Wednesday, April 08, 2009

"A state transportation kitty artificially propped up with borrowed money, steeped in debt payments and potentially headed for disaster."


More money for transportation? Not this session

Stimulus cash forestalls changes in how state pays for roads.


By Ben Wear
Austin American-Statesman
Copyright 200

Not much was happening around the Texas Capitol on Feb. 17, but still it might have been the worst day of the legislative session for the Texas Department of Transportation.

That's when President Barack Obama signed the federal economic stimulus bill at a Denver museum, effectively sending $2.25 billion TxDOT's way. That largesse, to a great degree, explains why the financial aspirations of the agency and its supporters for more Texas transportation dollars are foundering this session.

Despite what amounted to a written promise in August by the state's top three leaders to stop sending about $1.2 billion of transportation dollars to the Texas Department of Public Safety every two years, the 2010-11 state budget passed by the Senate last week removes only a tiny slice of that "diversion." Then Tuesday, the House Appropriations Committee, when it approved its take on the budget, chopped away all but a small piece of $2 billion of TxDOT money that was in the Senate version.

Efforts to raise money for moving freight rail lines out of urban areas have generated little momentum this session. And, in what has become something of a trend the past few sessions, efforts have gone nowhere to increase the state's gasoline tax — frozen at 20 cents a gallon since 1991 — or allow it to float with inflation.

The net result of this, some legislators say, is a state transportation kitty artificially propped up with borrowed money, steeped in debt payments and potentially headed for disaster. The state, according to a study released in December, needs to spend about $14.3 billion annually on transportation over the next 22 years.

The Senate's two-year TxDOT budget is $17.1 billion, or about $8.6 billion each year.

"The fact that we only reduced diversions by a mere $21 million tells me that folks here in the Capitol are not yet ready to take this issue seriously," said state Sen. John Carona, R-Dallas, chairman of the Senate Transportation and Homeland Security Committee. "We're about 24 to 36 months from TxDOT basically saying we can't do any new roads."

About 10 percent of the proposed TxDOT budget would go to debt service on roads already built. Another 20 percent or so would be borrowed money. TxDOT until early this decade had no debt — state law didn't allow it — and its income went to operations and construction.

The Legislature's budget chiefs, meanwhile, charged with producing a balanced $180 billion two-year spending plan in a tight economic time, said that given other needs they gave TxDOT what they could.

"We did not think this was the year to be able to change those diversions," said Rep. Jim Pitts, R-Waxahachie. "We came into the session with over a $2 billion shortfall. We didn't have money for textbooks. And there was a hurricane."

Rep. Helen Giddings, D-Dallas, who chairs the appropriations subcommittee that sculpted TxDOT's piece of the budget, explained the decision to leave diversions alone and cut the $2 billion.

"We felt like there was such a nice infusion of funds from the federal stimulus," she said.

In the current two-year state budget, about $1.6 billion from Fund 6, a state bank account fed by gas taxes and vehicle fees, went to parts of state government other than TxDOT. The bulk of that, $1.2 billion, went to the DPS.

In August, with TxDOT balking at selling more road bonds because of the future drain on gas taxes, Gov. Rick Perry, Lt. Gov. David Dewhurst and then-House Speaker Tom Craddick sent a letter urging TxDOT to immediately sell $1.5 billion in bonds. The agency did so.

This came at the end of a year in which TxDOT basically shut down spending on new or expanded roads, both because an accounting error led the agency to believe it had $1.1 billion more than it did and because federal transportation grants had been lower than expected.

Sell the bonds to build roads "through the fall and spring," the three leaders wrote, "until we can work with other elected officials to provide additional solutions." That included, the letter said, a plan "to end the practice of funding the Department of Public Safety with gas taxes that are needed for road construction."

Sen. Steve Ogden, R-Bryan, chairman of the Senate Finance Committee and thus the Senate budget guru, said the Legislature can't be held to a commitment made before the financial earthquake of last fall.

"When that letter was written, the stock market was at about 11,000 and we weren't in a giant recession," Ogden said. "There's a lot of things that have changed. We wrote a good budget for TxDOT."

The Senate version of that budget is about 2 percent below the authorized spending in the current budget cycle. An exact number for the House version wasn't available. But without the House's preferred cut of $2 billion — to be borrowed under a 2007 state constitutional amendment and paid back with general state revenue rather than gas taxes — TxDOT would see a budget cut of more than 11 percent.

The Senate and the House, which is expected to vote as a full body on the budget at the end of next week, will work out their differences in a conference committee, so it is likely that at least some of that $2 billion would be restored.

"More and more of the 'money' you're seeing going to TxDOT is borrowed," said Sen. Kirk Watson, D-Austin. "At some point, we're not going to be able to borrow any more money.", 445-3698

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