Friday, March 18, 2011

El Paso Times poll shows that most people do not plan to use the toll lanes

El Paso toll road going to bid


by Diana Washington Valdez
El Paso Times
Copyright 2011

The first toll-road project in El Paso County, planned for the César Chávez Border Highway, will go to bid next month, state Transportation Commissioner Ted Houghton said Thursday.

"The project is going to bid (tentatively) on April 6 in Austin," Houghton said.

The work involves the construction of two new toll lanes, one in each direction, and the reconstruction of the highway's four existing lanes, about 8.7 miles from U.S. 54 to Zaragoza Road.

When the project is completed, the lanes will serve as an alternative for East Side commuters who now use Interstate 10 to travel to and from Downtown.

"That will be your first managed-lane toll road," Houghton said. "If you don't like the Interstate 10 highway, then you have the alternate route, and that alternate route is the toll road, if you want to take it."

According to El Paso's Comprehensive Mobility Plan, the project cost is estimated at $80.2 million. Texas Proposition 14 bond funds will cover $74 million, and federal earmarks an additional $6.2 million. It is expected to be completed in 2013.

Eduardo Calvo, a Texas Department of Transportation official in El Paso, said the toll fees for El Paso will be decided within the coming week and construction could begin by late summer.

"It will be a totally electronic system with no booths or baskets for coins," Calvo said. "The tolls will be different for peak and off-peak periods. The revenues raised here will stay in the region."

The El Paso toll road will use a non-cash system and will be part of the TxTag system used in other parts of the state.

In the Austin area, tolls range from 66 cents with a state TxTag account and sticker to $1.50 cash to use certain toll roads or sections of toll roads. In other urban areas of Texas, toll fees have raised millions of dollars.

"The toll-road project is innovative for us because it looks to the future," said Roy Gilyard, executive director of the Metropolitan Planning Organization. "Everyone knows there are not enough funds to pay for all our transportation needs. This is one of several projects that we have planned to improve our mobility throughout El Paso."

A previous El Paso Times poll showed that most people did not plan to use the toll lanes, but motorists will have the option of using the express toll road or the non-toll part of the Border Highway.

Diana Washington Valdez may be reached at; 546-6140.

© 2011 El Paso Times:

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Thursday, March 17, 2011

Debt-laden tollway authority's 'complex financing' deal with TxDOT "could cost toll-payers up to $100 million in extra interest charges."

NTTA says U.S. government delays have upped toll road cost by ‘untold tens of millions’

NTTA bubble


The Dallas Morning News
Copyright 2011

Federal delays in approving a low-cost loan of $423 million to build State Highway 161, tentatively awarded more than a year ago, could cost toll-payers up to $100 million in extra interest charges, officials said Thursday.

“Rome is burning with Nero fiddling nearby,” North Texas Tollway Authority chairman Victor Vandergriff said, adding that delays by the U.S. Department of Transportation were responsible for “untold tens of millions of dollars” in higher interest, plus several million more in fees to lawyers and other advisers.

Federal officials have said the added time is needed because of the complexity of the financing.

In February 2010, the Obama administration tentatively awarded NTTA a special, government-backed loan the authority had requested to speed up construction of Highway 161 in Dallas County.

The news was greeted with excitement at NTTA and in Dallas and Tarrant County, where elected officials immediately said that by reducing its financing costs for the $1.2 billion Highway 161, NTTA would now be able to afford a second toll road as well.

That second road, the Southwest Parkway in Tarrant County, would be the first toll road NTTA has built in Tarrant County. At the time, several board members had said they would not vote to advance either project without finding a way to do both.

Just days after the federal loan was announced, NTTA voted 8-1 to advance Highway 161 and made a tentative agreement to also build Southwest Parkway and the Chisholm Trail project in Tarrant and Johnson counties, where some construction work has already begun.

The approval was hinged not just on the federal loan, but also on a second bit of financial wizardry — a first-of-its-kind deal with the Texas Department of Transportation, in which the state pledged to cover yearly debt payments if NTTA was unable to do so.

It’s that deal with the state, which itself took dozens of meetings to finalize, that has given the federal government pause as it considers granting final approval for the promised loan.

NTTA’s top financial advisers told board members Thursday that only two differences remain to be resolved, and said a deal could be finalized within a week.

Board members said Thursday that without a final approval by the federal government within a week or so, they are prepared to move forward without the loan. While the project has been on hold, interest rates have gone up and made the project as much as $100 million more expensive than anticipated a year ago, officials said.

