. PIRG: The Federation of State Public Interest Research Groups (PIRGs):

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Tuesday, December 23, 2008

"The US DOT misused data to suggest the federal motor fuels tax can no longer finance federal investments in highway and mass transit improvements."

US DOT Misreports Gasoline Tax Revenue

Motor fuel excise tax revenue was up $185 million in 2008, not down, contrary to US Department of Transportation claims.

Copyright 2008

The US Department of Transportation (US DOT) has falsely suggested that the nationwide drop in vehicle miles traveled is endangering the revenue source used to maintain America's highway network.

Soaring gasoline prices in the summer and the ongoing recession together forced motorists to cut back substantially on travel, resulting in 100 billion fewer miles being driven in fiscal 2008. Transportation officials seized upon these facts to argue that the gas tax is unsustainable and that the country must quickly shift to tolling to save the highway trust fund.

"As driving decreases and vehicle fuel efficiency continues to improve, the long term viability of the Highway Trust Fund grows weaker," Transportation Secretary Mary Peters said in a December 12 statement. "The fact that the trend persists even as gas prices are dropping confirms that America's travel habits are fundamentally changing. The way we finance America's transportation network must also change to address this new reality, because banking on the gas tax is no longer a sustainable option."

The federal Highway Trust Fund took in $3 billion less in revenue in fiscal 2008 than it did in 2007, and Federal Highway Administrator Tom Madison placed the blame squarely on the gas tax.

"This (drop in revenue) underscores the need to change our policy so American infrastructure is less dependent on the amount of gas American drivers consume," Madison said.

The American Road and Transportation Builders Association (ARTBA) crunched the numbers and found this assertion to be entirely untrue. In fiscal 2007, the US Treasury reported that a total of $29.4 billion was collected from the taxes on gasoline and diesel fuel. In 2008, the total figure grew by $185 million to $29.6 billion. Lower traffic volumes did cause gasoline tax revenue to drop $70 million, but this figure was more than offset by a $256 million increase in revenue from the tax on diesel, which is primarily paid by the commercial trucking industry.

hwy trust fund

These truckers, hit by tough economic times, cut expenses significantly. Sales of new rigs plunged in 2008. That caused a $2.4 billion drop in revenue from the 12 percent tax on the retail sales of trucks and trailers. An accounting change in the way kerosene and similar taxes were transferred ended up showed a paper loss of $722 million from the fund. Together these factors, which are unrelated to the number of vehicle miles traveled (VMT) in 2008, accounted for the $3 billion drop in trust fund revenue.

"The US DOT misused that data to suggest the federal motor fuels tax can no longer finance federal investments in highway and mass transit improvements," ARTBA Vice President William Buechner said. "The data in fact suggest that the federal motor fuels taxes can remain a viable source of revenues for highway investments for the foreseeable future. The trust fund's real problem is not the decline in VMT, but rather the economic slowdown and the fact the federal motor fuel tax rates have not been changed since 1993."

TheNewspaper has previously reported that gas tax revenues have not plunged at the state level. In Virginia, for example, fuel tax revenues were up 2.6 percent in fiscal 2008 (more). Motor carrier fuel tax receipts likewise increased in Illinois (more). At the same time, overall traffic has plunged on toll roads forcing huge increases in the tolling rates to prevent a loss in profit for private investors (more).

© 2008

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“It’s critical we have a place at the table to mitigate circumstances caused by TTC-35.”

East Central school district joins 391 Commission


Nannette Kilbey-Smith
Wilson County News
Copyright 2008

EAST CENTRAL — The East Central Independent School District (ISD) is the newest member of the South Central Texas Sub-Regional Planning Commission, or 391 Commission. District trustees approved membership during the regular board meeting Dec. 16.

Organized by the city of St. Hedwig and officials from Wilson County, the commission serves as a liaison between its member entities and the Texas Department of Transportation (TxDOT). In addition to the founding members and the East Central ISD, the commission also includes the city of Marion and Guadalupe County.

District board President Steve Bryant attended the last 391 Commission meeting in St. Hedwig and told trustees the district could benefit from membership.

