His Way or The Highway (Rick Perry's approach to road building)

Every day I can look out the window of my office in downtown Austin and watch traffic creep along Interstate 35, half a mile away. The time of day doesn’t seem to matter, nor does the weather: morning or evening, wet or dry, the snarl persists. Part of this is due to the unwieldy design of the downtown exit and entrance ramps, but the main reason is the volume of traffic, much of it commercial. I dread the drive to Dallas, which I last made on the Friday afternoon before the Texas-Oklahoma football game – surely the worst day of the year for such a trip. It took me forty minutes to negotiate the eighteen miles from downtown to the suburb of Round Rock, and much of that time was spent idling in a canyon of eighteen-wheelers.

The announcement several years ago that the Texas Department of Transportation - TxDOT, as it’s widely known – would build a toll bypass known as Texas 130 east of Austin was cause for celebration. Texas 130 was particularly welcomed by community leaders in the fast-growing town of Pflugerville, which abuts Austin to the northeast. The annexation, years earlier, by Austin of a strip of land along I-35 had kept Pflugerville from reaping the taxes generated by the high-dollar commercial property along the freeway frontage. Now, with the completion of another brand-new toll road, Texas 45, which will tie into the bypass, Pflugerville could lookforward to development along the flanks of the new highway, which would relieve homeowners from bearing the principal responsibility of paying for city services.

But when TxDOT announced the design of Texas 45, it has no Pflugerville exit and no frontage road, and that made the adjacent property unattractive for development. What was the reason for this oversight? It was no oversight, according to state senator-elect Kirk Watson, who, as mayor of Austin, had served on the board of the federally mandated regional mobility planning organization for the Austin area. “TxDOT,” he says, “wanted to maximize its toll revenue.”

A single nonexistent exit on a single yet-to-be-completed highway is of little consequence in the big picture of transportation policy in Texas. And yet the missing Pflugerville exit is emblematic of why so many Texans are upset about that policy and why it became an issue in the governor’s race: The importance of roads is not merely to make sure that you and I can get from point A to point B rapidly and safely. Roads create wealth. They multiply property values. They bring economic development. They improve the quality of life.

But as Texas turns more and more to toll roads, critics of TxDOT fear that the tail is wagging the dog, that the funding mechanism has become an end in itself, and that a mammoth stage agency has lost sight of its duty to serve the public and instead serves its own ends.

This is not going to be a screed against toll roads or against Rick Perry’s multi-highway Trans-Texas Corridor plan, through the opponents have made some legitimate points. Existing highways built with tax dollars ought not to be converted to toll roads; this is double taxation. Commuters should not be forced to tithe for the privilege of using a freeway overpass, as TxDOT wanted to do on another Austin expressway – conjuring up the memory of Ludwig of Bavaria, who built his medieval castle on an island in the Rhine, the better to extract tolls from passing boatmen. Yet toll roads are an essential part of our transportation future. The current revenue stream, which depends on a twenty-cents-a-gallon tax on gasoline, one fourth of which goes to education, is not enough to meet the state’s needs. Without toll roads, gridlock will continue to strangle Texas cities.

All of the rhetoric over whether to toll or not to toll has obscured a much bigger issue, which is privatization of transportation. TxDOT’s plan for toll roads is to surrender public control of these roads by entering into “comprehensive development agreements” (known as CDAs) with private companies, such as the partnership between Cintra, a Spanish company, and Zachry construction in San Antonio, which is building the first link in the Trans-Texas Corridor, an alternative to Interstate 35 known as TTC-35.

Cintra-Zachry paid $1 billion to TxDOT for the right to collect tolls for the next fifty years. I’m not going to make a xenophobic argument, as Carole Keeton Strayhorn did in her gubernatorial campaign, that this is a land grab by foreign companies. It doesn’t really matter whether the company operating the toll road is American or European or Qatari. What matters is whether the arrangement protects the public interest. Here is what John Carona, a Republican state senator from Dallas who is the new chairman of the Senate committee that deals with transportation, has to say on the subject: “Within thirty years’ time, under existing comprehensive development agreements, we’ll bring free roads in this state to a condition of ruin.”

It may seem as if the system of granting a concession to private companies in return for money, like restaurants at an airport, is a great idea – “free money” that TxDOT can use to build other toll roads, enter into still more concession agreements, and build still more toll roads, as if the agency had succeeded in creating a perpetual- motion machine to finance roads in perpetuity.