Moving forward without the loan would add yet more costs, however. It could make building the first road $150 million more expensive, and put NTTA’s ability to do the second road “at significant risk,” Vandergriff said.

NTTA executives said members of Congress had already raised the issue of the loan with Transportation Secretary Ray LaHood.

“Your problem is now with bureaucrats who are going to do it their way, come hell or high water,” said Janice Davis, NTTA chief financial officer.

At issue: The federal government tentatively awarded NTTA a $423 million low cost loan 13 months ago, but has yet to finalize the deal.

At stake: Without the loan, the cost of the Highway 161 toll road could jump $150 million, and put at risk NTTA’s ability to finance Southwest Parkway in Tarrant County.

Waiting: In addition, NTTA owes the Regional Transportation Council $458 million, plus interest, in payments promised as part of the deal that gave NTTA the right to build 161. That money can’t be spent until financing for the road is complete.

© 2011 Dallas Morning News:

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Wednesday, March 16, 2011

"Even though Texas' $27 billion budget shortfall is among the worst in the nation, Perry says Texas remains an example for other states."

Texas Economic Miracle Beginning To Tarnish


The Huffington Post
Copyright 2011

AUSTIN, Texas — Some in Texas had talked tough about solving the state's budget problem by austerity alone, but lawmakers finally faced a hard fact: Texas is in serious financial trouble.

The severity of the state's $27 billion budget crisis was evident in the furrowed brows, sad eyes and pained expressions of legislators. They fidgeted in their seats as hundreds of teachers, parents and disabled people explained in testimony in recent weeks how proposed budget cuts would ruin their lives.

Legislatures elsewhere are facing budget problems, but most are blending cuts with asset sales, increased fees and tax modifications to soften the impact. Texas prides itself on lean government so Republicans here promised to solve the crisis here by budget cuts alone.

Then rhetoric hit reality this week. The result was the latest and most vivid example of a state taking steps it had fiercely resisted.

The Republican committee chairman's southern accent turned plaintive as he urged legislators who had campaigned on preserving the state's $9.2 billion Rainy Day Fund to now break that promise to ease the budget pressure.

"If you want to close this shortfall through cuts alone, you have to either (completely) cut payments to Medicaid providers, cut payments to school districts or lay-off a substantial number of state employees," said state Rep. Jim Pitts, chairman of the House Appropriations Committee. "You would have to do these things immediately."

Magnifying the difficulty of the move here was that Pitts and other conservatives knew they had to get the state's – and perhaps the nation's – most outspoken advocate of budget cutting -- Gov. Rick Perry -- to climb down from the no-spending pledge with them. It took a week of convincing, but Perry, Lt. Gov. David Dewhurst and Speaker Joe Strauss – all Republicans – issued a statement on Tuesday approving a $3.2 billion withdrawal from the reserve fund to plug the budget hole, in addition to making $1 billion in cuts.

That deal will solve the budget problem – until Aug. 31. Lawmakers still need to cut another $23 billion from the next two-year budget.

"In other words, the state only has about three-fourths of the money it needs to continue doing what it is doing now," explained F. Scott McCown, director of the Center for Public Policy Priorities, an advocacy group for the poor. "And every single thing the state does now is something that the governor previously agreed it ought to be doing."

Several months into the current legislative session, the government fiscal crisis across the nation is proving as difficult for states with a tradition of austerity as for those more accustomed to spending. Other conservative states are struggling with how to pay for keeping tough-on-crime corrections policies in place.

Perry, the state's longest serving governor, has signed every budget over the last 10 years and praised lawmakers for spending only what's necessary. Last week lawmakers pressed Perry's budget experts to help cut $4 billion from the current budget, but neither side could reach the goal.

So Perry relented, but his support for tapping the Rainy Day Fund now came with an ultimatum about the budget that begins Sept. 1.

"I remain steadfastly committed to protecting the remaining balance of the Rainy Day Fund, and will not sign a 2012-2013 state budget that uses the Rainy Day Fund," Perry warned. So the dilemma may return.

The Texas Public Policy Foundation, one of the most influential conservative groups in Texas, opposed this week's concession and will fight any future solutions involving spending.

"We are disappointed to learn that Texas will likely resort to using its Rainy Day Fund this early in the legislative session," said Talmadge Heflin, director of the group's Center for Fiscal Policy. "Those who seek to empty the fund because it is raining today have not checked the long-range weather forecast."

That Republican leaders' posture in the financial crisis came in stark contrast to their campaign rhetoric.

"Texas is better off than practically any state in the country," Perry said in September, well after the coming problem was identified. When asked about the budget deficit in December, Perry dismissed the question as speculative.

