Saturday, July 03, 2010

With more than $7 billion in debt and a recession that has depressed overall traffic, NTTA hammers drivers with huge fines to recoup their losses.

Camera system's flaws cost tollway authority millions in lost revenue


The Dallas Morning News
Copyright 2010

Hundreds of thousands of drivers are getting a free ride on area toll roads even as tollway authorities hammer others with huge fines to recoup their losses. The reason: The costly camera system that is fast replacing human toll-takers routinely fails to identify customers who use the roads without a TollTag. As a result, 28 percent of drivers without TollTags are never even billed.

That means North Texas Tollway Authority leaves a big pool of money on the table each year – a sum its officials have gone to great, and controversial, lengths to recoup.

How big? In 2010, the authority expects customers without TollTags to rack up 80 million tolls worth $64 million. With 28 percent never billed, mainly because of NTTA's inability to match images from the cameras to valid addresses for the vehicles' owners. NTTA will lose $17.9 million in uncollected – and unbilled – toll revenue.

That's more than offset, officials say, by reduced operating costs as the last of the toll booths are eliminated by the end of the year. And, they believe the TollTags that 80 percent of their customers now have will make using their roads easier and bring more revenue.

But for now, with more than $7 billion in debt and a recession that has depressed overall traffic, NTTA finds itself under pressure to recoup as much of that lost revenue as possible.

So far, it has found no way to make the cameras more successful. And its efforts to persuade customers to sign up for TollTags – which involves paying tolls before incurring them – have fallen short of expectations.

Some drivers who were never invoiced say they called and asked to pay – and still didn't get a bill.

"I have found the system without tollbooths very confusing as a visitor to the area," said Mary Ann Appling, who comes to Dallas often with two children in nearby colleges.

"The first time I realized I was accidentally on a toll road without paying, I panicked. Being unfamiliar with the system and expecting a tollbooth, I had no idea what to do next. I expected an officer to start following me, but it never happened.

"I called the toll authority and they told me I would get a bill," she said. "It never arrived."

'Positive transition'

NTTA spokeswoman Sherita Coffelt said despite the billing problems, the switch to electronic tolls has benefited drivers, making the roads safer, traffic faster, and the air cleaner – all due to the fact that drivers no longer have to stop every few miles to pay.

"Overall it has been a positive transition," she said. "We've seen a 13 percent reduction in accidents on the Bush Turnpike while usage has steadily increased. And travel time, too, has been reduced."

She said NTTA will save $10 million in annual operations and maintenance expenses as well.
NTTA's problems with the cameras aren't unique, but they do seem more severe than some other agencies. The Texas Department of Transportation uses cameras to identify about a fifth of its customers on three roads near Austin. Of those, 13 percent are never sent bills, said spokeswoman Karen Amacher.

NTTA knew the cameras wouldn't work all the time and expected them to occasionally fail. But in the two years since it began phasing in the new cameras, failures have been much worse than anticipated. That's partly because the state address database often proves unreliable.

But the collections problems associated with the new reliance on the cameras goes well beyond troubles with outdated addresses. In fact, the $17.9 million that NTTA misses because of the faulty camera system is only the beginning of the hassles brought on by NTTA's $92 million conversion to all-electronic toll collections.

Even among the customers the cameras do identify, only 39 percent pay on time. An additional 29 percent pay after late fees or higher administrative fees are assessed.

But fully one out of every three of the customers sent bills simply refuses to pay. They can quickly find themselves dealing with collection agencies and penalties that turn small toll debts into bills worth hundreds or even thousands of dollars.

They have plenty of company. This year, for instance, NTTA expects to sic collection agencies on more than 400,000 drivers.

And while NTTA leaders point out the obvious – if these drivers simply paid on time, they'd avoid the collections hassles – many drivers dispute the agency's claim that they received a bill.

Together these delinquent accounts represent $14.7 million in unpaid tolls. But once the collection firms add on stiff penalties, they have the right to collect debts worth a total of $277 million.

Collections policy

The NTTA's nine-member board has voted to keep its collections policies intact, though it has reduced the fees customers must pay if they settle within 75 days – the point at which debts go to collection firms.

