Roger Baker : Can TxDOT Avoid Financial Disaster? / 2

Is a change of direction in order? Image from Cypress Creek Mirror.
Agency in denial:
Can TxDOT avoid financial disaster? / 2

By Roger Baker / The Rag Blog / February 1, 2013

"Denial isn't just a river in Egypt." -- Mark Twain

Second of a two-part series.

A glaring example of the Texas Department of Transportation's (TxDOT) denial of financial reality is that they view their roads in a way that confuses their assets with their financial position. This is made clear from TxDOT's 2012 Annual Financial Report (AFR), p 15, where we see this key statement.

Over time, increases and decreases in net assets measures whether TxDOT’s financial position is improving or deteriorating. Overall, the net assets of governmental activities increased by $710.7 million or 1.1 percent from fiscal 2011, primarily due to TxDOT’s continued efforts to maintain, improve and expand the state’s infrastructure network.

This characterizes TxDOT's financial viewpoint of highways as being financially beneficial assets, rather than as maintenance-demanding liabilities. By using construction costs to evaluate TxDOT's financial condition, the more it costs to build a road, the sounder TxDOT's finances are said to be. As we can see elsewhere in the AFR, TxDOT is claiming that the value of all its roads as assets is now about $64 billion, based on construction costs. They are public assets only so long as the public can afford to keep driving; otherwise they become a growing public maintenance burden.

TxDOT's roads are not marketable goods; few if any of its roads are marketable assets. This means that TxDOT appears to have nothing much to offer as collateral, to backstop its growing debt burden, to shield TxDOT against default on their $14 billion accumulation of road bond debt.

Is it possible to regard TxDOT's most traveled roads as collateral; as assets that TxDOT could plausibly sell to someone or some group willing to take them over and to manage them as private toll roads? We know that this is probably not the case because of TxDOT's inability to find a buyer for its CTTP group of Austin area toll roads, which are big money losers.

It is true that a few years back, TxDOT managed to sell the future tolling rights for the southern extension of their SH 130 toll road to a Spanish toll road operator named CINTRA, but those days are past. Freeways have become "costways."


TxDOT's toll roads are big money losers

Under Gov. Rick Perry's first appointee and close political ally, TxDOT Chairman Ric Williamson, TxDOT's philosophy was to try to attract money to build state roads supplemented with private funding as toll roads whenever possible. Williamson's slogan was that henceforth it was to be "toll roads, slow roads, or no roads."

This reflected an early approach to dealing with TxDOT's financial problems, stemming from the refusal of an anti-tax Texas Legislature to raise gas taxes. A decade ago, it was relatively easy to get private bond investors to supplement TxDOT's limited revenues by tolling and collecting fees; it was then anticipated that state toll roads could be profitable when operated as toll roads partially funded with gas taxes.

TxDOT first got into the toll road business with an initial group of toll roads, called the Central Texas Turnpike Project or CTTP. This was subsidized not only with direct TxDOT contributions, but also with a lot of Austin city money for ROW. The latter was demanded by the road lobby as the price to pay for the failure of Austin's 2000 light rail election.

Later on, after TxDOT became aware that its own toll roads were becoming management headaches, TxDOT and the Texas road lobby started actively promoting the establishment of newly authorized outside agencies termed "regional mobility authorities," such as the Austin area's CTRMA. These governmental bodies are able to wheel and deal and promote "public-private partnerships," partially supplemented with TxDOT contributions, but operating with fewer legal restrictions than TxDOT itself. They offer the additional benefit that TxDOT can't be held responsible whenever a RMA's toll road bonds default.

A July 2011 article by Austin American Statesman transportation reporter Ben Wear, reveals that TxDOT's own CTTP toll roads are big money losers, ones that TxDOT would like to sell if they could find a buyer. TxDOT's rather far-fetched selling point is to maintain that better marketing might somehow turn around their toll roads' current losses. TxDOT's "assets," if converted into toll roads, will probably always be money-losing liabilities.

Tolls and other revenue have fallen more than $100 million short of covering debt and operating costs of the state's three-road Central Texas Turnpike System since the highways opened about four years ago. Texas Department of Transportation subsidies almost 70 percent more than originally predicted have made up the difference. Those subsidies, covered primarily by state gasoline taxes that otherwise would be available for other road spending, should average about $38 million a year over the next decade and total about $750 million by 2042, according to TxDOT documents...

"Any dollar that we support that system with is a dollar that is taken out of the state of Texas to build and support other roads," said [TxDOT] Commissioner Ted Houghton of El Paso, who has served on the commission since 2003 and has long advocated such agreements with toll road companies. "We need to get out of that business. Find someone who knows how to market those roads, to operate them and collect the tolls. We do it as a sort of side business."

More recently, TxDOT's refusal to publicly reveal the revenue data on SH 130 , the most prominent of the CTTP toll roads, indicates that the lack of ridership is probably seen by TxDOT as a source of public embarrassment and an impediment to privatization. TURF, an active San Antonio-based anti-tolling group, has publicly announced a boycott of SH 130.


Total Texas and U.S. driving are both in decline, 
with little prospect for recovery

TxDOT doesn't want to admit it, but another important aspect of their institutional denial is the assumption that driving on Texas roads will someday resume its past growth. The reality is that Texans are driving less than they did just a few years ago. The author has already documented this problem and the link to rising energy costs in considerable detail.

Global oil prices have recently been rising rapidly, with little relief in sight. Despite the recent spate of publicity about increasing U.S.energy independence, the reality is that rising oil prices continue to haunt both the U.S. and global economies.

Nationally, an important factor leading to less driving is that the lower income third of the population is struggling to afford to drive at all because of rising fuel prices. We see this from a recent Brooking Institute study showing a strong correlation between car ownership and income level. Likewise, the U.S. population is aging, and older drivers drive less. Meanwhile, the young have become less interested in owning and driving cars.

When driving declines, so do Texas state and federal fuel tax revenues. Fuel taxes are TxDOT's major stable source of road funds, akin to TxDOT's financial oxygen supply. In his introduction to the 2012 AFR, TxDOT Director Wilson, notes that fuel taxes are up: "Motor fuel taxes, TxDOT's primary state funding source, shows a slight increase in fiscal year 2012 over 2011."

However, even this 2.8% increase in TxDOT's fuel tax revenue looks smaller when compared to TxDOT's total budget.

We know that Texas driving is currently decreasing because the FHWA documents total driving on roads in every state. Here are the final revised travel numbers in millions of vehicle miles on all Texas roads for the past six Septembers (the latest month available in 2012).

• 2007.....19,422
• 2008.....18,838
• 2009.....19,730
• 2010.....20,023
• 2011.....19,386
• 2012.....19,377

It is true that driving in Texas has decreased somewhat less than in the rest of the country recently. This is quite likely due to the hydrofracturing (or fracking) boom to the southeast of San Antonio. While the fracking may increase fuel revenue slightly, it is tearing up Texas state and county roads, and these damages on its state roads are being greatly underfunded by TxDOT.

The truck traffic needed to deliver water to a single fracking well causes as much damage to local roads as nearly 3.5 million car trips. The state of Texas has approved $40 million in funding for road repairs in the Barnett Shale region, while Pennsylvania estimated in 2010 that $265 million would be needed to repair damaged roads in the Marcellus Shale region.

And this from an NPR State Impact statement:

“With all the traffic, it’s destroying our roads. Some are already completely destroyed,” says Frio County Judge Carlos Garcia in South Texas. It’s in the heart of the Eagle Ford Shale formation, where oil production from hydraulic fracturing, or “fracking,” in nearby Karnes County now leads the state.

Public roads, especially those a few decades old, are by nature money losers which require a rising level of maintenance over time to remain useful. Asphalt and diesel costs for road maintenance have risen sharply during the past decade, along with rising oil prices; the crude oil used for making gasoline and diesel has more than tripled in price over the last decade.

Nationwide, driving decreased by about 1.6% in the last year, according to the FHWA TVT data for September 2012, as compared to September 2011; see lower right of this chart. We see that total U.S. driving peaked in 2007, and has fallen roughly 3% over the last five years. This bumpy downward trend line is largely due to a combination of a poor economy and rising fuel costs. Rising fuel costs contributed to the poor economy.

Over the same last five years, U.S. population has been increasing by about .75 % per year, which means a 3.75% U.S. population increase over this time. If you add both trends, per capita U.S. driving decreased nearly 7% in the last five years. People are driving less, while using transit more, except that U.S. urban transit typically isn't very efficiently matched to existing land uses and work trips.