Even though Texas' budget shortfall is among the worst in the nation, Perry says Texas remains an example for other states.

Last week, he touted a Federal Reserve Bank statement forecasting that Texas could add more than 264,000 jobs in 2011. Proposed budget cuts, though, could lay-off 100,000 school employees, 60,000 nursing home workers and eliminate 9,600 state jobs this year.

Democrats question why Perry and Republican lawmakers would tap the Rainy Day Fund to pay bills to creditors due in August, but not to save jobs.

Using the fund, which is made up of revenue from oil and gas taxes, could "mitigate the cuts to our children's education, the zeroing out of pre-kindergarten, the zeroing out of college scholarships for all freshman starting in 2012 and 2013," Democratic state Rep. Mike Villarreal said.

But there is little for Democrats to do. Republicans hold every statewide office in Texas, two-thirds of the state House seats and 19 out of the 31 seats in the Senate. The main political division is between veteran conservatives and ultra-conservative Tea Party Caucus members.

State Rep. Debbie Riddle, a caucus member, said her constituents expect her to slash state spending. In the end, though, she voted to spend the Rainy Day Fund.

"I don't think there is one of us ... who has not had our heart hurt and even broken in two with a lot of the testimony we have heard," she said. To tap the Rainy Day Fund "is a long step for me, and I imagine it is for others here, too."

Pitts, the appropriations committee chair, acknowledged that making $23 billion in cuts for the next budget would be devastating. Pitts said. He added that he has a plan that he doesn't want to make public yet. But if it involves the Rainy Day Fund, the question will be whether he can rally enough conservative support for it when the time comes.

© 2011 The Huffington Post:

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Tuesday, March 15, 2011

"If we continue down the infrastructure privatization road, we will learn that the real price is lost democracy and true freedom of choice."

The Toll Road to Serfdom

Toll road to serfdom


By Ellen Dannin
American Constitution Society
Copyright 2011

If you want to experience a real disconnect, find out how highway privation actually works and then read the glowing raves by infrastructure privatization boosters.

They claim that privatization transfers risk to the private contractor, while providing high quality infrastructure that a cash-strapped public cannot otherwise afford. They say that the public will have easy drives with new roads and new lanes, all assisted by the installation of the latest tolling and messaging technology.

But when you look into the history and details of infrastructure privatization, reality differs.

Take the story, "Public project, private risk: Virginia looks to partnerships to tackle major jobs" that praises the 1995 California State Route 91 private toll lanes built in the median of a public road. Those private lanes have a troubled history that is still relevant to today's privatized infrastructure. The SR 91 deal forbade the state from doing repairs and maintenance on the public lanes in order to herd drivers to the private toll lanes. As the public lanes were left to deteriorate, potholes led to car damage and dangerous road and, eventually, public anger that toppled politicians.

Today's deals still include similar terms intended to make the toll road drivers' only alternative. Commonly found "noncompete" terms forbid building or improving "competing" road or mass transit systems. They may also require what is called "traffic calming" but which means by narrowing lanes or making other changes to make alternative routes unpleasant or less useful.

Other contract terms require that the government "partner" compensate private contractors for "adverse actions," such as promoting car pooling to lower air pollution and urban congestion that could affect revenues. For the next 40 years, the HOT lanes contract with Transurban of Australia and Fluor Corporation of Texas requires Virginia to reimburse the private companies whenever Capital Beltway carpools exceed 24 percent of the traffic on the carpool lanes - or until the builders make $100 million in profits.
Infrastructure privatization proponents often tout their high-tech innovations, such as embedded sensors to monitor road conditions, communication cables, wireless networks, and flashing electronic signs to warn drivers about traffic volume and accidents, and the use of transponders to debit accounts. They also tout using variable tolls that rise during rush hour as promoting choice. However, because the contracts last generations and forbid competition, defined broadly, they will severely limit transportation innovation and public choice in the US.

The article also says: "The private companies are assuming heavy financial risk upfront." But the reality is that the public bears the greatest financial risk. For the 50, 75, or 99 year life of the contract, we the people must be concerned that our state and local governments take any actions that could be claimed to compete with a private road or be an adverse action affecting the private contractors' revenues - no matter how much they would benefit the public. Just as concerning is that the prospect of facing decades of worry about violating the contracts and fighting claims means that governments will try to buy out the private contractors. We have no idea how that process would unfold and what that price might be.
Freedom of Information Acts require governments - but not private entities - to provide information the public requests. However, increasingly, infrastructure privatization contracts are not made public. When I requested a copy of the now bankrupt San Diego South Bay Expressway (SR 125), I was told it was not available to the public.