But alas, there is no free money, and there is no perpetual-motion machine. The private companies that will build and operate the toll roads are in business to make a profit. In order to ensure that profit, they must have people who want to drive on their roads. And – here’s the rub – in order to be sure that people will want to drive on their roads, the CDAs with TxDOT will contain non-compete clauses that prohibit to TxDOT from building new roads or upgrading existing highways.

Any improvement to an existing highway that is not already planned at the time TxDOT enters into the contract is prohibited. That billion-dollar concession limits TxDOT’s ability to improve nearby secondary roads. How about adding extra lanes? Sorry, prohibited by the CDA. An HOV express lane? Not a chance. This is why Carona says that free roads will be reduced to ruin. TxDOT will no longer be able to respond to the transportation needs of the state, other than to say: If you don’t like the traffic, use the toll road.

Oh, I almost forgot. About that free money. It may be free for TxDOT, but it isn’t free for you and me. The billion dollars represents the present value of future toll revenue. TxDOT finds it attractive for the same reason that buyers of lottery tickets ask for the “cash option.” They want their money up front – so they can use it now, so that it won’t be eaten up by inflation – rather than have it dribble in over twenty years (or fifty). Meanwhile, the private toll road operator wants to get that billion dollars back. And the way the company will get it is by raising its tolls over fifty years, largely unrestrained by the public sector. Tolls will be marketbased – that is whatever the traffic will bear. In effect, TxDOT’s free money amounts to a tax on our children and grandchildren.

Concession agreements are not the only way to build toll roads, just the most expensive one. (Carona likens it to “renting to own.”) In fact, toll road authorities have functioned in Houston and Dallas for years by using the conventional method of building the roads: issuing revenue bonds that will be paid off with toll revenues over a period of twenty to thirty years.

When major league baseball first came to Arlington in the seventies, I drove to games from Dallas on the Dallas-Fort Worth Turnpike. In twenty years (1957-1977) the bonds were paid off and the turnpike became a free road, Interstate 30. It remains free today. The Dallas North Tollway followed a similar pattern, except that when the original section, from downtown to Interstate 635, was paid off, tolls continued to be collected so that the tollway could be extended farther north.

The Harris County Toll Road Authority has built 101 miles of toll roads, including a section of the Sam Houston for which I gladly pay $1.25 four times in order to drive to my hometown of Galveston without having to contend with Houston traffic. This method of financing is, in the long run, far cheaper for the public than concessions and higher tolls.

In the past, TxDOT cooperated with these local authorities – for instance, by making right-of-way available – but since Rick Perry has been governor, a much more aggressive department seems to regard the local toll agencies as competitors. The North Texas Tollway Authority wanted to build Texas 121, for example, but TxDOT stepped in and forced the NTTA to cede control of the project, thereby allowing TxDOT to do another concession agreement. The NTTA will be allowed to collect the tolls, but that is all.

For years, state budget writers have been dipping into the pot of money that is earmarked for highways to fund the Department of Public Safety, on the theory that state troopers are responsible for highway safety. This poly diverted $700 million from road building in the current biennial budget. At the same time, lawmakers have refused to raise the gasoline tax since 1991. In a Republican era, any kind of tax increase is unthinkable, even if its purpose is to further the case of free roads.

TxDOT played politics too, putting more projects on its approved list for future construction than it could afford; now it uses the length of the wish list to win the support of local transportation planning organizations for toll roads, warning communities like Austin and El Paso that their only other option is to wait 25 years for free projects.

The final step was that the 2003 legislative session, when Republicans controlled all the levers of power – House, Senate, governor – for the first time. Major bills were rushed through the Legislature with little debate or discussion. One of these was the omnibus transportation bill that authorized concessions and other mammoth changes in the way we build highways. Few lawmakers knew what was in the bill. The Senate gave it only cursory inspection. The result was a scheme in which TxDOT will be taking in billions of dollars from the private sector with no oversight by the Legislature, no responsibility to say how that money will be used, and no assurance for the public that free roads, as well as toll roads, will benefit from that money.

Governor Perry has strongly supported transparency, accountability, and oversight in public education. He could do the state and the public a great service by insisting on the same standards for highways. Otherwise, we are headed for the worst public fiasco in my lifetime.

Regarding the non-compete clause.

The author of this article and many others advocate a toll road built and operated by the state. Under that scenario, the state would have impose a non-compete clause on its self. The state is not going to build a toll road then undermine its profitability by building a free road next to it.

That points to the big problem with a state owned toll road. Political decisions replace business decisions and it is the taxpayer who has to pay for the bad political decision.