Whither fuel prices? Globally, total liquid fuel supply has been flat since conventional (the old cheap stuff) oil production peaked worldwide about five years ago, and seems unlikely to rise much above 90 million barrels a day. Looking ahead, this implies a continuing recession and higher driving costs.


The rising long-term price of TxDOT's denial

TxDOT's current planning is in denial by being geared toward handling a most unlikely continuation of the rising car and road travel seen in past decades. Any shift away from road building is guaranteed to upset the Texas road lobby; a constellation of the big road contractors, land developers, and engineering firms. Together these comprise some of the most politically powerful interests in Texas, whereas TxDOT is one of the most politicized state agencies in terms of its policies and priorities.

Low density suburban sprawl growth encouraged and subsidized by publicly funded roads is beginning to be recognized as a type of Ponzi scheme. Whenever the rate of new growth slows down, the fact that this kind of growth doesn't pay for itself is revealed by the sorts of funding shortfalls that TxDOT is experiencing now.

In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance. The American Society of Civil Engineers (ASCE) estimates the cost at $5 trillion -- but that's just for major infrastructure, not the minor streets, curbs, walks, and pipes that serve our homes. The reason we have this gap is because the public yield from the suburban development pattern -- the amount of tax revenue obtained per increment of liability assumed -- is ridiculously low.

Over a life cycle, a city frequently receives just a dime or two of revenue for each dollar of liability. The engineering profession will argue, as ASCE does, that we're simply not making the investments necessary to maintain this infrastructure. This is nonsense. We've simply built in a way that is not financially productive.

Arguably, the wisest mode of damage control to remedy its looming fundings shortfalls would be for TxDOT to shift its priorities toward preserving and maintaining at least the most important of its existing roads, including the interstates, non-interstate highways, and toll roads.

TxDOT needs to shift its focus away from planning roads it can no longer afford to maintain, and in the direction of public mobility by increasing the current minimal level of state funding for transit (the feds prefer to fund transit much more than TxDOT does).

Because of budget constraints, people increasingly need to live where TxDOT can still afford to fund and maintain transportation infrastructure and mobility and not a future overwhelmingly based on more cars and roads.

In the future, TxDOT's planning should be geared toward discouraging private vehicle travel. In fact, TxDOT really doesn't have much alternative to moving in that direction, either willingly or unwillingly. To try to continue their current denial of financial and travel demand trends can only make TxDOT's future problems worse.

Bottom line: If you have trouble driving to work, you shouldn't expect much help from TxDOT.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog. Read more articles by Roger Baker on The Rag Blog.]

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Roger Baker : Can TxDOT Avoid Financial Disaster?

Maybe TxDOT should heed its own sign.
Warning sign:
Can TxDOT avoid financial disaster?

By Roger Baker / The Rag Blog / January 24, 2013

"Things can become complicated when you actually try to understand them." -- Richard Vodra

This is the first of a two-part series.

AUSTIN -- The funding shortfall at the Texas Department of Transportation (TxDOT) is about 50% of its entire budget. How did it ever come to this? TxDOT's roads are now at war with our schools, nursing homes, and health clinics in the Texas legislature, all fighting for survival level funding.

There is great pressure to use an official increase in state revenue to restore the big cuts made to education, health, and human services in the last Texas budget. Every sort of social and governmentally funded need is competing for a piece of the budget increase since Texas Comptroller Susan Combs recently declared a substantial increase in available state revenues compared to the last budget two years ago.

This coming budget battle leads us to an important policy question concerning TxDOT and its roads. How could anyone even hope to manage a state agency that, according to it own management, falls 50% short of its needs? Yet this is the situation described by TxDOT Director Phil Wilson as the Texas Legislature prepares to meet, wheel and deal, and eventually to hammer out TxDOT's two year budget allotment.

One way to lobby for road money, although they can't call it that, is by inflating future hypothetical travel and road construction needs. TxDOT director Phil Wilson describes the situation this way:

TxDOT needs an additional $1 billion-a-year alone to shore up its maintenance budget, he said. And going forward, the agency will likely need another $3 billion-a-year infusion to its current $10 billion annual budget to “address congestion long-term with a sustainable method.”

The reality is that TxDOT's proclaimed road construction needs of $3 billion a year are utterly unfundable pipe dreams appealing to road builders and land developers. By contrast, the estimate of $1 billion a year in maintenance shortfalls is probably way short, but maintenance lacks political sex appeal. In fact, Texas road maintenance has been underfunded to such a degree that "Texas received a 'D' in roads, ranking Texas from 17th in 2008 to now 43rd for highway spending per capita."

Lets take TxDOT Director Phil Wilson's claim at face value. If TxDOT's current budget is $10 billion and needs an added $1 billion in maintenance, and another $3 billion to deal with congestion, that means that TxDOT is already about 40% short. This picture of a dire need for money for new roads does not even consider the fact that TxDOT already spent a billion dollars more than it took in last year.

Once you add the $1 billion net deficit for this year, the claimed gap between the available cash and current spending plus claimed needs rises to about 50%! Further complicating this situation is the fact that TxDOT is now about $14.6 billion in debt, and the debt service alone required nearly a billion dollars in 2012. (See pages 13 and 28 of TxDOT's Annual Financial Report.)

Meanwhile, for accounting purposes, TxDOT is claiming its state roads as assets, all together worth about $64 billion. The reality is that TxDOT's roads should be seen as constantly growing maintenance liabilities. In the context of high oil prices, a stagnant economy, and reduced driving, TxDOT's roads are like an oil-addicted, tax money-starved monkey solidly chained to the back of Texas taxpayers for the foreseeable future.


Texas Road Politics 101

TxDOT offers an important window on Texas politics, both because of the large size of the budget and because of the opportunity for political interests to affect the budget, which can change a lot from year to year, depending largely on legislative whim.

How could things be otherwise? Texas has been ruled since its early days primarily by its landed gentry, first those tied to agriculture, then to the oil interests. A strong focus on "property rights" has been basic to Texas politics ever since the Texas constitution was written, soon after the Civil War, after the Yankee "carpetbaggers" were expelled.

Celebrated Texas journalist Molly Ivins used to call TxDOT "the Pentagon of Texas" for good reason. TxDOT roads have been a political pork barrel for many decades, with all that this implies. In the 1920s, soon after the formation of the  Texas Highway Department, as it was then called, Texas Gov. James E. (Pa) Ferguson got caught up in a Texas road contracting scandal, which forced him to resign and have his wife Miriam A. (Ma) Ferguson become a replacement governor. After this, the Highway Department kept its nose clean for a few decades, particularly under director Dewiltt Greer.

In recent decades, Texas road contractors have regained their old clout as key political players, nowadays in alliance with suburban sprawl land developers. The latter have benefited greatly from publicly funded roads that serve new development ringing the urban areas where most Texans now live. During Gov. Rick Perry's first term, the big road contractors gave him more than $1 million in campaign contributions. Texas is the kind of state where it is always possible to bribe a politician, as long as you call it a campaign contribution.

Gov. Rick Perry appointed a fellow Texas Legislature warhorse and friend, Ric Williamson, to chair the Texas Transportation Commission, TxDOT's governing body, when Perry first got elected. TxDOT Chair Williamson pulled out all the stops to promote Perry's hugely unpopular $185 billion Trans-Texas Corridor -- a deluxe road building solution in search of a future problem to solve.

Williamson died in 2007, and Perry appointed another close associate, Deirdre Delisi to chair the Commission. A little over a year ago, in September 2011, Perry appointed Phil Wilson, one of his top advisors, to be director of TxDOT and its budget. He was appointed to solve TxDOT's problems at a time when that agency had become distinctly unpopular with the legislature. With Wilson installed to manage TxDOT policy from the inside, there was no longer the need to control the Commission from the outside. Delisi resigned soon thereafter.

Before Wilson's appointment, TxDOT directors had all been engineers promoted from within TxDOT's own ranks. This had the effect of limiting TxDOT's top management to those good at building roads, but not necessarily those good at politics or balancing budgets. By most accounts, what Wilson brings to the table is smarts and skillful politics. Wilson's approach seems geared to working harder to raise money to build roads or toll roads as usual. This rather than facing the political reality that the traditionally entrenched transportation solutions and trends are so unsustainable that they demand a basic shift in transportation policy away from roads.


TxDOT has embraced a mountain of new road debt, despite deteriorating finances

It was clear that TxDOT was an agency in deep denial even several years ago when Paul Burka quoted a newly released legislative report on TxDOT in this 2010 blog post:

At present, State Highway Fund revenues are not as stable as in previous years, nor are they continuing to increase at the same pace as in the past. In addition, from 2005 through 2007, TxDOT used a combination of State Highway Fund revenues and bond funding for operations and capital investments. During this period their expenditures for these areas outpaced revenues, resulting in TxDOT using approximately $700 million of reserves to pay for operating and project expenses during this period...