According to the story, "The [toll road] companies plan to pay down the debt through tolls collected on the Beltway." However, tolls are not the only source of financing used to fund private infrastructure. The story not only overlooks revenue from adverse action and noncompeting claims, it omits the important role of tax breaks to the private contractors. Those tax breaks include highly accelerated amortization of the investment for deals that last longer than the useful life of the infrastructure. If you were ever puzzled why the contracts last so long, now you know that the answer can be found in the tax code.

Those tax breaks impose two major costs on the public. Government budgets receive less tax revenue. And when the multi-generation contracts required to qualify for the tax breaks expire in the 22nd century, we will still be locked into early 21st century technology and will have traded freedom of choice for antique transponders.
The ultimate argument made by infrastructure privatization proponents is that cash-strapped states have no other choice. But that is also untrue. Alternatives exist or can be made to exist by governments letting bonds to investors and through taxes. State and federal fuel taxes have not been raised in many years. And, particularly those who benefit from improved infrastructure should pay their fair share. Rather than imposing taxes - and tolls are essentially a tax - just on those who actually drive on the toll road, taxing those who benefit from transportation more broadly would spread and share the burden in a fairer way.

If we continue down the infrastructure privatization road, we will learn that the real price is lost democracy and true freedom of choice. The real cost - and it is a heavy one - is the creation of 21st century serfdom and the loss of democratic control that lets us chart our future as a people.
Ellen Dannin is the Fannie Weiss distinguished faculty scholar and professor of law at Penn State Dickinson School of Law and author of "Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance."

© 2011 American Constitution Society:

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'Fannie Pave' Infrastructure Bank: "It’s like Fannie Mae was, before its exposure became real and the taxpayers had to come in and bail it out."


John Kerry’s ‘Infrastructure Bank’: A corporate welfare slush fund


By: Timothy P. Carney , Senior Political Columnist
The Washington Examiner
Copyright 2011

The flowers are blooming and the birds are chirping, and so it’s time for Sen. John Kerry, once again, to stand on stage with Republicans and Big Business and call for a dramatic expansion of government.

Last Spring, Kerry had lined up some corporate luminaries – BP, Conoco, and Shell – to endorse his cap-and-trade scheme for greenhouse gasses. Even though BP’s Deepwater Horizon had already exploded and was sinking, it was only a spat with his GOP ally, Lindsey Graham, that derailed that little moment of corporatism.

Today, Kerry’s Big Business-Big Government collusion would be a federal “Infrastructure Bank,” described by a Boston Globe reporter as “an independent entity called the American Infrastructure Financing Authority, which would be similar to the Export-Import Bank.”

Ex-Im epitomizes corporate welfare. It also is a prime example of unaccountability. The agency is independent of any cabinet department, and it hands out loans and loan guarantees basically at its own discretion. Congress typically gives Ex-Im lengthy reauthorizations, thus minimizing congressional oversight. In recent years, Ex-Im was moved off-budget, meaning it funds itself with the repayments from old loans and the fees from new ones. So it’s kind of like Fannie Mae was, before its exposure became real and the taxpayers had to come in and bail it out.

So, Kerry wants to create Fannie Pave, and the U.S. Chamber of Commerce loves the idea: a bunch of free money that seems to cost nothing.

Perhaps we’ll learn more about this idea at today’s press conference, featuring Kerry, the Chamber, and retiring Republican Sen. Kay Bailey Hutchison. But for now, some of my early reactions:

  • The Boston Globe quotes Kerry using Obama’s “Win The Future” talk: “As we invest too little and our competitors invest more and more, the harder and harder it will be to catch up." As I wrote about Obama’s use of this framework:”In Obama's America Inc., vision, all of the United States is competing against China, Germany, India and Spain in Olympic solar panel making, the biotechnology sprints, and the manufacturing relay.
  • Kerry spoke about the infrastructure bank at a Center for American Progress event in January. Remember, CAP has also advocated a “Green Bank.”
  • Amity Shlaes at Bloomberg has a great response to this idea (h/t Future of Capitalism blog):
    The second thing the U.S. can do is stop kidding everyone about infrastructure as stimulus.... Infrastructure spending as stimulus is no medicine for dramatic downturns or tsunamis. In fact, the very reason Japan was carrying destabilizing amounts of debt even before the quake was its infrastructure spending that failed to stimulate. Our own emphasis on stimulus plans that included infrastructure gave a lurching quality to recent growth. Now everyone is concerned that, absent stimulus, the U.S. can't grow farther. So sure, Japan will need new infrastructure now. But that infrastructure should be recognized for what it is: brick, wire, mortar. Remember, though, that growth comes from competitiveness, not government spending.
© 2011 The Washington Examiner:

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Sunday, March 13, 2011

Texas toll roads: "...taxes in sheep's clothing and, over time, increasing traffic congestion."

