The two-year moratorium on the privatization of highways that Lois Kolkhorst tacked onto a transportation bill in the House last week was just the first shot against the Trans-Texas Corridor. The amendment prohibited the Tx-DOT from entering into a comprehensive development agreement with any private entity and banned the sale of any toll road to a private entity until the moratorium expires on September 1, 2009. (The amendment did contain some carve-outs for certain regional toll authorities.)

Senate budget writers fired the second volley this week in a series of riders in the Tx-DOT budget that inhibit the department’s ability to enter into privatization agreements free of legislative oversight, as it has been able to do until now. The House version of the budget also addresses oversight issues, particularly of the Corridor. In addition to these riders, others place strict reporting requirements on the department to account for its use of funds.

Four years after the Legislature gave Tx-DOT carte blanche to privatize the state highway system, lawmakers have reasserted their control. This is a salutary development, the real credit for which goes to the public, which saw the potential for abuse and corruption in the Trans-Texas Corridor, as well as its cost to motorists and its impact on rural property ownership, long before the politicians did. The two budget bills, which will be reconciled in conference committee, go a long way toward establishing legislative oversight regarding the Corridor and toll roads generally.

Legislators should recognize, however, that the moratorium and the budget riders do not solve the long-term mobility issues facing Texas. The ultimate objective is a superior system of free intercity roads, supplemented by toll roads in congested areas, that are built, maintained, and operated with public funds. This is an achievable objective. Despite assertions by Tx-DOT in the past that this objective cannot be realized without tolling, the Texas Transportation Institute at Texas A&M has indicated otherwise: Increasing the gasoline tax by 8 cents per gallon and indexing the tax to inflation in the highway construction index will produce sufficient revenue for the state to meet its transportation needs over the next 25 years by issuing bonds. Unfortunately, the political will and leadership necessary to take these steps do not seem to be present, although you would think that the hostility toward the Corridor outside the Capitol would provide enough cover to allow those inside to muster a little courage.

The public uprising against the Trans-Texas Corridor is a significant event in Texas political history. Historically, grass roots activism has not flourished here. A few groups have been effective in getting their programs enacted–Mothers Against Drunk Driving comes to mind–but, session after session, the agenda tends to be set by the lobby and the leadership, who are responsive to important organized constituencies within their political parties. The last time I can recall citizens storming the Capitol demanding action occurred in the late eighties, when overcrowding of Texas prisons led to the release of violent criminals by the thousands. The Legislature responded with a mammoth prison-building program. In the last couple of years, however, Texans have organized to express concerns about illegal immigration (on both sides of the issue), about coal plants, and about Governor Perry’s and Speaker Craddick’s hostility toward the education community–and, of course, about the Trans-Texas Corridor. I think this new activism reflects that Texas is changing in ways we don’t fully understand, that quality of life issues are becoming as important as social and economic issues, and that the state’s political leadership is seen as being out of touch with the times. And rightfully so.

I seem to have strayed from the subject of the transportation riders. The Senate’s provisions appear first, then the House’s. The numbering of the Senate riders, immediately below, is my own, not the budget writers’. Both bills can be found on the Legislative Budget Board’s Web site. The Department of Transportation budget is in Article VII.

#1. Comprehensive Development Agreements

The Department of Transportation may not expend any amounts from payments received by the department under a comprehensive development agreement and deposited to the State Highway Fund #6, including applicable concession fees, unless:

a. the department submits a report to the Legislative Budget Board … outlining the amount of funds available from such payments …, the department’s anticipated use of such funds and their projected impacts, and

b. The Legislative Budget Board issues a written approval for the use of such funds.

#2. Appropriations of Concession Fees and Payments Received under a Comprehensive Development Agreement.

The Department of Transportation may not expend any amounts from payments received by the department under a Comprehensive Development Agreement and deposited to the State Highway Fund…including applicable concession fees, unless:

a. The department submits a report to the LBB … outlining the amount of funds available from such payments …, the department’s anticipated use of such funds, and their projected impacts; and

b. The Legislative Budget Board issues a written approval for the use of such funds.

#3. Toll Project Revenue and Funds Report.

Using funds appropriated above, the Department of Transportation shall submit to the Legislative Budget Board…an annual report of all state toll project revenue received and any other related funds that are deposited outside the state treasury, including the purpose and use of such funds….

#4. Limitations on Expenditures for Contracts

a. Without prior approval of the Legislative Budget Board, the Department of Transportation shall not use funds appropriated above to enter into any contract with a private participant for the construction, maintenance, or operation of a road or highway in the State of Texas that:

(1) contains any provision that would guarantee or ensure a return on investment;

(2) would reduce the risk of the private participant as a result of any action taken by the department or the State of Texas;

(3) would limit or penalize the expansion of any other department-run facilities designed to reduce congestion;

(4) fails to contain a stated buy-back provision that can be calculated without using estimates of future revenues;

(5) contains any possible financial liability that could be inherited by the department, the State of Texas, or any other state agency.

(b) The Legislative Budget Board may consider a request from the Department of Transportation to expend funds appropriated above to enter into a contract containing any of the criteria specified in this rider. A request by the department to expend funds under this provision must include information regarding the location, project costs, and projected benefits to the state for each project request proposed under such contracts.

The House also adopted a rider addressing the Trans-Texas Corridor, reflecting recommendations made earlier in the session by the State Auditor:

Miscellaneous Provisions Related to Toll Roads and Trans-Texas Corridor Projects.

a. Toll Road Projects. The Department of Transportation may not use appropriate funds to pay any costs related to making projections, using department personnel, of revenue to be generated by a toll road project. The department may use appropriated funds to may the cost of making those projections only if the projections are made under an interagency contract between the department and the Comptroller of Public Accounts under which the Comptroller:

(1) makes the projections for the department; and

(2) projects the toll revenue for each geographic region of a toll road segment before the department signs a contract with a developer to operate, lease, and finance that segment.

b. Report of Indirect Costs. In each cost report submitted to the Legislature by the Department of Transportation that includes information related to a project that is part of the Trans-Texas Corridor, the department shall either include indirect costs associated with that project or indicate that indirect costs are not addressed in the report.

c. Access to Records Relating to the Trans-Texas Corridor. The department shall spend appropriations available for the purpose under this Act to achieve transparency in the department’s functions related to the Trans-Texas Corridor by providing, to the greatest extent possble, … public access to information collected, assembled, and maintained by the department relating to the Trans-Texas Corridor.

d. Accuracy of Developer Assumptions in TTC-35 Project. Money appropriated by this Act may not be spent in connection with a contract entered into by the department … related to the TTC-35 project, unless the department implements a process to obtain assurance regarding the reasonableness of the assumptions that the contracted developers use in developing plans and financial projections for the TTC-35.

e. Financing Costs Associated with Mid-Term Road Facilities and Long-Term Road Facilities. The Department may not use money appropriated under this Act to implement a master development plan unless the plan includes the financing costs associated with the mid-term and long-term facilities.