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The committee met to take up the following interim charges:
 
Evaluate the status of Texas's port system, including a review of the structure and operations of the Maritime Division of the Texas Department of Transportation.
 
Evaluate the status of passenger and freight rail in Texas, including a review of the structure and operations of the Rail Division of the Texas Department of Transportation.
 
Conduct legislative oversight and monitoring of the agencies and programs under the committee’s jurisdiction and the implementation of relevant legislation passed by the 83rd Legislature.
 
Agency Update
 
Shelly Mellot, Deputy Executive Director, Department of Motor Vehicles

  • The agency returns $10 in revenue for every dollar appropriated
  • The single sticker program goes into effect March 1, 2015
  • In the process of renewing contract with specialty license plate maker MyPlates.com
  • Working on a new system to have Texas titles show an entire lifetime history for a car
  • Working on an e-title system; will allow a paperless system for filing titles
  • Rep. Yvonne Davis asked about a revenue guarantee from the license plate maker
    • The new contract only gives them 5% of the renewal fees; the last five years brought in around $25 million; the next five years should see $50 million
  • Chairman Larry Phillips noted the new contract represents less of a guarantee from MyPlates.com but also represents a decreased percentage that the company receives; hopes the DMV doesn’t try to micromanage the program too much
  • Rep. Cindy Burkett asked if the state supplements anything to MyPlates
    • No, they just get a percentage of new plates and renewals; that covers all their costs
  • Phillips asked if the single sticker program will roll out easily
    • The plan is to roll out March 1; everyone has cooperated so far and the roll out should be smooth
  • Phillips asked if concrete permits have been successful in bringing in new revenue
    • Yes; the money is divided between the highway fund and counties that are affected
  • Phillips asked if there is anything that needs to be done to make the timber permits more successful
    • Will be bringing a recommendations to clean up that statute in the future

 
James Bass, CFO and Interim Executive Director, Texas Department of Transportation (TxDOT)

  • Many costs savings initiatives are ongoing
    • Concrete erosion cover protection; looking at news ways to avoid the high cost of the coating currently being used
    • The use of flaggers to alert motorists to construction work is being studied to develop alternate methods
    • Fleet forward; finding efficiencies to remove certain pieces of equipment from the fleet
      • Phillips noted that sometimes it is better to have certain pieces of equipment used in emergency situations than trying to find equipment when it is needed; need to be smart about working toward savings; the county sign program is a real concern to rural residents as well
    • Real estate management program; determining what property is no longer needed for transportation department uses and selling that real estate
    • A large deal of prop 14 debt service responsibilities have been refinanced
    • Working toward a new IT vision to help lower operating costs
  • Burkett asked how much was saved on bond refinancing
    • Over the next 12 years $102 million will be saved and will become part of the appropriations request to help fund other requirements
  • $1.2 billion of the $5 billion in prop 12 bonds have been used and there isn’t much room left because of progress payments
  • Phillips asked where mobility fund revenue comes from
    • Primarily license fees, inspection fees, driver record fees and title fees
  • Phillips asked about the gas collection revenue
    • It continues to grow between 1-2% annually; not necessarily keeping pace with population growth; purchasing power has declined because of inflation
  • The federal MAP 21 program is expected to end in September; they are having a problem with cash flow and Texas developed a short term borrowing system to help supplement decreasing MAP 21 funds until the state is reimbursed

 
Financial Audit and Review
 

  • Rep. Ruth Jones McClendon brought up the issue of the financial audit that the legislature asked TxDOT to do in the last Sunset bill; it was brought up during the Sunset process; it was intended that a third-party entity would perform the audit but the Department interpreted it to mean the State Auditor could fulfill the requirement
  • Jennifer Jones of the Sunset Advisory Commission noted this piece was adopted by the conference committee; Sunset did a compliance review of that piece and determined the State Auditor review did satisfy the statutory requirement

 
John Keel, State Auditor

  • The State Auditor’s Office gave audit delegation authority to TxDOT to hire an external contract auditor for their future study; this is one way the Office deals with high work loads
  • Believes the office qualified under the language in the statute as an outside auditor
  • Issued an internal control report that had some criticism of TxDOT as well as a third report on performance measures
  • As a legislative agency and not an executive agency, the State Auditor’s Office works for the legislature and is independent of the state agency group
  • Phillips asked what the definition is of a complete and detailed financial audit
    • Brian Ragland, Finance Director at TxDOT noted the RFP for the audit is out now and the department is looking for a financial audit; an auditor generally looks at financial documents from within an entity and determines whether they fairly represent what is going on with that entity financially
  • Phillips asked if the report from the State Auditor gave recommendations
    • No it was basically an opinion of the financial health of the Department; there was a second report that went more into areas of concerns that need to be addressed; that report suggested that some internal controls needed to be strengthened
  • Phillips asked if the Auditor’s first report incited any change within TxDOT
    • Ragland replied that he thinks changes have been made in line with the financial audit
  • Phillips made the point that asking for another audit in the same way that the last one was requested will not give the kind of information that the legislature is looking for
  • McClendon noted she may want to change the criteria of what the audit looks for
    • Keel noted that a financial audit may not be what the committee is looking for; auditors can be contracted to meet a certain list of charges beyond a standard financial opinion audit