Toll tax: Bill would make road charges perishable


Ben Wear
Austin American Statesman
Copyright 2011

In Texas, tollways, like diamonds, are forever.

State Sen. Steve Ogden would prefer something a little less permanent.

Ogden, a College Station Republican whose district includes Williamson County, is carrying a bill this legislative session that would require tolls on any Texas turnpike to disappear once debt incurred to build that particular road has been paid back. The bill, as even Ogden admitted, has little chance of passing.

"There's too much money involved," said Ogden, who as Senate Finance Committee chairman is in charge of writing the state's $160 billion budget.

But the legislation's precarious prospects don't mean it isn't noteworthy. Ogden, through his bill, is addressing a broader, key question: When does a toll, instead of being a user fee, become merely a stealth tax?

Ogden said that time came in 2003 and he's as much to blame as anyone.

"Today is Ash Wednesday," Ogden said last week when he presented Senate Bill 363 to a committee, "and I'm here to atone for my sins. To make sure that the innocent don't pay for the guilty. And to make sure we have truth in taxation."

Ogden eight years ago was the Senate sponsor of a massive transportation bill that greatly expanded the power of the state and of local toll authorities to build turnpikes, charge tolls on them in perpetuity and use profits from one tollway to help build other roads, including, at least in theory, free roads.

None of this was an accident.

That legislation, carried in the House by then-state Rep. Mike Krusee, a Williamson County Republican and close ally of Gov. Rick Perry, was based on the premise that the Legislature had no taste for raising the state's 20-cents-a-gallon gas tax. Therefore, the only way going forward to pay for roads had to be tolls, with the excess revenue becoming an "economic engine" for expanding the transportation network. And toll charges, officials said, would continue even after each tollway's original cost had been paid off.

Time has borne out that premise about the state gas tax. The levy, last raised by lawmakers in 1991, remains 20 cents a gallon (there's an additional 18.4-cents-a-gallon federal gasoline tax), and toll roads have sprouted all over the eastern half of Texas.

The Austin area, which in 2003 had no tollways, now has five, and a sixth under construction.

Profits from one of those roads, 183-A in Cedar Park, will serve as what amounts to collateral when the Central Texas Regional Mobility Authority attempts soon to borrow several hundred million dollars for the U.S. 290 East tollway in Northeast Austin.

Ogden says that's just wrong, that folks in Cedar Park are being "taxed" to pay for a road more than a dozen miles away that they will seldom use. Similarly, four of the Texas Department of Transportation's Austin-area tollways — Loop 1, Texas 45 North, Texas 45 Southeast and Texas 130 — function as a system, with their money pooled. The heavy traffic on Texas 45 North in Round Rock is basically propping up the much lighter use of Texas 130 near Mustang Ridge.

"We continue to run this state basically on hidden taxes," Ogden told that committee last week.

Ogden's bill, aside from snuffing tolls on a paid-off road, would not allow surplus revenue from one road to be used for another road.

Here's the problem, though: A toll road's costs don't end when its bonds are paid off.

There are still annual maintenance costs, the day-to-day expense of collecting and processing the tolls, and the big hit of major reconstruction every 40 years or so.

And another, larger problem: That stagnant gas tax will produce declining revenue as cars become more fuel-efficient, and what it generates now is already inadequate to build new roads and maintain the ones in place.

Ogden is carrying separate legislation, a potential constitutional amendment, that would allow the gas tax to rise by up to 5 cents a gallon. Each cent now raises about $150 million a year.

The extra gas tax money could be used to make debt payments for tollway bonds issued since 2003 (under that bill Ogden carried) — now about $270 million a year and likely to be nearly $410 million annually by 2013 — freeing up existing gas tax money to build or repair roads.

From road advocates' point of view, the worst-case scenario would be for Ogden's first bill to pass, making toll roads all but impossible to finance, and his second measure to die, meaning no extra gas taxes.

If neither becomes law — the most likely scenario — we get the status quo: taxes in sheep's clothing and, over time, increasing traffic congestion.

If any legislators are looking for something to give up for Lent, magical thinking about transportation finance might be a good candidate.

© 2011 Austin American-Statesman:

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