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The House Committee on Transportation met on March 30 to hear invited and public testimony on toll roads in Texas.
 
James Bass, Exec. Dir., TxDOT and Tryon D. Lewis, Chair, Texas Transportation Commission

  • HB 2612
  • Chair Joe Pickett – Bill was not meant to do away with county toll authorities, also important to inventory all of the toll authorities, balances, and debts, adding new tolls will be a regional decision
  • Pickett – Can you give us a rundown of State Highway 130 segments 5 and 6?
    • This was entered into as a public-private partnership with “Cintra and Zachary,” funded the 1.3 billion facility without state funds
    • Facility has been operating for several years, traffic volumes have not yet met with expectations
    • Developer has now filed under Chapter 11 bankruptcy, which allows developer to restructure debt while operating the facility and maintaining the agreement, agreements for this are currently being explored with investor
  • Burkett – Will the state now bear the burden?
    • No obligation or commitment on behalf of the state to take the debt
    • Taxpayers will not feel the cost unless state elects
  • Burkett – How would the state utilize this option?
    • Fair market value of lease would be determined and state would pay this amount
  • Martinez – Has enforcement been impacted by bankruptcy proceedings
    • Monitored like any other, state is collecting enforcement proceeds and sends out tickets, etc. by mail
  • Martinez – What about maintenance?
    • “Cintra and Zachary” is required to maintain the road, damages if they do not
    • However, state would be behind other collectors to collect debt for failure to maintain
  • Pickett – Creditors can force Cintra and Zachary if they do not restructure, correct?
    • Yes, lenders would select a new operator and state could approve
  • Pickett – State is not in any bad position, not in a place to lose money beyond potential maintenance issues
    • Correct, but state is in for $146 million
  • Phillips – What percentage of the truck traffic through Austin would use 130?
    • Majority of truck traffic in Austin has local deliveries, etc. so it would be difficult to re-route
    • 80% of the trucks on I-35 are doing business in Austin
  • Phillips – So the state enters agreements that shift risk to private sector developers
    • Correct, this is the idea
  • Phillips – So the road is still running and without this agreement this road would not be built? Citizens are able to use it and it helps the state, correct?
    • Correct
  • Israel – Aren’t there more lanes in this section than more northern sections of 130?
    • It is two main lanes in both directions
  • Israel – If Cintra and Zachary is interested in selling, they would maintain it because it is seeing more traffic now, correct?
    • Yes, but traffic levels have not risen as they expected
  • Martinez – Cites survey stating users would be more likely to use tolls if the price was slightly lower, which users did this reference
    • Unsure, two previous pilots offered truck discounts on 130, showed a 45%-50% increase in truck traffic
    • Pickett – It was the Texas Trucking Association, 64% of membership would utilize 130 if tolls were reduced or removed
  • Pickett – Is there now an appropriation to run the pilot programs for truck reductions again?
    • Yes, current program would begin in April and would have two separate discount rates to see differences in trucker behavior
    • Discount is applied to anyone in a truck (4+ axles) in these sections would get a discount Mon-Fri between 7am and 7pm
  • Pickett – So this is until the appropriation is used up?
    • Correct, TxDOT worked with consultants to develop a number of scenarios, appropriation would last biennium with a little cushion
  • Burkett – TxDOT and the State still does the imminent domain process for these projects, correct? And so Texas foots the bill for this?
    • No, for this project, private funds were used to fund the imminent domain taking
    • State has provided funds for prior projects that rebuilt lanes in existing highways, but 130 was a new project funded entirely with private funds
  • Pickett – Bill says that TxDOT will come back in December of 2016, hopes testimony today will enlighten TxDOT and wants to hear what TxDOT has prepared
    • First is an inventory of the toll roads in Texas and the state of debt of these roads, due in September
    • Also identifying bonds that would warrant lump sum payments
    • Finally, TxDOT is working on developing a plan to eliminate toll roads in Texas, subject to a clause TxDOT thinks exempts toll roads developed solely with private funds (i.e. only evaluating toll roads with public funds involved)
  • Pickett – Does not believe that dollar amount necessary to end toll roads with state connection is feasible, but thinks discussion would be useful and help toll project proposals
  • Pickett – What is the total amount of debt for all facilities?
  • Simmons – Would like a breakdown of all individual debts across the state
    • Before getting into the numbers, TxDOT has prepared information in expectation of September 1, so TxDOT asked for numbers in January, a lot fo work will need to continue to provide accurate numbers
    • Projects have been financed as “systems,” individual roadway funding is tied together in concert with other roadways
  • Pickett – Thinks that separate loans are a better financing plan than financing “systems” together