First, when TxDOT bumped up spending through the use of bond funding, baseline expectations for TxDOT spending levels in any given year were raised both inside and outside the organization, even though that approach was not sustainable and represented a marked deviation from historical spending levels. Second, TxDOT incurred a significant debt service burden associated with the bonds it issued -- and that servicing reduces the availability of General Revenue and Fund 6 dollars for TxDOT to use for operations and new projects. [In other words, the bondholders had to be paid from the funds -- general revenue and Fund 6 -- that were being used to pay for the projects.]

The end effect is that TxDOT’s available budget (for maintenance, new projects, etc.) is effectively lower than it would have been before the bond funding was issued. At the same time, maintenance requirements are increasing as a result of having increased the size of the highway system (every new road brought into the system must be maintained).

To which Burka responded:

In other words, the Legislature acted in a fiscally irresponsible manner when it issued several billion dollars in bonds to pay for road projects. By going into debt to build roads, TxDOT ended up with less money for new roads than if it had just used gasoline tax money. This is what happens when lawmakers spurn the pay-as-you-go principle. This is not fiscal conservatism. This is spending beyond your means. You can’t blame TxDOT. The blame belongs with the Legislature and in particular the leadership at the time, Dewhurst and Craddick. And with the voters, who approved the bonds...

Since this was written, not a lot has changed. TxDOT still likes the idea of toll roads, just so long as someone else is responsible for managing them. There has been no discernible shift in policy away from trying to build as many roads as fast as possible. Roads are considered urgently necessary to meet TxDOT's hypothetical, but always increasing, future travel demand estimates.

A growing number of TxDOT roads are now being built with the help of a sort of road bidding competition. This demands that local government contribute matching funds to help TxDOT pay for construction. With the "pass-through tolling" being encouraged by TxDOT, TxDOT helps by building a road while a county (like Williamson and Hays near Austin) helps front the money. The county gets reimbursed by TxDOT, but ONLY if the projected traffic shows up in TxDOT's subsequent traffic counts.

As an agency currently in obvious financial trouble, TxDOT is doing whatever it can to shift its debt burden toward private lenders, toward local level government, and toward making roads a general obligation of Texas government.

In Part 2 of this series we will take a closer look at why TxDOT's denial of current trends is leading to financial disaster.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog. Read more articles by Roger Baker on The Rag Blog.]

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Roger Baker : The Texas Road Lobby Meets Peak Oil

Photo by Rupert Ganzer / Flickr.
Coming soon:
Peak oil, peak driving, peak cars

Part IV: The Texas road lobby meets peak oil

By Roger Baker / The Rag Blog / July 28, 2011

[This is the fourth and final part of a series by Roger Baker on transportation, centering on the issue of peak oil and its ramifications.]

The 'Pentagon of Texas'

Molly Ivins once called TxDOT (Texas Department of Transportation) the "Pentagon of Texas.” The political clout of TxDOT and the Texas road lobby operating on the state level is still unrivaled.

Inside Texas, TxDOT has held a politically powerful position for many decades, with the help of its traditional political allies like the Texas Good Roads Transportation Association, which was the political base for businesses and civic clubs that might benefit from local application of road money, and the Associated General Contractors, essentially an alliance of private road contracting companies, rather analogous to the defense industry. The contractors gained their institutional power decades ago, when TxDOT stopped building very many roads on its own.

From its earliest days, the Texas Highway Commission, as it was known before it became TxDOT, has been a highly political institution ready to pass out favors to its political allies in the form of road contracts. This snip is taken from an especially scholarly study devoted to the early politics of TxDOT.

It’s more than likely that the conditions of these highways can be seen as a direct legacy of years of county authority and political struggle for control of the department. After all, since its founding in 1917 the Texas Highway Department has, as often as not, been forced to make decisions based on political considerations. Issues such as traffic density and the proportional allocation of funds were often secondary to the job of protecting revenue or just getting roads built.

In Texas, roads gradually became seen as a traditional form of publicly funded entitlement; a kind of welfare to subsidize suburban sprawl development in a heavily urbanized and rapidly growing state.

The way politics works in Texas, there is a traditional alternative to political bribes. Instead, the special interests channel money to Texas politicians through campaign contributions. Quite in line with this approach, the biggest road contractors in Texas contributed over $1 million to Texas Gov. Rick Perry during his first term in office. Later they gave more millions to other Texas politicians.

Since the state solicited its first bids for a leg of the TTC project in 2003, private companies that have landed lucrative TTC contracts have contributed $3.4 million to Texas candidates and political committees -- a significant increase in their political activity. TTC contractors also have spent up to $6.1 million on Texas lobbyists since the state solicited their respective bids. While the TTC contains windfalls for some contractors, lobbyists and elected officials, the benefits to Texas motorists and taxpayers are much less clear.

A few years ago, when the late Ric Williamson chaired the Texas Transportation Commission, it became apparent that fuel tax revenues could not possibly keep up with TxDOT's accustomed pace of road building. Working with Gov. Rick Perry, Williamson ordered TxDOT to try to shift all its new construction to "public-private partnership" toll roads to leverage TxDOT's limited public funds.

In order to sell private investors on toll road bonds, it is obviously helpful to try to maintain that road demand will keep increasing for decades until the bonds are finally paid off (some toll road bonds, like some issued for US 290 E, pay junk bond rates, but are uninsured against default). The policy is to try to use private toll road bond funding and also federal loans to supplement TxDOT's traditional but stagnant gas tax revenue, in order to bridge the revenue gap and keep building roads.

As is the case with Indiana Gov. Mitch Daniels, Texas governor Rick Perry is a highway booster. "The highways of Texas are built and paved in part by paths of gold leading to the Texas Governor's Mansion," political reporter R.G. Ratcliffe wrote in the Aug. 30, 2002, edition of the Houston Chronicle, in “Highway plans bring money to politicians.”

The political clout of the Texas road lobby still exceeds that of the various competing social needs such as education. TxDOT's long range road planning policy still stubbornly reflects the same outlook, which involves working hard to perpetuate the notion of ever-expanding growth in future road demand.

However, as the federal data clearly shows, Texas travel is currently falling short of TxDOT's vehicle travel growth projections, due to a combination of higher fuel prices, a poor economy, an aging population, congestion fatigue, and changing driving behavior, also seen nationally.


The Texas road lobby today

The latest incarnation of the Texas road lobby is arguably Transportation Advocates of Texas (TAoT). A sort of who's who of current Texas road politics, clearly organized by special interest money. Scroll down to the bottom to see a long list of those interests currently involved in promoting roads -- largely banking, construction, engineering, road contracting, and land development interests.

Those familiar with Austin's federally sanctioned Metropolitan Planning Organization, CAMPO, will see the last two CAMPO directors, Mike Aulick and Joe Cantalupo, listed among members of the road lobby's supporters.

This snip from an internal document of this same group, TAoT, recently circulated to its supporters, clearly shows that their primary political goal is to get more road money, despite the relatively falling gas tax revenue:

The Great Outstanding Issue: Texas has yet to identify a stable source of additional revenue that can meet the transportation needs of a rapidly expanding population. Fuel efficiency and hybrid vehicles reduce gas tax revenue -- and the state fuel tax hasn’t changed in 20 years. Whether it is through taxes, fees, tolls or other sources of revenue, further delays in providing additional financing will inevitably result in more traffic congestion.

By one estimate we under-fund roads by $8 billion a year. The problem will only get worse. Congestion will get worse. Economic losses will get worse. Rural connectivity will get worse. Road conditions and road safety will get worse. And the cost associated with doing nothing means one day the price tag will be worse.

Only roads are mentioned; TxDOT and the road lobby don't do much transit, except by TxDOT passing federal transit funds down to the local level. Even while admitting that the road funding situation is getting worse with no relief in sight, the focus remains strongly on building roads, as spelled out in this editorial by two top TAoT road lobbyists.

But we are not without solutions. The gas tax hasn't been increased in 20 years -- and its buying power has significantly diminished due to inflation. Vehicle registration fees could be raised and dedicated to high-priority projects. Allowing local officials to access a portion of the gas tax or other sources of revenue would also provide relief. And we can support ending the diversion of highway dollars to spending on other priorities.

The Texas road lobby selects data that
always predicts increasing road travel demand

The Texas road lobby seeks to keep building roads which benefit not only the road contractors, but also the powerful Texas suburban land developers who thrive by planning ever-expanding rings of suburban sprawl around the major metropolitan areas of Texas, a pattern typical of other sunbelt states.