“Especially with the Trans-Texas Corridor [TTC-35], which will cut right through our district,” Bryant said. “It’s critical we have a place at the table to mitigate circumstances caused by TTC-35.”

Bryant was impressed with the discussions between TxDOT and the commission’s existing members.

“The attitude of TxDOT toward this commission was much better than their attitude toward the general public when they held their [TTC] meetings,” he said. “I was also impressed with Kathy Palmer, who chairs the commission. She has really done her homework, and TxDOT knows it.”

Board approval to join the 391 Commission was unanimous.

© 2008 Wilson County News:

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Monday, December 22, 2008

Investment bank executives 'pork out' on unaccountable taxpayer bailout

AP study finds $1.6B went to bailed-out bank execs


Associated Press
Copyright 2008

Banks that have their hands out in Washington this year were handing out multimillion-dollar rewards to their executives last year.

The 116 banks that so far have received taxpayer dollars to boost them through the economic crisis gave their top tier of executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007, an Associated Press analysis found.

That amount, spread among the 600 highest paid bank executives, would cover the bailout money given to 53 of the banks that have shared the $188 billion that Washington has doled out in rescue packages so far.

Some banks trimmed their executive compensation in the face of faltering performance that foreshadowed the current economic crisis, but they still granted multimillion-dollar packages. Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

Such bonuses amount to a bribe for executives "to get them to do the jobs for which they are well paid in the first place," said Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services committee.

"Most of us sign on to do jobs, and we do them best we can," said Frank. "We're told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!"

The AP review of annual reports that the banks file with the Securities and Exchange Commission found that the average paid to each of the banks' top executives was $2.6 million in salary, bonuses and benefits.

Among other findings:
  • Lloyd Blankfein, president and chief executive of Goldman Sachs, took home nearly $54 million in compensation last year. The company's top five executives received a total of $242 million. This year, Goldman's seven top-paid executives will work for their base salaries of $600,000, with no stock or cash bonuses, the company said. Last spring, before Wall Street's staggering losses and layoffs mushroomed, Goldman described its pay plan as essential to retain and motivate executives "whose efforts and judgments are vital to our continued success, by setting their compensation at appropriate and competitive levels." Goldman spokesman Ed Canaday declined to comment beyond that written report. The New York-based company, after gains last year, on Dec. 16 reported its first quarterly loss since it went public in 1999. It received $10 billion in taxpayer money on Oct. 28.
  • Even where banks cut back on pay, some executives were left with seven- or eight-figure compensation that most people can only dream about. Richard D. Fairbank, the chairman of Capital One Financial Corp. (COF) (COF), took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options. The McLean, Va.-based company received $3.56 billion in bailout money on Nov. 14.
  • John A. Thain, chief executive of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, came to Merrill Lynch in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he earned $57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options. Like Goldman, Merrill tapped taxpayers for $10 billion on Oct. 28.

The AP review comes amid sharp questions about the banks' commitment to the goals of the Troubled Assets Relief Program, a law designed to buy bad mortgages and other troubled assets. Last month, the Bush administration changed the program's goals, instructing the Treasury Department to pump tax dollars directly into banks to prevent wide economic collapse.

The program set restrictions on some executive compensation for participating banks, but did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution. Banks were barred from giving golden parachutes to departing executives and deducting some executive pay for tax purposes. Some banks are forgoing bonuses and restricting other compensation.

The records detailing last year's pay packages show that personal financial advice was among the executive perks. Wells Fargo of San Francisco, which took $25 billion in taxpayer bailout money, gave its top executives up to $20,000 each to pay financial planners.

At Bank of New York Mellon Corp. (BK), chief executive Robert P. Kelly's stipend for financial planning services came to $66,748, on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said.

Goldman Sachs, paying as much as $233,000 for an executive's car and driver, told its shareholders that financial counseling and chauffeurs were needed so executives would have more time to focus on their jobs.

JPMorgan Chase chairman James Dimon ran up a $211,182 tab for private jet travel last year when his family lived in Chicago and he was commuting to New York. The company received $25 billion in bailout funds.

Banks cite security to justify personal use of company aircraft for some executives. But Rep. Brad Sherman, D-Calif., questioned that rationale, saying executives visit many locations more vulnerable than the nation's security-conscious commercial air terminals.