 
Maritime Division
 
Dan Harmon, Director, TxDOT Maritime Division

  • Mission is to develop high value growth in Texas’ ports and waterways and help maintain Gulf Intercostal Waterway (GIWW)
  • Created in November 2012
  • Division consists of 5 FTEs
  • Current initiatives
    • GIWW master plan development; expected completion June 2014
    • Port Authority Advisory Committee; appointed to develop the Port Capital Program
    • Transportation Commission has been conducting port visits
  • Ports and waterways play a crucial role in transportation and commerce especially in Texas
  • The demand for capacity as well as size of ships is exceeding the capacity of Texas ports
  • 91% of the materials transported through the GIWW are petroleum based; federal funding has not been sufficient to maintain the authorized depth of the GIWW which is now 9 feet at the shallowest point instead of 12
  • Phillips asked what the impact is of the shallower waterway
    • They cannot carry as much load
  • Brazos River flood gates and Colorado River locks negatively impact the operating efficiency of the GIWW
  • The biggest challenge is the need for funding for capital improvements as well as maintenance
  • Providing funding for capital projects at the state level may be the best way for the state to help improve Texas ports and commercial waterways
  • Allen Fletcher asked who is carrying the federal waterway legislation
    • Chairman Schuster is carrying the bill; the bill is getting ready to go to conference; the legislation contains funding for Texas ports

 
Eduardo Campirano, Texas Ports Association; Port Director, Port of Brownsville

  • Ports impact about 1.4 million jobs in the state; over $82 billion in personal income
  • Houston is the largest Gulf Coast port but the smaller Texas ports cannot be ignored, they are all important for different reasons such as oil and gas (Victoria), fishing (Palacios), international trade (Brownsville)
  • Hopes TxDOT realizes the GIWW as a way to regain capacity on the roads system; Texas may look at developing a marine highway system to lead the nation in that respect
  • Phillips asked what the rate of return is on money sent to the Harbor Maintenance Trust Fund
    • Like the road fund, Texas is a donor state and may contribute around $150 million per year with a return of $75 million
  • One ton of cargo can be moved cheaper in water than any other mode of transportation; rail is second and highway is last

 
Rail Division
 
Erik Steavens, Director, TxDOT Rail Division

  • Rail division was formed in 2009
  • There are 12 FTEs in the rail division focusing on freight movement, passenger mobility and safety
  • Tower 55 improvement in the Fort Worth is a recent project TxDOT has been working on
  • Looking at a Texas Oklahoma Passenger Rail Study; looking at types of services that may be viable
  • Working with DART and Houston Metro rail divisions; attempting to help them make their rail systems as safe as possible
  • Phillips asked about safety; federal government is giving TxDOT more authority and responsibility as it relates to light rail systems
    • In the MAP 21 bill there is an expanded role for states to play in safety for rail systems; the federal government will be issuing guidance in that realm
  • Phillips noted rules had not been implemented and once they are there will be funding tied into that
    • The federal government laid out an appropriation that would be given; around $900,000 per year for our portion of the safety program
  • Phillips noted he has concern that with the growth in the system, it is imperative that these systems are safe
  • Davis asked when the South Orient Rail will become self-sufficient in its value it is supposed to provide to the state
    • That’s a value judgment question
  • Davis noted there is a threshold somewhere where it would make sense to make the same investment for other systems
    • It depends on the system; the South Orient has value for many reasons but other systems would have other types of value
  • Davis noted it would be helpful to have an idea of what is received from short rail projects; what is the greatest value and what does that cost
  • Rep. Cindy Burkett asked for information to be provided that would show how rail impacts congestion on highways as well
  • Davis asked if short lines are supposed to be profitable and what TxDOT’s role is related to Amtrak
    • Short line railroads want to be profitable; when the state owns the infrastructure it is a different theory; state owned infrastructure exists to improve economic development in the communities the infrastructure lies in
    • Amtrak is a quasi-governmental agency and the state pays operating costs at a certain amount per year to maintain services to and from certain cities every day
  • Davis asked if there is another entity that could be providing that service
    • Another service provider would have to go back and negotiate with freight line operators to be able to run passengers on those lines