By 2005, about 86% of the Texas population was living in its urbanized areas with only 14% living in the rural areas. Suburban sprawl development has long been made profitable by buying and developing land in the suburban fringe areas. These areas often escape city taxes, but require the help of publicly funded highways to help stimulate development.

This road-assisted urban development formula worked for decades, but it is based on unsustainable trends. Anyone can now see from the federal data that the total travel demand on Texas roads has been flat since about 2007. Here are the yearly VMT numbers for total travel in Texas in millions of miles on state's roads as measured by the Federal Highway Administration. See for example the 2007 link.

2004 -- 231,008
2005 -- 235,170
2006 -- 238,256
2007 -- 243,443
2008 -- 235,382
2009 -- 230,411

Unfortunately, this useful yearly data series for Texas road travel stopped in 2009. However, using this series we can compare the five most recent Februarys of Texas driving; here again, we can see that the Texas VMT road travel data have continued to stagnate or decrease, on through the most recently reported data:

Feb. 2007 -- 17,893
Feb. 2008 -- 18,831
Feb. 2009 -- 18,953
Feb. 2010 -- 18,490
Feb. 2011 -- 17,635

Given the nature of road politics in Texas, it comes as no surprise that TxDOT's long range plan released in May 2010 anticipates a travel demand growth of about 2.44% a year, for decades into the future, as a basis for TxDOT planning. As TxDOT says, "The new Statewide Long-Range Transportation Plan 2035 (SLRTP) will serve as the state's 24-year "blueprint" for the planning process.

TxDOT's "Statewide Long-Range Transportation Plan 2035," released in mid-2010, tries to ignore the current flatness in travel demand as something exceptional and abnormal. It assumes that vehicle miles traveled will somehow recover and then continue to rise steadily as a straight line for decades to come, much as it did before 2005.

The TxDOT long range planners are unable to explain the sharp falloff in traffic volume seen to begin about 2005 -- with Texas road travel peaking in 2007 -- and now continuing through the most recent data in 2011, or about six years now.

Since the Texas travel data is collected and published by the Federal Highway Administration, the continuing stagnation or decline in vehicle miles traveled on Texas roads is hard for TxDOT to deny. This well-documented reality has caused TxDOT to insert the strange flattened VMT section in the middle of their otherwise ever-ascending long range travel demand chart.



The reality is also that car registrations in Texas peaked in 2005 and then flattened and decreased slightly until 2009, where the most recent FHWA data ends. This data is given in thousands of car (light vehicle) registrations in Texas, 2004-2009, here seen peaking in 2005:

2004 -- 8,620
2005 -- 8,793
2006 -- 8,689
2007 -- 8,680
2008 -- 8,711
2009 -- 8,711


The Texas Road Lobby's think tank,
the Texas Transportation Institute (TTI)

The Texas road lobby has its own nationally prominent think tank, the Texas Transportation Institute (TTI) based at Texas A&M. TTI functions more or less as an academic wing of the road lobby, implicitly denying peak oil, while focusing primarily on expanding road capacity as the best way to preserve mobility and serve future transportation needs. The TTI outlook on urban traffic congestion and congestion relief -- through building more roads for ever more vehicles -- is widely disseminated through the media as their main approach to transportation planning policy.

Over the past year, TTI experts answered tough questions on a variety of state and national transportation issues. Over 2,500 newspaper articles, broadcast television spots and professional journals -- with a potential reach of over 725 million readers and viewers nationwide -- mentioned the Institute or its experts.

For the Texas road lobby to contemplate that the total amount of driving inside the USA may never again exceed the peak reached in 2007, either in Texas or nationally, is considered a heresy.

As the charts show, the TTI and TxDOT claim to be able to predict the future numbers of drivers, and the future road demand, thus implying the need to keep expanding road capacity for decades into the future. (Note: car ownership peaked worldwide in 2004.)

The TTI works hard to help us ignore the fact that people are actually driving less, in large part because of higher fuel costs combined with a decreasing family budget. Other factors include an increasing level of rush hour congestion seen in most large U.S. cities as a normal consequence of their growing population.

At the same time, TTI concludes that Texans will always be willing and able to keep driving more, as they have in the past, by means of a transition to more fuel efficient or electric vehicles. This would of course justify the continued building of ever more new roads by the private road contractors.

Since fuel tax revenue has been stagnant compared to the rate of inflation, TxDOT's gas tax revenue has effectively been decreasing. From the standpoint of road lobby politics, the political path of least resistance is for the road lobby to try to claim that demand for new road capacity will always keep growing as fast as it has in the past.

The road lobby also has an interest in trying to maintain that the increasing fuel efficiency of vehicles is more important than changing driving behavior, thus causing fuel taxes to continue falling short of the funding needed to meet the projected increase in road demand.

In May 2010 Dr David Ellis of TTI appeared before a joint meeting of two top transportation-related committees of the Texas Senate to explain why Texas travel volume will always keep rising, much as it did before 2005. And to argue that future road demand will continue to increase rapidly for decades to come, which implies the need for ever more roads.

Note the similarity between Dr. Ellis's chart and TxDOT's VMT charts released about the same time, except in the case of Dr. Ellis's chart, driving demand is projected to increase even more steadily over time.



Dr. Ellis's argument is that while Texas may have seen slight decreases in driving before, that these are exceptional and momentary blips, after which the old historic, and presumably normal, increases in vehicles on the road will resume, blind to the rising price of fuel.

The steady increase in driving seen during the decades of cheap oil before 2005 should thus be accepted as the normal situation, and as a proper guide to future spending on roads in Texas (see Exhibit 2 of his report).

Part of Dr. Ellis's conclusion is based on the theory that vehicle fuel efficiency is increasing much faster than probably is the case. While it is true that the U.S. has been using a lot less petroleum since 2007, this is probably in large part due to the fact that the public driving is less.


The reality is that while average vehicle fuel efficiency is really increasing, it is only happening very slowly. It takes about 10 years for fuel efficiency to increase by 5%, or .5% per year, largely held back by a slow vehicle replacement rate, as Stuart Staniford shows in this chart.

In sharp contrast to this probable rate of vehicle efficiency increase, Dr. Ellis estimates in his chart that vehicle fuel efficiency in Texas has somehow increased from 17.2 MPG in 2005 to 20.5 MPG in 2009 (see Exhibit 4 of his report). This would be a whopping 19% vehicle fuel efficiency increase in just over four years. This is nearly 5% a year, or almost 10 times the much more plausible rate of .5% a year seen above.

Exaggerating the probable increase in fuel efficiency helps the road lobby ignore the current and ongoing stagnation in vehicle miles of travel since the 2007 peak, both in Texas and the USA. The theory seems to be that any time now we will dump our old cars and go out and buy new electric cars, which the road lobby will tax per mile with road user fees. Meanwhile, we are expected to keep driving more and more, just as we did in past decades of cheap oil.


Texas roads are already deteriorating on a large scale

With the Texas road lobby in effective political control of state funding, most of the available road money has been going into building new roads. As they say, there are no ribbon-cutting ceremonies for maintaining existing roads, which in Texas have been deteriorating. As this piece points out, Texas road upkeep is getting lot more expensive, so repairs are falling behind to the point that most Texas roads are in now less than good condition.

Texas’ road conditions

As of 2008, a full 65% of Texas’ state-owned major roads had fallen out of good condition, meaning they will now be increasingly expensive to repair and maintain. Only 34% of Texas’ roads were in good condition, the state in which repairs are least expensive. The condition of 1% of Texas’ state roads was not reported.

Texas’ highway spending priorities

Between 2004 and 2008, Texas spent 62% of its highway capital expenditures on road expansion – $4.1 billion each year on average -- but only 11% on repair and maintenance of existing roads -- $692 million. That 62% of spending on expansion added 2,962 lane-miles to the Texas road network.

Texas would need to spend $4.5 billion annually for the next 20 years to get the current backlog of poor-condition major roads into a state of good repair and maintain all state-owned roads in good condition. Shifting more funds toward repair would go a long way toward addressing the state’s maintenance needs.

Cartoon from Korea Times.
The Texas road lobby's funding solution:
the Mileage-Based User Fee (MBUF)

Given the TTI's faith in the need to build more roads to accommodate an ever-increasing level of road demand, combined with an increasing inability of the fuel tax to meet the funding gap, it is easy to conclude that a lot more road funding revenue will be needed.

Anything to avoid seriously dealing with the basic need to shift transportation policy toward more energy-efficient compact urban development sometimes called smart growth, together with a new focus on public transportation.