One board member who has consistently disagreed is vice chairman Victor Vandergriff of Tarrant County.

"I think the concept of the electronic tolls is good," said Vandergriff, noting the convenience for TollTag users and the operational savings for NTTA.

"But I am still troubled by the rate of uncollected tolls, the reported rates of the camera failures, and the administrative fees program in generation. I am concerned that perhaps those who are paying are paying far more than they should to offset what we are not getting from those who don't pay [or aren't billed] at all."

As scary as the soaring fees can be for the drivers who refuse to pay, the news is equally depressing for NTTA.

NTTA says 4.1 percent of the total will be collected this year. Once the firms take their commissions, which average 19 percent, NTTA will recoup just $9.2 million.

© 2010 The Dallas Morning News:

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Friday, July 02, 2010

"Being a crony of Perry is a very profitable endeavor, because, as a career politician, he takes care of his friends as they take care of him."

Perry picks former aide to 'modernize' TxDOT


The Houston Chronicle
Copyright 2010

AUSTIN — Gov. Rick Perry's former chief of staff will be paid more than $303,000 over 14 months, plus benefits, to help modernize the Texas Department of Transportation, according to an interagency contract signed Friday.

Jay Kimbrough, who previously served as Perry's go-to person to lead reforms at the Texas Youth Commission after an abuse scandal, has been special adviser to the Texas A&M University System Board of Regents. He also served as Perry's homeland security director and was deputy attorney general for criminal justice under Texas Attorney General Greg Abbott.

Kimbrough emphasized that his 12-month base salary of $260,000 will remain the same as it was for being special adviser to the A&M regents: "I ain't getting a raise."

He said of his new post, "The data is there. We've got to make sure that the Legislature and the leaders can make the decisions based on a clear and accountable discussion of what the data is."

Rocky times recently

His salary of $303,338 and benefits totaling $58,787, including health insurance, are detailed in a $385,481 interagency contract between TxDOT and the Texas Transportation Institute at Texas A&M. The contract ends Aug. 31, 2011.

The funds will come from TxDOT's administrative budget, agency spokesman Chris Lippincott said.

TxDOT has 12,000 employees and has gone through rocky periods with lawmakers and members of the public. A report in 2008 by the Sunset Advisory Commission staff found concerns that TxDOT was "out of control" in the wake of controversy over planned public-private partnerships on toll roads, the now-fizzled Trans-Texas Corridor transportation network and questions about finances.

Critical of pick

Democratic gubernatorial candidate Bill White's campaign, which has accused Perry of a politically-driven governing style that rewards friends who help him, seized on Kimbrough's appointment as another example.

"Being a crony of Perry is a very profitable endeavor, because, as a career politician, he takes care of his friends as they take care of him. Perry has frequently called on Kimbrough to clean up his messes, from sexually abused children to massive fiscal mismanagement. Perhaps Kimbrough's first step at TxDOT will be to purchase a calculator so he can avoid billion-dollar accounting errors," said White spokeswoman Katy Bacon, referring to a $1 billion accounting error uncovered by a 2008 audit of the agency.

A prominent Democratic House member, Transportation Committee Chairman Joe Pickett of El Paso, expressed confidence in Kimbrough, saying he "has got a reputation for turning stuff around. He's done this many times before, and I have a lot of confidence in him."

© 2010 The Houston Chronicle:

Former Perry aide, corporate lawyer to head TxDOT overhaul


By Ben Wear
Austin American-Statesman
Copyright 2010

The reconstruction of the Texas Department of Transportation took on two experienced architects Friday.

Jay Kimbrough , a former chief of staff for Gov. Rick Perry, will be paid almost $360,000 in salary and benefits over the next 14 months to run the day-to-day operations of a small team being assembled.

Howard Wolf, who retired from the Fulbright & Jaworski law firm in 2003 after 44 years and is acting chairman and general counsel of Falcon Seaboard Co., a corporation owned by Lt. Gov. David Dewhurst , will assume more of a chief executive officer role, officials said.