Sherman, a member of the House Financial Services Committee, said pay excesses undermine development of good bank economic policies and promote an escalating pay spiral among competing financial institutions - something particularly hard to take when banks then ask for rescue money.

He wants them to come before Congress, like the automakers did, and spell out their spending plans for bailout funds.

"The tougher we are on the executives that come to Washington, the fewer will come for a bailout," he said.

© 2008 The Associated Press:

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Grand Theft Economics

Where'd the bailout money go? Shhhh, it's a secret


Associated Press
Copyright 2008

WASHINGTON (AP) - It's something any bank would demand to know before handing out a loan: Where's the money going?

But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it.

"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for J P Morgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?

None of the banks provided specific answers.

"We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.

Some banks said they simply didn't know where the money was going.

"We manage our capital in its aggregate," said Regions Financial Corp. (RF) spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.

The answers highlight the secrecy surrounding the Troubled Asset Relief Program, which earmarked $700 billion - about the size of the Netherlands' economy - to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.

There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money - not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that's happening and there are no consequences for banks who don't comply.

"It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry," said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.

But, at least for now, there's no way for taxpayers to find that out.

Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.

"Those are legitimate questions that should have been asked on Day One," said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. "Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?"

Nearly every bank AP questioned - including Citibank and Bank of America, two of the largest recipients of bailout money - responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.

A few banks described company-specific programs, such as JPMorgan Chase's plan to lend $5 billion to nonprofit and health care companies next year. Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp. (MI) (MI), said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.

But no bank provided even the most basic accounting for the federal money.

"We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.

Others said the money couldn't be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money "doesn't have its own bucket." But he said taxpayer money wasn't used in the bank's recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn't being tracked, Denham said the bank would have made that deal regardless.

Others, such as Morgan Stanley (MS) spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: "We are going to decline to comment on your story."

Most banks wouldn't say why they were keeping the details secret.

"We're not sharing any other details. We're just not at this time," said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.

Heine, the New York Mellon Corp. spokesman who said he wouldn't share spending specifics, added: "I just would prefer if you wouldn't say that we're not going to discuss those details."

The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent.

Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.

"What we've been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we're doing this," Paulson said at a recent forum in New York. "So we're building this organization as we're going."

Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they've spent the money.

"It would take a lot of nerve not to give answers," she said.

But Warren said she's surprised she even has to ask.

"If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn't be in a position where you're trying to call every recipient and get the basic information that should already be in public documents," she said.

Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.

"A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal," he said.
Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in Washington contributed to this report.

© 2008 The Associated Press:

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Sunday, December 21, 2008

Senate Bill 384 would muzzle Gov. Rick Perry's ministry of toll road propaganda

Bill Would Prevent TxDOT From Using State Money To Shape Public Opinion About Toll Projects


By Vince Leibowitz
The Capitol Annex
Copyright 2008

A bill proposed by State Sen. John Carona (R-Dallas) would prevent the Texas Department of Transportation from spending state money to shape public opinion about toll projects, including the controversial Trans-Texas Corridor.

The bill, SB 384, is no doubt in response to significant public outcry back in the summer of 2007 related to TxDOT’s multi-million dollar marketing campaign promoting toll roads and the Trans-Texas Corridor.

At the time, TURF (Texans Uniting for Reform and Freedom), an anti-toll watchdog group, asked Travis County DA Ronnie Earle to investigate whether or not TxDOT broke any laws by using public money in such a way.

As we noted then, while TxDOT’s use of public funds in this was was indeed the wrong thing for a state agency to be doing, it was likely not illegal, since TxDOT is permitted by statute to do some marketing.

Carona’s bill would significantly narrow the statutes related to marketing and TxDOT, allowing the agency only to engage in marketing, advertising, and other activities only relating to the status of pending or ongoing toll projects. Under the present statute, the agency is allowed to engage in marketing, advertising, and other activities to “promote the development and use” of toll roads.

Carona’s bill goes one step further, by specifically not authorizing the agency to engage in marketing or advertising related to influencing public opinion about the use of toll roads or of tolls as a financing mechanism for highway construction.

© 2008 The Capitol Annex:

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