Monday, January 12, 2009

"Privately financed toll roads so far are the only approach lawmakers have agreed to accept."

Texas lawmakers to weigh private road deals against tax increases


The Dallas Morning News
Copyright 2008

Two years ago, lawmakers went to war with Gov. Rick Perry over his push to privatize Texas toll roads, but their efforts to stop the idea largely failed.

As they return Tuesday to launch the 2009 legislative session, lawmakers will be faced with a choice of either raising taxes – which both Perry and Lt. Gov. David Dewhurst have called a bad idea – or giving private companies a greater role in paying for, and operating, a fast-expanding network of toll roads.

The two-year moratorium on private road deals that passed in 2007 slowed but didn't kill Perry's plan to privatize toll roads. Construction on one project is set to begin soon in Austin, and private firms are readying bids in Dallas, Tarrant and other counties across Texas.

And while the state Department of Transportation has officially killed the Trans-Texas Corridor, it hasn't canceled two development contracts with private firms that continue to look for ways to develop hundreds of miles of toll roads.

Moratorium at issue

Lawmakers could stop the practice, or simply extend the partial moratorium, but it's unlikely that they will.

"I see no reason to extend the moratorium, so long as we have leadership at TxDOT we can trust," said Dewhurst, who is president of the Senate. "There is certainly a place for private financing."

TxDOT has pledged to back away from the toll-roads-or-no-roads approach it has favored in recent years, but it remains convinced that without significant private financing, Texas will never come close to building the hundreds of billions of dollars in roads it says the state needs by 2030.

Sen. John Carona, R-Dallas, isn't prepared to accept Perry's argument that privately financed toll roads are good for Texas. But despite emerging as one of the governor's fiercest critics during the skirmishes over the Trans-Texas Corridor, Carona has already filed a bill that would extend legal authority for private road deals until at least 2015.

A top aide said that's because privately financed toll roads so far are the only approach lawmakers have agreed to accept.

"His philosophy is that it is not the best approach," said Steven Polunsky, staff director for the transportation and homeland security committee. "The best approaches have been the ones that have been proven over time."

Carona, transportation chairman, would prefer to impose higher gas taxes on drivers and use that money to let the state build the roads it needs, Polunsky said.

"In the absence of those other methods, you have to do something," he said. "You either starve, or you have these less desirable alternatives, like tolls, and the comprehensive development agreements."

The same calculations are being made in statehouses across the country, where lawmakers from Georgia to Pennsylvania to Florida have either already followed the lead of pro-privatization states like Texas and Indiana, or are considering doing so when they next meet.

And while Democrats in Congress were highly skeptical of the Bush administration's full-fledged support of private toll roads when they gained power in 2006, they have since come to embrace them. House Speaker Nancy Pelosi, for instance, has said they will be part of any transportation finance reform that comes out of the 2009 Congress.

The deals have moved beyond statehouses, too.

In Chicago last month, a consortium of private firms bid $1.2 billion for a 75-year contract to install and operate parking meters on downtown streets. Other cities, including Dallas, are considering public-private partnerships that would involve private companies taking over services that have traditionally been provided by government agencies.

Last week, Mayor Tom Leppert said the city is considering a number of such possibilities but said it's too early to provide details.

Watchdog groups that have monitored Texas' rush to privatization say there are still concerns, even if they concede that some level of private financing is essential for transportation and other areas.

"We're not anti-toll road by any means," said Melissa Cubria, a researcher and spokeswoman for the Texas chapter of Public Interest Research Group, a nonprofit agency that bird-dogs government spending and policy. "But it's just that we want roads that are built with the interest of the taxpayer in mind, not the interest of the private firms who are building them."

Her group wants tougher laws to ensure that the deals TxDOT strikes with private companies are more evenly balanced against the tendency of private firms to exploit every advantage they can.

Expect some noise

Too often, Texas lets companies it contracts with write the rules, watchdog groups have said.

Not everyone is ready to accept the private road deals as inevitable, however.

"We should be cautious," said Rep. Lois Kolkhorst, R-Brenham. "I am not for taking tools out of the toolbox, but I am also not for signing a road away for half a century or longer. ... I started last session by being very focused on the TTC, but the more I was involved in transportation policy, my concern became the private equity deals themselves."

But avoiding deals would require the Legislature to raise taxes to pay for what all sides agree are skyrocketing costs as Texas' biggest cities keep getting bigger and its network of highways and bridges keeps getting older. Carona has promised to push for higher gas taxes this session, and Polunsky said support for that has been growing. So far, however, both Perry and Dewhurst have said they think raising taxes in uncertain economic times is a bad idea.

Either way, one thing is certain, Kolkhorst said: The transportation debate in 2009 will be a lot like the one in 2007 – noisy.

"I give Gov. Perry credit for taking us out of the box, even if his approach was not what we would have liked, and placing transportation on the front burner," she said. "Now that he has put it there, he is going to find that we will come together to create a solution, even if it is not one of his choosing."

© 2009 The Dallas Morning

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