The road lobby's basic conclusion is that Texas now needs to move toward some kind of vehicle mileage tax or fee, and raise a lot more money per vehicle mile driven. However any kind of new tax or fee that extracts more total money from already financially stressed drivers is going to be widely unpopular. Since the word "tax" is already quite unpopular in Texas, other terms are being used such -- as a "Mileage-Based User Fee." Alternative terms being used are "road user charges" or "network tolls."

A new tax or fee on miles driven is seen as one of the few possible ways to raise enough new money to keep the road-building game going. However this method of funding expanded road capacity ignores the effect that rising fuel prices are having by already reducing total per capita driving. It is becoming a matter of what the driver market will bear, given that driving is now in decline both nationally and in Texas due to the rising cost of fuel on top of a stagnant economy. But TTI sees little alternative.

TTI Leads Mileage-Based User Fee Conference, June 20, 2011

Some 115 federal, state and local government representatives, transportation system users, private-sector representatives, and transportation researchers attended the Symposium on Mileage-Based User Fees (MBUF) in Colorado, June 13-14. That represents a 60 percent increase over last year’s attendance.

MBUFs, also known as vehicle miles traveled (VMT) fees, would raise funds based on how many miles a motorist drives. Revenue generated would replace or supplement the inadequate fuel tax, which comes from each gallon of gas sold at the fuel pump.

“Although the idea of a road-user fee to replace or supplement the fuel tax has been discussed and researched at varying degrees for about a decade now, interest is really growing at the state and national levels,” says symposium co-chair Ginger Goodin, of the Texas Transportation Institute (TTI). Goodin is currently serving as principal investigator for a USDOT study on road-user fee collection technologies and is TTI’s resident expert on the topic.

The Texas Transportation Commission (TTC), at its Dec. 15, 2010 meeting, took a look at a variety of road user fees in a presentation given by TTI.

The Texas Transportation Institute reviewed its draft report, "Is Texas Ready For Mileage Fees?" which asserted that fuel consumption will continue to decrease and make a gas tax an unsustainable revenue generation method in the upcoming decade.

This fact -- combined with increasingly fuel-efficient and alternative-fuel vehicles and the $315 billion in funding needs for Texas transportation identified by the Texas 2030 Committee -- demonstrates the inadequacy of the fuel tax as a viable long-term funding mechanism for maintaining and expanding highways in the Lone Star State,

the report read.

The Legislature required Transportation Commissioners to take a look at the viability of a Vehicle Miles-Traveled (VMT) tax, which would rely on either on-board devices or remote-tracking systems to measure the number of miles each registered vehicle travels, and then tax vehicle owners accordingly. No formal action was taken.

As a part of their background preparation for the TTC, TTI had set up a number of focus groups with average citizens to try to anticipate public reaction to road user fees. As the reader may easily imagine, new road user fees proved to be quite unpopular -- "negative reaction to mileage fees heard raised were pretty consistent across the focus groups"

Even though different focus groups in different areas all had these concerns (privacy, cost, and enforcement), in some groups privacy was more prevalent and in other groups it was cost.


Where is the Texas road funding deficit headed from here?

Given the current political climate and budget constraints, the chances of the Texas road lobby actually implementing the proposed mileage taxes or fees seems highly unlikely. This is simply because the amount of new revenue thought to be necessary would require the imposition of much higher user or driver fees than are now being collected through the current Texas gas tax. This totals about 40 cents a gallon, -- about half state and half federal.

However, the federal portion of this funding is in trouble since the feds have long been spending beyond their means. It appears that federal road funding must now shrink dramatically.

The Highway Trust Fund, based as it is on gas tax revenues, is the main revenue source for state and local transportation funding, special programs, and MPO planning funds. The gas taxes bring in about $35 billion annually, explained Beaudry, but the feds have been spending about $27 billion more than that, drawing upon revenues from other sources.

The crux of the Congressional debate swirls around “House Rule 21,” which says they can’t spend more than they bring in (in gas taxes), which means cutting more than a third of the transportation bill. There is disagreement over three options -- raise the gas tax, dramatically cut spending or find new revenue sources.

In essence, a new and less costly approach to maintaining urban mobility than road-building-as-usual is needed pretty soon. The economics of driving is likely to play out this way: we will probably see much higher oil prices by next year, with $4.50 a gallon gasoline now anticipated.

Goldman-Sachs, Morgan Stanley, and Barron’s issued reports last week forecasting that oil prices will be much higher next year because of a stagnant supply situation. Goldman is saying the Saudis do not have nearly as much reserve capacity as Riyadh and the IEA claim and forecast oil at $140 a barrel next year. Barron’s is talking about oil reaching $150 next spring with spikes to $160 and $170 a barrel. Gasoline will be in the vicinity of $4.50 a gallon.

Just try to imagine the political challenge of the road lobby trying to impose miles driven fees on top of these fuel prices! But even this situation will probably not be enough to break through the current public denial relating to the unsustainability of driving as we have in the past.

To really break through our denial it may take $10 a gallon gasoline, as prominent peak oil policy analyst Tom Whipple has recently speculated:

Even weeks of 100 degree temperatures or even $4, $5, or $6 gasoline is unlikely to shift many prejudices in the short term. It is going to take a more severe shock -- say food shortages or $10 plus gasoline -- to shake the notion that a return to life as we knew it is still possible.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog. Read more articles by Roger Baker on The Rag Blog.]

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Central Texas Roads : Not Enough Money or (Soon) Water

This graphic from the Austin American-Statesman presents an optimistic funding projection.
Road Planners face huge budget shortfalls, try to ignore looming water shortages

By Roger Baker / The Rag Blog / September 20, 2009

Consider the emerging factors affecting most transportation planning. Four important basic constraints on long-range transportation plans are: funding trends, population and population distribution trends, and fuel prices.

And in Central Texas, the available water supply counts too.

All these factors are now working against road building, acting to impede sprawl growth like a perfect storm.

At their August meeting CAMPO planners hinted that CAMPO’s long range plans may be unfundable. Then on Monday, Sept. 14, the funding news got worse. CAMPO admitted that it does not look like CAMPO will have the money to fund EITHER of its long range planning alternatives.

From the Austin American-Statesman:

"...Maintenance and operation of the current roads and transit would get $15.5 billion under the CAMPO estimate, and $9.6 billion would go to new roads and transit facilities. CAMPO principal planner Stevie Greathouse said the greater emphasis on maintenance of existing systems reflects a growing awareness in the transportation industry that infrastructure has been allowed to deteriorate. Given projected inflation in construction costs, Greathouse said the actual ability to build road and rail capacity would fall by as much as 50 percent..."

The three alternatives proposed in CAMPO's long-range 2035 plan are Build Nothing, the Current Trends Concept, and then the environmentally greener clustered growth Centers Concept. The latter, which is generally seen as preferable by the planners, tries to cluster greener, denser growth in satellite cities like Manor, Cedar Park, and Kyle.

CAMPO might only have half the money they expected to do the long range 2035 stuff, and even the short range TIP is facing severe cutbacks -- and the potential impact has not been fully calculated.

There is no money for SH 45 SW.

Judge Biscoe told CAMPO at the Sept. 14 meeting that building SH 45 SW, a new road over the Edwards Aquifer opposed by environmentalists, would cost $100 million. Then the potential bond lenders would probably require about a $30 million local match, local skin in the game, to get the other $70 million. The local match is not there, because all the local transportation budgets are under stress.

If there was any good news at the CAMPO meeting, it was that Austin may manage to escape tougher federal transportation planning rules due to the city's having exceeded ozone limits. The money news at CAMPO essentially was all bad. Even some federal stimulus funded sidewalks in Manor may not get funded because of TxDOT shortfalls.

As in most places, Texas road funding is closely tied to the fuel tax, meaning that fuel prices ultimately rule over road funding. The CAMPO assumptions and models have tended historically to assume that vehicle travel and thus fuel taxes will always increase. But the federal federal stimulus funds are falling way short of balancing the shortfalls.

TxDOT has mismanaged and over-committed its TIP funds, meaning only about 20% of this major category of funds will be available, which drags down other funding categories within a highly complex leveraged system built on growth, credit, and business as usual.

As a starting handicap to its long term plans, the CAMPO population projections that get approved are completely unscientific and are political in their nature. The choice is a political decision whereby the population projections and distribution are usually chosen to inflate and perpetuate profitable suburban sprawl growth, favored by the development interests with the most political clout.

Roads in Texas are a form of public subsidy for land developers. As such, they tend to be blind to recent travel trends, funding trends, or resource constraints, whether energy or water.