Wolf, 75 , is serving as a volunteer and will not be paid a salary.

Their task: Take the voluminous analysis and recommendations of a recent, 627-page management review of TxDOT, as well as earlier critiques by the Texas Sunset Advisory Commission and various auditors, and make genuine change at the agency in charge of Texas highways, airports, rural transit and ferries.

Given the $2 million cost of that management review released in late May, Kimbrough's compensation and what will be paid to other team members, managing an overhaul of TxDOT could cost something close to $3 million. Bill Meadows, who serves on the five-member Texas Transportation Commission, which brought on Kimbrough and Wolf, said it would be money well-spent. Meadows said although the agency's district offices do yeomanly work building and maintaining transportation facilities, he has been less satisfied with what's going on at the top.

"My frustrations have really been more management, vision, direction," Meadows said. With money drying up for TxDOT, Meadows said, "we better be creative, we better be innovative, we better be open. My experience is that we are not always there."

Kimbrough, 62 , has specialized over the past 15 years in parachuting into troubled Texas government bureaucracies and, through an aggressive management style appropriate to his early adulthood as a Marine, making things change. Aside from his most high profile jobs, serving as conservator briefly of the Texas Youth Commission in 2007 and as Perry's chief of staff in 2008 and 2009 , Kimbrough also intervened at the Texas Commission on Alcohol and Drug Abuse, the Texas Commission on Private Security and, most recently, the biodefense program at Texas A&M University. Until this hiring Friday by TxDOT, he was a special adviser to the A&M board of regents.

Kimbrough has "a great track record," said state Rep. Joe Pickett, D-El Paso , chairman of the House Transportation Committee. "I know the guy. He's not going to take any (guff) from anyone, including me."

Wolf, aside from his long and varied service as a partner with Fulbright & Jaworski, has served on a number of corporate boards over the years, often as chairman. He has been in private law practice in Austin since 2004 . He served two terms on the Sunset Advisory Commission, starting in 2003 , as a Dewhurst appointee.

The massive review of TxDOT by Grant Thornton , one of the six largest accounting firms in the world, cited TxDOT's insular culture of engineers — overwhelmingly with degrees from the University of Texas and Texas A&M — as "a tremendous strength, but also can act as a tremendous inhibitor to internal change and to the ability to understand, accept and respond to an evolving external environment."

© 2010 Austin American-Statesman:

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“If he doesn't want to debate, he should just say so instead of playing games like a typical career politician."

Governor hopefuls — but not Perry — will debate


By R.G. Ratcliffe
San Antonio Express-News
Copyright 2010

AUSTIN — The first debate in the Texas governor's race in this year general election will involve a pair of Houstonians in Kerrville on Monday — minus Gov. Rick Perry.

Democratic nominee Bill White and Libertarian Kathie Glass, both lawyers, are scheduled to face off in a Kerrville Area League of Women Voters debate at 7 p.m. at the Cailloux Theatre there.

The debate can be called a statewide event, in that anyone who wants to go to the KVHC-TV web site can watch it.

Kerrville Area League President Donna Robinson said Perry was invited but turned it down. Robinson said Perry can still show up Monday if he wishes.

Perry spokesman Mark Miner said the governor will not debate White until White releases his personal income tax returns for the years when he was assistant U.S. secretary of energy and Texas Democratic Party chairman, a period covering the mid-to-late 1990s. White has released his returns for the years when he was Houston's mayor.

“We will discuss debates when Bill White comes cleans with the people of Texas and releases his tax returns for his years on public service,” Miner said.

White spokeswoman Katy Bacon said Perry is just playing games to avoid a debate.

“Next he'll be asking for Bill's tax returns when he was running concession stands as a teenager, or saying he'll only debate if Glenn Beck is the moderator,” Bacon said. “If he doesn't want to debate, he should just say so instead of playing games like a typical career politician. “

Glass favors states rights, nullification of federal laws by the states if they consider them to be unconstitutional, an elimination of the public school property tax and state payments for Medicaid. Glass said Perry talks about states rights and less government spending, but “he really doesn't believe in it.”

