10.13.09

Transportation schemes are continuing, despite “death” of the TTC

Posted in Around The State, Bad Government Republicans, Commentary, Cronyism, Had Enough Yet?, Privatization, Road Issues, SD 5, Transportation at 10:18 am by wcnews

Transportation schemes are continuing, despite “death” of the TTC

Some things everyone must keep in mind before whenever how to pay for highways, or highway financing, is discussed. Sooner or later somehow the taxpayers of Texas will have to pay for new roads - highways in particular. Currently there are only two ways to do that, gas taxes or toll taxes.

Until the mid-90’s we used the gas tax to pay for most of our roads. By then tax increases - no matter how needed they were - became politically unfeasible. Our highways funding in Texas began to shrink and they were neglected due to decreases in funding. The gas tax was unable to keep up. Because of that our elected officials began working with corporations on a scheme to pay for roads with toll taxes. Essentially giving state government money up front, for the right to build and toll tax the people of Texas for as much as 50 years. Many profit making incentives were built in for the corporations to profit off these deals, and get their “up front” money and much, much more back in the long run.

A massive public backlash occurred, halting some deals, for now, and that’s where we find ourselves today. Paul Burka’s recent post, Cronyism and the Corridor, should be read by every Texan, but specifically by public school teachers and state employee in Texas. In essence Burka is saying that Perry will try to stack the management of the retirement systems of teachers (TRS) and state employees (ERS), in order to use them to finance toll roads in the future. From Burka:

This is a scary story. The Statesman reported yesterday that Governor Perry is removing Linus Wright, a former Dallas school superintendent, as chair of the board that oversees the $88 billion Teacher Retirement System and will replace him with a current board member who is also a member of Perry’s campaign finance team, Dallas real estate investor R. David Kelly. (Wright succeeded Jim Lee, who was one of three co-chairs of the Perry fundraising apparatus; Lee had resigned in the wake of news reports that he had run up six-figure gambling debts in Las Vegas.)

The removal of Wright occurred just a few days after Perry had announced the death of the Trans-Texas Corridor. The juxtaposition of events reminds me of the old Mark Twain line: “Reports of my death were greatly exaggerated.” The concern is that the governor’s office has installed a crony as chairman who will urge the board to invest retirement system funds in toll roads as a means to pump money into funding-starved TxDOT. Perry appointees who don’t go along–as we have learned in the case of board of regents and the Forensic Science Commission–are likely to find themselves replaced.

I’m not just being an alarmist here. Remember, in the summer of 2008, Perry, Dewhurst, and Craddick signed a letter agreeing to work together to find a way to pay for new roads. An earlier Statesman story about the agreement said:

One prong of the plan would create a Transportation Finance Corporation to allow state investment funds — including the state employee and teacher retirement systems, among others — to directly invest in state transportation projects. Combined, the two state systems manage $135 billion in assets.

But TRS and ERS officials “took a cautious view of investing in state projects in testimony this year before the Senate Finance Committee, saying a mandate to invest in Texas infrastructure could conflict with their duty to find the best return on investment for retirees.”

Toll roads are highly questionable investments. Their success depends entirely on the accuracy of traffic forecasts, which can be influenced by consultants who tell roadbuilders (and pension funds) what they want to hear. The industry newsletter TOLLROADS NEWS reported on October 9 that a major toll road in South Carolina is insolvent and about to default:

US Bank, trustees for the bondholders of Connector 2000 Association, the owner of the Southern Connector tollroad in Greenville South Carolina have issued an official notice that they expect a default Jan 1, 2010 with insufficient funds being available from the pike to make debt service that’s due. (Link to Perry, Dewhurst, Craddick letter [.pdf])

To those of us that were paying attention in 2008 this is no surprise, Texas GOP Leaders Want To Use Public Pension Funds To Build Corporate Toll Roads. Our own state Sen. Steve Ogden (R-Bryan) was trying to get the horrible “transportaion bank” idea through the lege last year. They see this big pool of cash that no one’s using, so why not “invest” it in toll roads? Well hopefully teachers and state employee’s will not stand for this.

But who will stop this. Here’s what Burka’s states in the last paragraph in his post.

The thing I find most interesting is that Perry removed Wright and replaced him with a crony in the middle of a governor’s race. What does that tell us? I think it says that he is supremely confident and he is going to do whatever he feels like doing and doesn’t care what the media (much less bloggers) are going to say about it. He had to know what people were going to say about his replacement of Wright, especially coming on the heels of his evisceration of the Forensics Commission, and he did not care. Rick Perry is one tough guy. Don’t think I don’t admire that.

I think Burka’s wrong. It has less to do with being tough, and more to do with payback. That’s what cronyism is after all. So who will turn this around. Certainly not his GOP Primary opponent. Remember there’s only two ways to pay for roads, and it’s unlikely that Sen. Kay Bailey Hutchison will utter the “T”-word in a GOP primary. More on that from the DMN’s tranportation blog, Where is Kay Bailey Hutchison on transportation?.

I have more of a problem with Kay Bailey Hutchison’s failure to articulate any vision at all on transportation. Her statements on the subject have been overwhemlingly politically opportunistic — essentially, what she’s against — and scarcely illuminating on what kinds of programs she would put forth. Look at the “issues” section of her campaign website. Instead of stating what she stands for, she asks opinions from the public. And this after identifying transportation as one of her big five issues.

Of course Democratic candidate Hank Gilbert is committed to work for and with the people of Texas to pay for roads the right way.

Remember, currently there are only two ways to pay for roads, gas tax and toll tax. The gas tax is an up front tax, where the roads are paid for as they’re built. The toll tax usually involves some sort of scheme, where the cost includes corporate profits and how much they will ultimately cost is unknown. It really seems like an easy choice

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