I apologize if that wasn't clear. Since narby and I were comparing AZ & TX, my reference to "each state" was AZ & TX.

This website is excellent for comparing the states' fuel taxes because it includes tax on diesel and includes important comments.

For example, we see that TX has the same tax on gasoline and diesel. OTOH we see that AZ has tax on diesel that is almost 50% higher than gas. Plus, there is an additional 9 cents tax on some classes of diesel vehicles. While there are some passenger cars and light duty trucks in AZ paying this higher fuel tax, we would say that this is mainly a higher tax on commercial/business fuel. Since business passes its costs onto the consumer/taxpayer, the AZ taxpayer is paying for this. This is one way govt hides taxes.

We also need to consider that European diesel technology is now being imported to the US. In the coming years, many AZ drivers will be using diesel with the 50% higher tax.

I've looked at your links. Number 2 & 3 is old bs that has been shot down many times.

But number 1 is very important, so lets discuss it. Before we do let me say that you and Texas Toll Party are being dishonest by not also posting TxDot's response. It probably deserves a thread of its own.

TXDOT response to Michael Stevens/Business Council

TXDOT says Stevens is under estimating the States's obligations and over estimating the revenue from his higher proposed tax. Lets look at each.

Steven's number is 56 bil and TXDOTS number is 86 bil. The 30 bil difference is 8 billion that Stevens says the TXDOT is calculating wrong. If that is the case, Stevens needs to give us/TxDOT some details on that. Otherwise he is just shooting in the dark.

The 22 bil is a shortfall that the cities will have over the period. By now we all know that the feds will not be giving any more money to the State Infrastructue Bank/Texas Mobility Fund. It has to come from the state. Stevens says the state doesn't have to be responsible for this. Out of the other side of his mouth he is saying that the cities should get all the gas tax to pay for their roads. He wants to scrrreeeeew rural Texas.

Now lets look at Steven's tax increase. Will it produce enough money or will the tax have to be higher than what he says.

First, his numbers are predicated on none of the tax increase going to schools. That is a 25% potential short fall right there.

Second, his numbers are predicated on constuction costs going up only 3.4% Given the projected growth in the US and the world/projected growth in demand, plus the uncertainties in the Mideast, Venzuela, Africa, and elsewhere, anyone who advocates using 3.4 % is selling snake oil.

Third, his numbers are predicated on the average auto gas milage as being only 23 mpg in 2030. Stevens acknowledges that 23 mpg is way low and counters by saying that the state can utilize Satellite Tracking Technology to tax Texas drivers.

You know, I seem to remember that even in California gas taxes were about $ 0.50 a gallon. Taxes here in Pennsylvania are somewhat lower.

Now, neither California nor Pennsylvania does a particularly good job on road maintenance, but paying $1 per gallon over what other states charge, or roughly $ 0.05 per mile if your car gets 20mpg, doesn't sound any cheaper than tolls.

I think Texas is one of the best-run state in the union, but something doesn't smell right here.

D

In New England, we call it the NIMBY syndrome (not in my back yard).

We complain about the congestion at Logan Airport in Boston but whenever there is a proposal to build a second airport at nearby Hanscom Field in Bedford (or anywhere else), there is a public outcry against it.

We complain about the traffic congestion but every new highway proposal is squashed. Once, during the early 1970s, I-95 was being built to run right around the outside perimeter of Boston and through the North Shore (Revere, Lynn, etc.) to connect to NH and Maine. But public outcry stopped the project and instead, I-95 was routed through the outer suburbs of Boston via the old "Route 128" which at the time was derisively called the "road to nowhere." Ironically, today, this stretch of I-95 is the heart of the Boston-area economy and people who used to own empty fields and cow pastures along it are multi-millionaires today.

People want more prisons built but nobody wants them build in their town which means that we are building them along median strips of highways.

People complain about I-93 running through Boston and because nobody wanted more highway lanes built above ground, we wasted billions of dollars of taxpayer money simply sinking the highway underground while adding little or no highway capacity so the drive through the city is as congested as ever only now you get no picturesque view. Just ugly tunnel where you get no radio reception.

The $1.40($1.00 plus existing 40 cents) came from a rough budgetary number of what it would eventually(50 years) cost to build out the entire TTC System.

As I pointed out in another reply, no one can predict what the actual costs are going to be. Some will try to minimize the cost and some will try to exaggerate the cost.

The issue is, will the costs be paid by a user fee or will the costs be socialized. Also an issue is, will the state use tolls as another/additional funding mechanism to build/maintain free roads.