Southern Methodist University political scientist Cal Jillson said White's decision to debate Glass is a “mixed bag.”

It gives White the opportunity to promote a candidate who might draw votes from Perry in the general election and highlight the fact Perry will not debate.

But Jillson said it also “caters to the idea that they are a little frantic and are taking the eye off of the ball, which is Rick Perry.”

© 2010 San Antonio Express-News:

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Tuesday, June 29, 2010

"Gov Perry has found another way to get his hands on retirees' pension money to enrich his toll road buddies at Zachry."

Texas teacher retirement funds invested in risky toll road schemes


Terri Hall
Copyright 2010

We warned it was going to happen last year, and here we are. Rick Perry, who has the dominant role in selecting the Board of Trustees of the Teacher Retirement System (TRS) pension funds, has long been laying the groundwork to raid this massive source of public funds to invest in risky toll deals. Perry along with Senator Steve Ogden, Lt. Gov. David Dewhurst, and then Speaker Tom Craddick hatched a plan to raid the funds in 2008 by establishing a "revolving fund" to loan money to toll roads that the private market won't touch and fund themselves.

When the retirees along with the grassroots defeated that bill during Perry's called special session last summer, it seemed the pension funds were finally safe, albeit temporarily. So Perry has found another way to get his hands on retirees' pension money to enrich his toll road buddies at Zachry.

Though its cloaked as an $800 million real estate investment, an announcement published in Euromoney Institutional Investor Online on June 25 states the purpose is to invest in infrastructure. Part of it goes directly into Zachry American Infrastructure, which is a direct investor in the Trans Texas Corridor TTC-35 and Trans Texas Corridor TTC-69 projects. Both deals use public private partnerships (PPPs) and involve risk, especially since SH 130, the first toll road that's a leg of TTC-35 is so empty that a plane landed on it during "rush hour" traffic!

TxDOT has been discussing ways to increase traffic on SH 130 for over a year. In fact, the taxpayers will subsidize that losing project for all 40 years of the bond debt to the tune of $1 BILLION.

Even though these PPPs are sweetheart deals that GUARANTEE the private operators never lose money, they are still going bankrupt all over the country due to overblown traffic projections that fail to show-up and pay-up. Today's version of toll roads are based on what amounts to pure speculation with little science and lots of manipulation to convince investors toll roads are a sure thing, since they're government-sanctioned monopolies.

The South Bay Expressway in San Diego and the South Carolina Greenville Southern Connector bankruptcies are just two recent examples of failed projects. This doesn't bode well for retirees who rely on their pensions for daily necessities. Who's going to bail them out and will there be enough taxpayer money to do so given the $12 billion in toll road debt that the State has already incurred under Perry?

In other news... Canadian economist condemns road privatization

The latest in a string of critics to condemn public private partnerships (PPPs) is Canadian economist John Loxley, whose new book, Public Service, Private Profits, exposes the truth that PPPs amount to taxpayer rip-offs.

A review by Canada's Chronicle Herald says this of the book: "Loxley and his research team succeed in amassing a mountain of evidence to prove their essential thesis that P3s are generally a bad deal -- more costly to build, less accessible to the public, and of poorer quality than their traditional public sector counterparts...The book ends, predictably, with an overview of the case studies arguing that the risks far outweigh any advantages."

To read the review, go here.

© 2010

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Sunday, June 27, 2010

Public Private Partnerships: "More costly, less accessible to the public, and of poorer quality than their traditional public sector counterparts."

Economist condemns P3 projects

Loxley sheds light on murky world of public/private partnerships


The Halifax Herald
Copyright 2010

The acronym P3 has almost become a dirty word in some circles. It stands for public-private partnerships but many see this as code for "privatization" of our public services. Michael Moore’s 2007 hard-hitting feature film Sicko, the startling Nova Scotia auditor general revelations about shoddy P3 financing deals, and a spate of Canadian Union of Public Employees studies have all alerted us to the potential dangers such deals pose to our life, health and pocketbook.