In Central Texas, the available water supply limits growth more than the transportation planners want to admit. The reality is that most of the total Colorado River flow, although buffered by the Highland Lakes, gets used up by the adjacent cities and agriculture before it reaches the Gulf of Mexico. During drought periods like the current one, the wells dry up, and there may not be enough stored river water to fulfill existing commitments.

I recently requested via the public Information Act any CAMPO documents that would indicate that CAMPO planners are taking into account the water supply constraints on Central Texas growth that were documented and incorporated in the future population projections for the various Texas river basins, developed by the Texas Water Development Board.

Following is the specific section of federal transportation law that says that MPOs like CAMPO should take other regional environmental plans, (like the TWDB's long term plans based on Texas water supply), into account when doing long range CAMPO transportation
planning:

The federal code that regulates CAMPO planning is Title 23, Chapter 1, section 134,

(D) Consultation, comparison, and consideration. -

(i) In general. - The long-range transportation plan shall
be developed, as appropriate, in consultation with State,
tribal, and local agencies responsible for land use
management, natural resources, environmental protection,
conservation, and historic preservation.
(ii) Comparison and consideration. - Consultation under
clause (i) shall involve comparison of transportation plans
to State and tribal conservation plans or maps, if available,
and comparison of transportation plans to inventories of
natural or historic resources, if available.

However, as Mr. Caltalupo noted in his Aug 7 reply,

"Mr. Baker; We don't have any direct requirement to include water-related and water supply/availability factors in the development of our long range plan..."

In other words the federal law indicates that you really should -- but stops short of saying that you must -- take limited natural resources like water into account when planning roads that must serve a vastly expanded future population and its distribution.

Such a planning oversight can get those who invest in toll roads and sprawl development in lots of trouble once somebody bothers to figure out that the water for residential development just isn't there.

Let us look at an extreme case of the CTRMA toll road promoters ignoring natural water supply limits. As background, one should understand that the CTRMA is in financial trouble, unable to build US 290 E as planned, and is beating the bushes looking for toll road lenders. Here the CTRMA director Mike Heiligenstein suggests emulating China as the Texas model for funding toll roads, which implies that traditional funding alternatives assumed in the past are not there anymore.

In their pitch to potential toll road investors on the CTRMA website -- entitled "Mobility Authority Investor Update" -- they boost the hypothetical 2040 population of Williamson County up to an astonishing 1.7 million, far above what even CAMPO projects in 2035 (the January 2008 State Data Center population estimate for Williamson County was 380,000).

CLICK IMAGE TO ENLARGE

The CTRMA got this high number by cherry-picking a period of intense nationwide and Austin area sprawl development from 2000 to 2007, an increase that was cited by the Texas State Data Center. The CTRMA planners then extended this growth spurt at full force for thirty years into the future. This is an assumption apparently calculated to prove that Williamson County toll roads are bound to be sure fire moneymakers.

Such investment planning strategies look like the homegrown Texas equivalent of sub-prime loans packaged for naive investors. In fact, the CTRMA investment promotion document comes with a heavy-duty legal disclaimer, cited in part below. Translation: Let the CTRMA toll road bond buyer beware!

"...In no event shall The Authority [the CTRMA], J.P. Morgan or First Southwest be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of..."

Could Williamson County really grow to 1.7 million? Let us compare this toll road promotion fantasy with the sober Texas Water Development Board projections that predict water shortages will occur over much of Williamson County within the next ten years. This chart of anticipated water shortages in Williamson County is from the long range TWDB water plan for the Brazos basin that includes Williamson County.

CLICK IMAGE TO ENLARGE

Go here then get the pdf by clicking on: "Section 4A - Comparison of Demands with Water Supplies to Determine Needs; page 4A-8."

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Texas : Transportation Projects in Big Trouble

Moving right along. From Mr. Ed's Old Car Pictures.

“If the physical scientists who warn about limits to growth are right, confronting the global economic meltdown implies far more than merely getting the banks and mortgage lenders back on their feet. Indeed, in that case we face a fundamental change in our economy as significantas the advent of the industrial revolution.

"We are at a historic inflection point -- the ending of decades of expansion and the beginning of an inevitable period of contraction that will continue until humanity is once again living within the limits of Earth’s regenerative systems.

"But there are few signs that policy makers understand any of this. Their thinking appears to be shaped primarily by mainstream economists’ assurances that growth can and must continue into the indefinite future, and that the economic contraction the world is currently experiencing is only temporary--a problem that can and must be solved.”

-- Richard Heinberg, author and commentator

CAMPO Meeting:
Screwups mean financial problems, delays, for transportation projects

By Roger Baker / The Rag Blog / August 11, 2009

CAMPO is the federally mandated bureaucracy responsible for approving federal funds for roads in Austin and its surrounding counties. (Campo is the Capital Area Metropolitan Planning Organization.)

At the CAMPO meeting last night in Austin, the big news was huge new money problems facing TIP (Transportation Improvement Program) projects (mostly roads) the next few years.

Basically, TxDOT (Texas Department of Transportation) screwed up once again on a massive scale in terms of its binding commitments around the state. As a result, CAMPO will only be getting a small fraction of the anticipated Category 2 Metropolitan Mobility funds going into the Austin area for TIP projects for 2010 and 2011.

(This probably stems from expensive commitments that TxDOT made in the salad days of yore, like pass-through tolling and whatever. Under Ric Williamson, TxDOT didn't take financial constraints very seriously). Perhaps on the order of $4 million now expected to be going into the CAMPO area instead of the anticipated $20 million or more for these years. These funds are considered by TxDOT to be approved but postponed.

But a delay of two years for the many projects in the TIP not funded by stimulus money is a big deal, meaning that many of these projects will likely NEVER get built. Some idea of the difficulty that CAMPO now faces is that it is hiring a financial guy just to scrounge up money.

CAMPO is reserving big money for new corridor studies that it indicated may be handled by other agencies. These are barely described in the backup but will cost about $1.7 million. This corridor study funding may, I suspect, signal a big shift in thinking, perhaps toward
rail, since road funding is in such trouble, locally, statewide, and nationally (oil addiction is an expensive habit).

Austin is VERY close to exceeding (if one critical reading moves up a bit more than 1% in the next few months, bang!, its over) its federal ozone limits that would trigger a whole new and (from the standpoint of CAMPO, nightmarish) redoing of their existing planning effort.

CAMPO actually admitted last night that its long-range planning effort might be pretty academic given its current finances. I would go on to say it's total garbage already, due to the combined effect of oil, water, and dollar shortages. (Since world oil production has probably already peaked, there is likely to be another debilitating oil price spike before CAMPO's TIP funds from TxDOT could be restored to "normal" in 2012.)

CAMPO is now getting proprietary NEPAssist software free from TxDOT. TxDOT is apparently encouraging all its MPOs to use this software to speed up environmental studies on roads. Its database has maps of stuff like recharge features. And even the form letters where you fill in local data to generate form letters to federal officials, all according to the proper protocol.

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Roger Baker : Transportation Politics and the Austin Road Lobby

I-35 in downtown Austin. Photo by noname 77065.
Part 2:
The Austin Road Lobby

Texas transportation politics, the developers and those pesky populist reformers

By Roger Baker / The Rag Blog / June 22, 2009

[This is the second part of a series on transportation in Austin. In the first installment, Baker debunked the myth of growth in Austin traffic congestion. Here he examines the politics of the highway establishment. This was to be a two-part series, but Roger tells us there's more to come.]

How it got to be that way

The Author has been an observer of transportation politics in Austin since about 1979, beginning as a transit advocate, and then observing the sad failure of the Austin Tomorrow Plan; this is still official Austin growth policy but is mostly ignored due to the political influence of special interests tied to land development. While it is convenient to use the term "Road Lobby", in many ways locally it is actually a land development lobby.

Given the strong historical role of real estate in Texas politics, it was almost inevitable that a politically powerful road lobby would evolve. Political corruption involving roads in Texas is a matter of long tradition, dating back to the period soon after the Texas Highway Department was established in 1916. After Texas Gov. James "Pa" Ferguson was impeached for corruption in 1918, his wife "Ma" Ferguson ran and won in 1924 and she became Texas' first woman Governor. Subsequently, road contracting scandals kept her from being reelected in 1926. Here are some details about these early days of Texas road politics:

"...Throughout the 1920s and 1930s the department remained a focal point of Texas politics. The 1924 gubernatorial election of Miriam Amanda Fergusonqv placed the state road agency in a politically precarious situation, since control of construction and maintenance contracts meant potentially lucrative patronage to Ferguson supporters. A legislative enactment passed a year before Ma Ferguson's election staggered the terms of the highway commissioners, and she appointed all three members of the reorganized highway commission. Her appointees soon took political and monetary advantage of a vulnerable road program..."