Since business passes its costs onto the consumer/taxpayer, the AZ taxpayer is paying for this.

Either you, or one of the other pro-road-fee people, recently made the point that turnpike fees collect money from people passing through the state, not just state citizens. Higher diesel costs do the same, because the costs will be spread to other states.

Even though Tx and Az gas taxes are the same, I would still gladly pay more fuel tax in order to prevent toll roads. The design of toll roads damages business, concentrates development in cities (because of the lack of on-ramps in remote towns), and generally depresses the economy.

The people are going to pay for the roads they drive on one way or another. Paying via fuel taxes is the most fair method I can think of. It pays for both local roads and highways, rather than doubling up with fuel taxes *and* tolls on major highways. It charges more for people with larger vehicles, which wear roads more than light vehicles.

There are very few things that are best done by government, and because roads are a natural monopoly that will never have competition, libertarian ideas of tolls are not a good idea. This country was built in the last 75 years almost exclusively on good free roads. There's no reason to fix what isn't broken.

Your are not the only one who would prefer roads to be paid for by taxes. Those that use those roads know that if they can get those not using those roads to help pay for them, the user's cost will be lower.

As for roads being a natural monopoly best run by govt, there is nothing in the TTC PPP that negates the State's ownership or ultimate authority over the road.

As for which may be best, it would appear that what has happened on roads in other parts of the world contradicts you. The fact that many, many states are headed in the same direction as Texas contradicts you. The fact that many in AZ see the writing on the wall contradicts you.

Those that use those roads know that if they can get those not using those roads to help pay for them, the user's cost will be lower.

What is it about "fuel taxes" that you don't understand? Even third parties out of state paying for truck transport are "using" the road, and should pay for them through fuel taxes.

As for roads being a natural monopoly best run by govt, there is nothing in the TTC PPP that negates the State's ownership or ultimate authority over the road.

The non-compete clauses forbid the government from building roads that will compete with the private toll road operators. It will obviously be left up to a court to decide what free road "competes" with the toll road. What you favor is turning over road decisions to a foreign private corporation and the courts. Just brilliant.

The fact that many, many states are headed in the same direction as Texas contradicts you.

No. It merely means they're buying into the same sales pitch that Texas is buying. With billions of dollars at stake, if you don't think there's some selling and lobbying going on by companies that think they'll make money from this, you're nuts.

The fact that many in AZ see the writing on the wall contradicts you.

See above. And I seriously doubt there will be toll roads here. There were proposals to make the new section of the Santan FREEway a toll road, but they were shouted down within days.

The primary difference between Tx and Az on this issue is that money making here is primarily done via growth, and toll roads sap growth. While Tx has larger established cities where money making is via raising the value of existing development. Therefore free roads help money making here, while constricting travel, and thus holding people close to inner cities, makes money in Tx.

I'm glad I live here. Toll roads and the jammed up cities they spawn suck.

The question should be why, if it's profitable for anyone to build a toll road while maintaining the free routes - as we are told is required by law - why not have the State (The People) do it?

I grew up going from Dallas to Fort Worth (or to the "suburbs" between, especially to Six Flags Over Texas) on the Toll Road because that was the best route. But sometimes we went the slower, more round-about ways for reasons Daddy didn't tell us. But now, the old toll road is free.

Toll Roads are one way to back loans. That's why States ("The People") use them. This scheme is a long term sale or lease - I'm not sure - to an entrepeneur. For unclear reasons.

Tolls will collect more from out-of-staters. They have ways of avoiding a gas tax.

Road decisions aren't being turned over to the private sector. That is all covered in the contract.

All these other states, including AZ, face the same problem. Strong opposition to raising the gas tax. You mention that you "shouted down" a proposal to toll a road. That is universal. But, when it comes down to a choice between tolling and taxing, the anti-tax group will "shout down" louder than the anti-toll group.

I'm not opposed to a rising gas tax. It is obvious that construction costs and MPG ratings are rising. I know that our interstates are worn out and have high maintenance and repair costs. I recognize that there has to be free roads built and the cities are having a hard time financing their local needs. I even think the "new construction" tax for local roads being used in AZ is a good idea. Real estate developer Stevens will oppose that.

But, wherever possible, it will always be better to impose user fees rather than taxes

Given the wide opposition to tax increases, there is nothing wrong with using toll money to finance/subsidize free roads.

Finally let me say, you continue to base part of your argument on something you dreamed up. That toll roads impede progress. Nobody believes that.

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