The public debate around P3s is so politically radioactive that few have attempted a thorough, research-based analysis of the topic, until now. That is why John Loxley’s new book, Public Service, Private Profits, is such a welcome contribution. Written by one of Canada’s leading critical economists, assisted by Salim Loxley and a team of researchers, it delves deeply into P3s as a mode of delivering services through 11 different case studies.

It’s a detailed, heavily documented book where few stones are left unturned.

Today, it’s hard to imagine that P3s were once all the rage, favoured by governments at every level across Canada. Beginning in the 1990s, governments jumped on the bandwagon looking to proceed with major capital projects at a time of severe budget restraint by entering into ingenious long-term financing schemes and buying into private sector promises of greater cost efficiencies. Promoters of P3s and a new breed of private developers seized upon the idea as a panacea and vocal critics denounced the schemes as essentially "deals with the devil."

Partnership deals popped up in Atlantic Canada virtually everywhere — from schools, bridges, and water treatment plants to social services and hospital catering. In the case of schools, social and hospital services, New Brunswick led the way with its first P3 project, the Evergreen Park School, Moncton, initiated in 1994 and opened in September 1996. While Nova Scotia was slower off the mark, the John Savage Liberal government embarked on P3 school projects with tremendous zeal, initiating or proposing the joint construction and management of some 38 otherwise publicly funded schools.

Most of the joint projects or service agreements initiated are now coming under much closer public scrutiny. Loxley and his research team succeed in amassing a mountain of evidence to prove their essential thesis that P3s are generally a bad deal — more costly to build, less accessible to the public, and of poorer quality than their traditional public sector counterparts.

Loxley provides a tremendously valuable, detailed analysis of the nature of public private partnerships and identified the seven most common types from service operations and maintenance contracts to various forms of design-build-operate schemes. The murky world of P3 economics and financing, as well as all of the potential risks, is rendered understandable. We are also treated to a comprehensive review of federal and provincial policies since the 1990s aimed at advancing such projects.

Those seeking a serious analysis of P3 contracts and schemes will not be disappointed. Loxley and company do provide a debatable comparative analysis of whether "value for money" was achieved, using public sector comparators. The book also offers fascinating detailed studies of 11 case studies drawn from a cross-section of areas: schools, social services, hospitals, hospital services, bridges, roads, water, and waste treatment. The book ends, predictably, with an overview of the case studies arguing that the risks far outweigh any advantages.

Loxley’s book identifies the Frank McKenna’s New Brunswick government as an early champion. The province’s largest P3, the Fredericton-Moncton Toll Highway, is recognized as the model P3, but Loxley blames the tolls for the successor government’s 1999 election defeat.

Nova Scotia’s foray into the construction of P3 schools comes in for scathing criticism. "Nova Scotia," the book states, "actively pursued P3 arrangements without developing a well-articulated policy toward them," and the "hasty approach" led to "a number of questionable deals." Prince Edward Island, the most cautious Maritime province about P3s, gets off lightly.

The senior author, a respected University of Winnipeg economist, has produced a book written from a politically engaged, explicitly left perspective. He and his researchers do not care for P3s in any way, shape or form, and that it is clear on every page.

Yet the author team avoids, for the most part, the overheated rhetoric found in the CUPE studies. Thankfully, we are spared, for once, a repeat of that overworked Greg Malone quotation lambasting P3s as "P12s" dedicated to "plundering our planet." On the other hand, one might have wished that Loxley had paid more attention to Finn Poschmann’s 2003 C.D. Howe Institute study, since it would have demonstrated more openness to conflicting research findings.

Setting aside those mild reservations, Loxley’s Public Service, Private Profits lives up to its publisher’s advance notice. It’s truly a "critical book for critical thinkers."

When it comes to such a hot button issue, it remains virtually impossible to find safe middle ground, especially here in the Maritimes. It is one book that will appeal to both critical readers and public service zealots alike, and that’s a rare accomplishment.

Paul W. Bennett is director of Schoolhouse Consulting, author of The Grammar School (Formac 2009), and operates EduBlog and Eduwatch at

© 2010 The Halifax Herald:

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