Later, the road scandals and a relative lack of road money during the depression years caused the Texas Highway Dept to clean up its political act. Dewitt Greer, a celebrated TxDOT director, kept TxDOT politics clean for decades.

The 1950s saw easy federal money for new interstate highways under President Eisenhower, and lots of new road contracts; roads were apparently a permanent growth industry. With the advent of the federal highway trust fund, roads came to be considered a sort of permanent land developer entitlement. See the Texas Monthly link to Griffin Smith's story in Part 1 of this series.

Increasingly since the Carter Administration, notably under Reagan, and up until only a few years ago, most of the federal “social economic and environmental” regulations governing roads became increasingly lax and weakly enforced. As one telling example, CAMPO is self-certified; the feds let CAMPO vote to proclaim they are complying with all the federal law. In effect the foxes get to vote on whether they steal chickens.

Road privatization plus easy credit under lax rules led to new suburban roads being generously proposed to meet future land development projections supplied by the developers themselves. The road lobby thus flourished as a special interest coalition with hundreds of millions of dollars worth of real estate loans at stake. Increasingly TxDOT formed political alliances with the interests that benefited from road-based growth. Rarely if ever have TxDOT Commissioners been appointed on the basis of transportation expertise rather than political or business connections. Meanwhile, in the mid-1980's, public transportation got only about 1% of TxDOT's funds.

The fading of the Sharpstown era building bubble in Houston sent a lot of cash trapped in Texas by intrastate banking law to Austin. The Savings and Loan bubble especially contributed to making Austin a hot growth area in the mid-1980s. It seemed easy to recruit an endless supply of high tech jobs. Some of the land development politics of that era is detailed in Harvy Katz's book Shadow on the Alamo.

These factors all helped to stimulate a big new development boom in the Austin area. Developer lobbyist Ed Wendler Sr. was notably active in lining up political support and votes on the ATS for the "Outer Loop,” or SH 45, a giant ring road proposed to circle Austin. The SH 45 ring road was favored by an influential group of suburban land developers. Soon the road ran into trouble as part of the fallout after the Texas Savings and Loan bust killed off the construction boom. Key developers who had promised to donate free right of way for the Outer Loop went broke in numbers sufficient to delay its construction. Here is how the author reported the situation in July 1986. The end of the mid-1980s Austin growth boom caught nearly everyone who benefited from it completely by surprise. Go here, here, here, and here.

Austin has since seen several boom and bust cycles. Here is how the Austin region land development lobby, tied closely to roads, looked to the author in 1994, in terms of regional growth policy:

Not a lot has changed since the mid-1980s in the way the politics operates, except nowadays the road lobby is now much better organized to resist populist meddling in the affairs of those promoting roads. And the public money is running out fast.

Now, almost a quarter century later, this same Outer Loop, SH 45, has been largely built as pieces under different names. The west side of the loop was always to be the existing Ranch Road 620 and US 71. The east side of the Outer Loop has been constructed as the SH 130 toll road. Two more sections, SH 45 N and SH 45 SE are now open as toll roads. Meanwhile, the road lobby is still trying to build a remaining portion of the loop, SH 45 SW, as a new road over the Edwards Aquifer, but nobody knows where to get the money to build it. Travel demand on the existing segment of SH 45 SW is about flat, but the road lobby hasn't given up. Here is the business media pitch to encourage this SH 45 SW in January 2009, which still assumes the politics can overcome the money problem.

The Austin road lobby now

Texas transportation infrastructure is obviously of key importance to the Texas economy and the TxDOT budget reflects that. TxDOT had learned to depend on a continually growing budget of about $8 billion a year, but that is shrinking and TxDOT is under broad political attack. The major road building decisions in Texas are in essence almost totally political. This is because the governor appoints the TxDOT board that then channels most of the state and federal gas tax money down to the local level; predictably, TxDOT Commission appointments by the Governor have become a traditional political reward.

Meanwhile, TxDOT's gas tax dollars have been falling increasingly short of traditional expectations for more than a decade. TxDOT now usually requires new roads to be "leveraged" by seeking local matching contributions including toll road bonds from those who seek roads. Given this situation, it is understandable that transportation lobbying has become an important part of Texas politics.

Local Austin area lobby groups revolving around real estate now complement TxDOT's old traditional state level allies tied to state road contracts. Between sporadic populist uprisings opposing toll roads, etc., CAMPO's Austin meetings tend to be dominated by well-dressed businessmen representing the many interests that stand to benefit from roads.

The road lobby, sometimes called the highway establishment, is a sort of constellation of allied special interests, with TxDOT at the center. A leading example of a powerful statewide TxDOT-associated lobby is Associated General Contractors, or AGC, a politically active coalition, with many offices across the state.

Texas Good Roads Association. Spend more on roads.
The Texas Good Roads Association tends to focus more on organizing local Texas political support among community leaders and politicians to support spending on roads. It has not been too difficult for a powerful state agency like TxDOT to have its friends line up political support for spending on local roads. Since road funding is a discretionary political decision of the TTC, local governments have learned to either play ball with TxDOT, or lose favor and get no roads:

Always politically active in the background, but ordinarily trying to keep a low profile is the Greater Austin Chamber of Commerce. When exploring groups like this, one should study the memberships of the various boards and committees and subcommittees. Then google the important individuals to get an idea of the many common ties among the lobby groups, hinting at the political dynamics below the surface.

The Real Estate Council of Austin, RECA, has long been active in promoting roads, generally to the exclusion of rail. Dependable and profitable new home construction has been thriving in the suburbs, with the help of publicly funded roads, for the last thirty years in the Austin area. It is how much of the private money is and has been made in the Austin area. As a group representing many of those who depend on and closely represent suburban sprawl growth beneficiaries, RECA can be depended on to turn out its realtors and home builders for contentious road hearings at CAMPO to weigh in on the side of lots of public funds money for roads and toll roads to serve future sprawl development.

There are sometimes road lobby efforts that seem to arise from nowhere. "Take on Traffic" is a local road lobby group funded by none other than the Greater Austin Chamber of Commerce, as you can see from the fine print at the bottom of the following link. This site closely reflects the recent position taken by Sen. Watson in the current legislative session, to support a local option (ten cent gas tax) funding. This is thought to be the best of the politically unpopular options as the state money runs out. What this potential local revenue is intended for is not clear:

"...With troubling news of shortfalls from the federal government and the Texas Department of Transportation, the time has come to allow communities the option to generate additional funding locally for transportation projects to help meet our increasing mobility needs."

The Capital Area Transportation Coalition, pronounced "kat-see,” is a primarily road lobby headed by Bruce Byron who comes to nearly every CAMPO meeting, often to urge more road funds. CATC, like the other branches of the road lobby, actively promotes roads that serve suburban real estate interests, often with the help of the drowning-in-traffic argument:

…More cars, more driving. Right now, there are about four cars for every five people in Central Texas. In five years, there will be at least another 130,000 cars on the road. And those cars are driving farther and longer as the region expands into the surrounding counties. Right now, Central Texans are spending nearly an hour every week -- 51 hours a year -- stuck in traffic, and that figure is rising. And our roads are becoming less safe. Our rate of traffic fatalities is 45% above the national average...

The local business press works hard to perpetuate the ever-increasing-traffic myth, usually also focusing on roads. The Austin Statesman newspaper has had an obvious incentive to be supportive of car-centric transportation solutions, since a large portion of its ad money has historically come from cars and suburban real estate. The local business press like Neighborhood Impact News and the Austin Business Journal have been historically supportive of spending public money on roads to serve proposed low density development.

Here is another example:

...Texas A&M University’s Texas Transportation Institute (TTI) calculates travel delay (the amount of extra time spent traveling due to congestion) in Austin at an index of 1.22, meaning peak hour travel takes an average of 22 percent longer than free flow travel as of June 2004. Today, Central Texas residents spend an additional 52 hours each year in their vehicles because of congestion on our jam-packed roadways. That extra time in our cars, trucks and SUVs costs each of the travelers about $1,000 during the year, which is a higher cost than those commuters in Seattle, Baltimore, Philadelphia, Denver, Phoenix and San Antonio -- all cities much larger in square mile and in population than we are -- endure. We are stuck like Chuck in traffic, and the motors are all running...

