Thursday, July 30, 2009

Another $10.9 billion of debt will boost TxDOT toll road plans for the next two years

Borrowing, stimulus boost TxDOT road plans

Agency expects a record $5.9 billion in construction and maintenance spending in coming fiscal year.



By Ben Wear
Austin American-Statesman
Copyright 2009

The rags-to-riches-to-rags trajectory of state highway spending is about to zag upward again, officials said Wednesday, thanks to a cobbling together of federal stimulus funds, massive new borrowing and some help from the Legislature this spring.

But the surge from the federal stimulus plan and the borrowing will be mostly exhausted over the next two years, leaving the Texas Department of Transportation debt-ridden, once again dependent on flat-to-ebbing gas tax revenue and in need of more help from the Legislature in 2011.

In the 2003-06 period, TxDOT spent $4 billion to $5 billion annually building and maintaining roads. That dropped to $3 billion last year.

But the agency now estimates it will spend a record $5.9 billion on projects in the fiscal year beginning Sept. 1 and $5 billion in the 2010-11 fiscal year, TxDOT Chief Financial Officer James Bass said Wednesday.

Central Texas will benefit along with the rest of the state from TxDOT's financial recovery, temporary though it could be, including:

TxDOT has reaffirmed its commitment to spend about $200 million to complete the Interstate 35/Ben White Boulevard interchange by adding four flyover bridges and also to widen Texas 195 from north of Georgetown to the Bell County line. A contract for the I-35 project should be awarded in October, said Carlos Lopez, TxDOT's Austin district engineer, and the Texas 195 work is expected to occur in 2010 and 2011.

"We all breathed a sigh of relief" when the commission in June decided to borrow another $3 billion of gas-tax-backed bonds, Lopez said, allowing the two projects to proceed.

The Central Texas Regional Mobility Authority is expecting to receive $90 million in stimulus funds and expects an additional $31 million today when the Texas Transportation Commission acts on a state infrastructure bank loan, The authority would use the money to begin the U.S. 290 East tollway project in the coming months.

The area also has been promised another $95 million in stimulus funds for various road and rail projects.

The commission, taking advantage of what have been lower-than-expected contract bids, probably will approve seven more maintenance projects at its meeting today. The additional $6 million in stimulus-funded projects will be used to resurface highways from Llano to Austin to Caldwell County

TxDOT finances have been on a roller coaster this decade.

When Gov. Rick Perry took office in early 2001, the agency was using the pay-as-you-go financial model it had employed since its 1917 founding, using a combination of gas tax and vehicle fees to pay for projects as money became available.

But Perry, aided by the late Ric Williamson as chairman of the Transportation Commission, pushed through changes in state law that will allow the state to borrow about $17 billion for roads.

In addition, Perry and Williamson enlisted private companies to build, operate and profit from building state-owned toll roads, bringing in a handful of large upfront payments.

That private toll road initiative, however, ran into public and legislative resistance in 2007 and has mostly stalled out as public policy. But the financial vestiges — principally a $3.2 billion payment from the North Texas Tollway Authority when it outbid a private group on the Texas 121 toll road — will allow TxDOT to build a number of large projects over the next two years.

The Legislature this spring also authorized TxDOT to borrow $2 billion and pay it back with the state's general tax revenue, rather than with gas taxes.

And it stopped the "diversion" to nontransportation purposes of about $365 million of gas tax revenue every two years, added money for TxDOT that will allow it to borrow an additional $3 billion — it already has sold about $2.9 billion in gas tax bonds earlier this decade — and pay it back over 20 or so years.

All that money, along with $2.25 billion of federal stimulus funds that the agency has already begun spending, will underwrite the gusher of road spending the next two years.

But the agency would need an additional $120 million in the 2012-13 biennium and years to come to make the debt payments on that new $3 billion of gas tax-backed borrowing. And agency officials say they hope that the Legislature in 2011 will authorize another $2 billion of borrowing against the general fund that voters authorized in 2007.

If not, Bass, the agency's chief financial officer, said the squeeze will resume by 2012.

"We're thankful we'll be able to deliver all these projects sooner," Bass said. "But we're also looking at years three, four, five and six and wondering how we'll be able to pay for projects."; 445-3698

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