04.01.08

Sen. Ogden Wants To Gamble With Your Money

Posted in Commentary, Privatization, Road Issues, SD 5, Williamson County at 10:26 am by wcnews

EOW needs to backtrack to something that was written last week. It was alluded to over the weekend but after actually sitting down and reading Sen. Steve Ogden’s Op-Ed in the AAS last week, Texas can solve the problem of financing road construction, there are two paragraphs that need to be taken apart:

Later this month, the Senate Finance Committee will examine additional financing methods. Specifically, I want to explore the possibility of investing a portion of our state’s trust funds (i.e., Employees Retirement System, Teachers Retirement System, Permanent School Fund, Permanent University Fund) in TxDOT toll projects. The argument for this is straightforward. If it is such a great idea for foreign companies to invest in and profit from our roads, why isn’t it a good idea for our retired teachers and state employees to invest their trust funds in and profit from these roads?

These same trust funds currently make large investments in real estate and infrastructure outside of Texas. I think some of this money should be invested in Texas and that this would be a “win-win-win” situation. Roads will be built, the trust funds will get a guaranteed return on their investment, and the toll revenue would benefit public education in Texas.

Saying that his committee wants to “examine additional financing methods” by using the state’s trust funds to finance toll roads around Texas, should set off sirens for anyone with a stake in those trust funds. And that’s literally every Texan. He then wants us to accept his so-called “straightforward” argument that if foreign corporations are salivating over Texas toll roads then it must be a great idea for us to invest our public funds. Lord knows corporations are never wrong on their investment strategies, see Enron, Bear Stearns, etc..

While toll roads may be seem like a safe investment to Ogden, they’re not. The scam of toll roads was fleshed out very well a few years back by this Denver Post series, “Truth Be Tolled”. Basically corporations that build roads, and the consultants that are in bed with them, inflate Traffic & Revenue (T&R) studies to make it look like toll roads will be profitable so the local entity and will agree to build the road. Of course, a little guaranteed profit is built into the deal. Once the road is built, the consultants and construction contacts have been paid, things change. Ultimately the traffic, and revenue, does not pan out the way it was supposed to, the road is not making the money the consultants said it would.

With the road not making the money it was supposed to, the state or local entity is in a bind, with the debt and “guaranteed” corporate profit coming due. Therefore they have to start looking at other options for what to do with the road. Those same consultants are again brought in, and paid again, to come up with a fix for the same problem again, big surprise. Shockingly the fix they come up with is to increase the toll and/or privatize it – sell the road to a corporation. This is what Sen. Ogden wants Texans to get involved in. Again it’s toll everything, as far as he’s concerned there is no other option.

That’s where the second paragraph of the excerpted text of Sen. Ogden’s Op-Ed comes in. He admits what many only do when pressed, that profits are guaranteed in these deals. These roads would not be touched by a corporation if there truly was a “free market” in play. They know the T&R studies are bogus, and the roads cannot be built, maintained, and make a profit as originally planned. Corporations make money by minimizing risk, and guaranteed profit with taxpayers on the line, is as minimal as it gets. The only reason the corporations even get in this game is because of the guaranteed profit, which leaves the state, in this case, holding the bag. Meaning when the T&R doesn’t show up like the consultants promise the tax payer is left to pay the debt and the corporate profit.

Now what Sen. Ogden is proposing has little to do with congestion, or building the roads that are needed, or reducing the time in our cars. This is about building for-profit toll roads, which is much different. As many of us in the Williamson County area realize the new toll roads in the area have done little, if anything, to change the overall congestion, made it easier to get around, or even make logical sense. They’re purpose is to drag another quarter out of your pocket, nothing else.

If these roads that Ogden wants get built with trust fund money, and the traffic and revenue doesn’t come, then who will pay back the trust funds? Taxes would then have to be raised to make up for that money, to pay retirees, as well as pay for public school, and university, or not. But we all know how the GOP feels about public retirees and public education. What Sen. Ogden is doing is the using that now tired GOP line that you can have it all and not have your taxes raised, or at least not until Sen. Ogden’s long gone.

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