Recently, while conspicuously avoiding the funding shortfalls, a common position of the Austin area business press is trending increasingly toward advocating BOTH roads and rail:

Money Problems

Until about 2006, with the help of leveraging such as Texas Mobility Fund borrowing, the road contracting money flowed freely, and TxDOT kept building. Under TxDOT Commission Chair Ric Williamson, TxDOT got pretty sloppy about its finances. Due largely to the Trans Texas Corridor, TxDOT had gotten a reputation for arrogance from rural landowners who saw no benefit from a huge new $185 billion network of roads a quarter mile wide crisscrossing the state. Then TxDOT got wide and unfavorable attention for double counting over a billion dollars in revenue.

District 14 of TxDOT, which handles the Austin area, finally had to admit to CAMPO in late 2007 that its accumulated Austin area road commitments were so great that it was being forced to turn over responsibility for building a bundle of promised new toll roads to the CTRMA, and henceforth concentrate on maintenance.

As Texas Transportation chair Ric Williamson said in May, 2004: "It's either toll roads, slow roads or no roads." TxDOT coordinated closely to help the CTRMA to contract and build its first and only toll road, US 183A. In fact, Regional Mobility Authorities like the CTRMA were being actively promoted and groomed by TxDOT statewide to shoulder the responsibility of funding and building regional toll roads without being subject to the usual state and federal laws applying to TxDOT.

In the case of Austin, TxDOT has used a TxDOT subagency called the Texas Turnpike Authority to build a group of toll roads including SH 130, SH 45 N and SW, and MoPac North. This raises the following question. If TxDOT can build and operate these existing toll roads, then why can't they also build the same ones that they are now expecting the CTRMA to build? Probably this is because the CTRMA can wheel and deal on financing and avoid a lot of existing state law that TxDOT finds burdensome. In fact, the CTRMA appears to coordinate closely with TxDOT on projects like US 290 E. The CTRMA offers legal advantages plus a financial firewall that protects the big dog with deep pockets in the road game, which is TxDOT, from bond holders.

Trains (literally) arrive in Austin.
Rail becomes a factor

Recently, local business interests and politicians (previously anti-rail former Rep. Mike Krusee being one example) have begun to recognize that roads alone cannot meet the anticipated future travel demand, leading them to now support passenger rail. Dallas-area support for expanded rail transit through Sen. Carona was one of the main reasons for Texas Senate support of the local option transportation tax, which failed when HB 300 died in the Texas legislature.

The Central Texas transportation lobby is not a pure road lobby anymore. The ASA rail lobby group now has the favor of key elements of the Austin-San Antonio political establishment, although they don't have much money because TxDOT, under the Texas Constitution, and due to the road lobby, has to spend most of its gas tax money on roads. Furthermore, ASA lives under the thumb of TxDOT, which now regulates rail. ASA managed to get about $8.7 million in new rail planning money from the Texas legislature to keep the doors open, but this is far short of the $1.8 billion or so it will take to move rail freight to the east of IH 35 and unclog the existing line UP line for passenger service.

Nowadays, there is even an Austin-area wing of the political establishment supporting transit; the Alliance for Public Transportation or A4PT (here and here), has joined forces with the road lobby as we can see below. A4PT chair Joe Coffee, is also the Elgin city planner. He was appointed by Sen. Kirk Watson, incidentally an Elgin Frontier Bank co-owner, to CAMPO's Transit Working Group. The Green line is meant to serve transit oriented development in the Elgin area. Coffee seeks to promote rail projects like the Green line to Elgin.

"CATC and RECA have joined with the Austin Chamber of Commerce, Downtown Austin Alliance, and the Alliance for Public Transportation for something more important than the old ‘road verse rail’ battle lines… more local funding and the chance to fight over that later."

Pesky Persistent Populist Reformers

Austin has always had a lot of environmentalists and they decided pretty early, through the Austin Tomorrow Plan, that they did not want any new roads over the Edwards Aquifer. By about 1980 CAMPO's earlier incarnation, the Austin Transportation Study (ATS), had already become a focus of the developer versus environmentalist conflict. When (later Governor) Ann Richards became Travis County Commissioner, she publicly sided with the environmentalists fighting to keep TxDOT, and interested land developers like Gary Bradley, from making MoPac into a second crowded version of the IH 35 now leading to the Edwards Aquifer. Since that era there has been a more or less constant string of battles going on between environmentalists and the increasingly organized road lobby, trying to keep building roads to serve expanding rings of sprawl development.

The road lobby and TxDOT have always been more than happy to blame environmentalists for stopping roads. The truth is that any fair appraisal of the Austin area situation would show that over-optimistic road planning, blind to funding limits, has been a much more important factor. Road opposition has now widened from the early liberal environmentalists, even Earth First! in the early 1990s, to a much broader political spectrum of transportation reform advocates, now active statewide. Everyone can see the existing system is corrupt and badly needs reform, although not everyone can agree on how to fix it.

There is even a documentary video, "Truth Be Tolled.” Lots of rural conservative Republican property owners, Libertarians, and grass roots environmentalists opposed the Trans-Texas Corridor, largely on the basis of opposition organized and supported by web activists David and Linda Stall.

In Austin there is still a strong anti-toll road coalition, partly due to reform politics and Libertarian influence. Muckraker/anti-toll road and skilled media activist Sal Costello played a major role in organizing Austin toll road opposition in 2006 and 2007.

Currently, Terri Hall's TURF group in San Antonio is probably the most active group fighting TxDOT, the road lobby, road taxes, and toll roads:

And the environmentalists remain active, especially in the Austin San Antonio area. As one example, SH 45 SW has been actively promoted as a new road over the Edwards Aquifer to serve new commuters in Hays County who face a lot of congestion getting onto Southern MoPac. But roads like this to serve development over the Edwards Aquifer have always attracted strong opposition from Austin environmentalists. As of now, SH 45 SW is on hold, remaining a magnet for environmentalist opposition, and without a plausible funding source.

Likewise, US 290 W at the "Y" at Oak Hill in Austin is stalled partly by some federally required studies, but more seriously from a lack of money from the CTRMA that has accepted responsibility for rebuilding this road as a toll road. This road is now on the back burner. Likewise the CTRMA's US 290 E toll road is under attack from a swarm of activists. TxDOT approved stimulus funds for building an interchange at US 183, but this toll road would cost about $620 million and most of the funds to build this road are hypothetical. Actual travel demand on both these roads has been flat for years.

Statewide, the opposition to the Trans Texas Corridor became heated enough to make the TransTexas Corridor a campaign issue for former Comptroller Carol Strayhorn. She also wrote an exposé about the politics behind the CTRMA.

Now Perry's big TTC toll road network has even become a prime political target for Sen. Kay Bailey Hutchinson, who is expected to run for governor. United citizen opposition to TxDOT's traditionally heavy handed policies have thus taken a heavy political toll on that agency. TxDOT is now widely unpopular across the state,

In fact, TxDOT came under heavy political attack in the recent session of the legislature, and TxDOT got abolished as a state agency, although a special session will fix that. And they are out of money, unable to issue the $5 billion in bonds authorized by voters. Sen. Carona, promoting a local option fuel tax as part of the ill fated HB 300, held a press conference announcing that TxDOT may have to quit building ALL new roads by 2013. But it gets worse. Austin and San Antonio are both strapped for transportation cash. There is the matter of $5 billion in unissued bonds authorized by Texas voters, That amount was shrunk to $2 billion to make it more politically appealing, but even this did not pass the Texas legislature. Lots more problens detailed here.

The bad news for TxDOT just keeps on coming, and with it much of the future that The Texas road lobby had mapped out before the recent legislative session, much of which was tied to HB 300. If there is any good news for TxDOT and the road lobby, it is probably that Gov. Rick Perry has called a special session of the legislature to save TxDOT from being permanently "sunsetted" into oblivion. Also TxDOT's political clout in the legislature prevented serious reforms called for by the Texas Sunset Commission, like an elected transportation Commission, from being passed with strong support from the Texas House of Representatives. See the Sunset Advisory Commission Staff Report, here:

TxDOT is at this point quite unlikely to regain anything like its former political clout. This is because it is now so politically unpopular, together with the fact that it is essentially broke. Locally the CTRMA's toll road bonds are almost certain to default within a decade or so, due to rising fuel prices due to peak oil.

If the problem facing TxDOT was peak oil alone, it would be bad enough, but now the United States faces complex interacting economic factors tied to peak oil (see here, and here; trying to solve one problem only tends to worsens others, like reducing the strength of the dollar.

See Part 1 of this series: Roger Baker: Austin Drowning in Traffic Growth? Think Again by Roger Baker / The Rag Blog / June 7, 2009

See Roger Baker's earlier Rag Blog articles on Austin transportation here, here, and here.

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