Tuesday, June 30, 2009

"A lot of people really don’t like toll roads.They should have time to make their arguments, and what they say should be given serious consideration"

Texas Legislature’s special session shouldn’t be rushed

perry looting


Fort Worth Star-Telegram
Copyright 2009

To hear Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus talk, you’d think it’s a sure thing that state legislators will complete Friday the special session that begins today. Perry’s agenda is limited, and the state’s top leaders apparently believe dealing with its topics should be a snap. That should make Texans uneasy.

The three agenda items are important issues that lawmakers failed to resolve in this year’s 140-day regular session. So now they’re supposed to polish them off in three days?

Granted, the first agenda item is a no-brainer. Five state agencies (most notably the Department of Transportation and the Department of Insurance) are in sunset review and will go out of business next year if the Legislature fails to act. Perry’s plan is to extend that deadline so lawmakers can continue to look at them during the 2011 regular session.

The two other agenda items are tougher. Maybe a lot of people have made up their minds about what should be done. This Editorial Board mostly favors their concepts. Still, not everyone is convinced — and the specific legislation should not be taken lightly.

For example, one item allows more time for the state to enter into comprehensive development agreements with public or private entities to build toll roads. Legislation adopted in 2007 put a moratorium on these agreements. But there were specific exceptions, some in the Dallas-Fort Worth area. Deadlines for those excepted projects are approaching, and the plan for the special session is to extend them.

Good idea, but if there is anything Texas should have learned, it’s that a lot of people really don’t like toll roads. They should have time to make their arguments, and what they say should be given serious consideration.

The remaining agenda item is far-reaching and has the most potential for serious mistakes. It has two parts.

The first would allow the Texas Transportation Commission to sell up to $5 billion in bonds approved by voters in 2007. The money would be used to improve the state highway system, which sorely needs it.

But the Transportation Department has so little money that it might not be able to pay the interest on that much bonded debt. The plan is to sell only $2 billion in bonds, but even that might be too much. This financial decision is not easy, no matter how much Texas needs more ways to clear up its congested roads.

The second part is even more complicated. The plan is to take $1 billion of the proceeds from bond sales and create the Texas Transportation Revolving Fund. That fund would help public entities throughout the state build more toll roads, using its assets to enhance the credit standing of those entities or to make direct loans on road projects.

The Senate approved this during the regular session; the House did not debate it.

Perhaps the most complicated part: The fund could periodically package up the debts owed to it for its toll-road help and sell it as securities in the private investment market.

That’s what got the nation’s biggest banks in trouble, selling securities based on money owed them. The banks generated more cash, but they thought they had no skin in the game and made questionable loans. When the underlying loans went bad, everything fell apart.

In this case, the proposed legislation says that the fund couldn’t be held responsible if securitized loans went bad. But the whole plan is to use $1 billion to help pay for $5 billion in toll roads.

Setting that up is not, and should not be, a snap.

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