    • TxDOT has a current inventory today, no finance plan revamps ready to present
  • 51 tolled roadways and 5 CTAs, 23 financed “systems,” funded by 12 developers, does not include international bridge crossings
  • Total outstanding debt is $21 billion, remaining payments on outstanding balance is $38 billion
  • Final payment expectation is 2053, for the central system it is 2042, many years remain to be paid on these bonds
  • Ultimate question is “what would it take to pay off this debt today?” TxDOT expects to calculate this as of September 1
  • As debt is structured in many different ways, it is not simply a matter of paying $21 billion and being finished, non-callable bonds require set asides to pay over time, etc.
  • Pickett – What is the total debt service on the $21 billion?
    • Does not have this now, can provide it on a yearly schedule
  • Pickett – Would also like the revenues generated by the 51 systems, has a feeling there is a big difference between debt service and revenues
  • Pickett – Some systems are generating revenues to fund other projects, state needs to “shine a light” on these projects
    • May be many reasons for the difference, typically over life of debt that roadways need rehabilitation, generally toll revenue is set aside into a fund for this
  • Pickett – Would like TxDOT to separate out state toll facilities to see what state actually controls and can be most effective on, wants totals, revenues, and debt service
  • Pickett – What have you requested from the toll authorities
    • TxDOT will need to reach out for “some if not all”
  • Pickett – Authorities will need to defend the difference between service and revenue
  • Israel – How is the state funding free bus ride programs, etc.? Would like information from TxDOT on this as well
    • Most of this would be larger MTAs TxDOT does not fund, but can reach out
  • Israel – Would help long term planning to see these transit trends
    • Debt numbers discussed exclude the 5 CTAs, TxDOT likely has a different opinion on value than developers, but current estimate is roughly $10 billion
    • Includes project likely state highway 288
  • Pickett – Previously asked what it would cost to remove tolls on 130 segments 1-4 and if this would relieve pressure on 35. Is this one of the toll systems that could be separated out? Could state buy out the investors and is it still a $150 million investment?
    • It can be done, would be a multi-step process, would likely include 45 southeast as a relevant connection
    • Investors are those for the central Texas turnpike system,
    • To separate 130 and 45 southeast, all of the debt would need to be paid off, new bonds could be issued for those portions of road expected to continue as toll roads
    • This is not as simple as “here’s money”
  • Pickett – Would like the estimates and plans explored, $150 million out of the $11 billion TxDOT annual budget sounds “doable,” does not believe that state is receiving much revenue from letting private investors running these roads
  • Pickett – Value for state would be alleviating congestion and would like to explore congestion relief projects, perhaps removing the toll on 130 have the same effect as building additional lanes or roads
    • So this would be an all vehicle discount? Question is what is the revenue gap that needs to be filled
    • Another challenge is state may only appropriate in 2 year cycles, debt runs for two decades still
  • Pickett – Could coordinate with legislative changes, not focusing on small 2 year changes, but rather long term plan changes
  • Pickett – Would also like traffic counts of how many use access roads rather than highway lanes, apply this thinking to whether state would be better served if 130 was a toll free alternative road to 35
  • Pickett – In some systems, usage of managed lanes is very small, would like to see if this trend continues across the state
  • Pickett – There are tolls where the revenue does not go to pay off bonds
  • Harris County Toll Road system and Metro in Houston area have no current state assistance or outstanding debt
  • What can easily be accomplished with one toll entity is different than what can be accomplished with others because of variance in contracts with bond holders from different decades
  • Pickett – Wants to look at tolls in an unbiased way – there are situations where tolls are helpful to avoid bottlenecking of traffic
  • Commission was asked to come up with criteria that should be considered in analyzing bonds – asked toll entities and would like to hear from members of the committee in the future
  • Pickett – I would never say we do not need any more tolls, but if they generate revenue, there should be a policy that a portion returns to the state, state should see returns on money lended
  • Murr – Have there been any prior discounts applied to these sections of highway and what were the usage rates
    • Two prior truck discounts, one saw a 50% increase in truck transactions and the other saw a 45% increase year over year
  • Pickett – Keep in mind that the state funded the discounts
  • Murr – Was there a measurable decrease in traffic on 35 during this period?
    • No significant decrease on 35, however it generally grows year over year and it may have grown less during this period
  • Murr – Does TxDOT work with TCEQ on traffic mitigation and emissions reductions
    • Yes, new facilities must pass standards

 
Brigid Shae, Travis County Commissioner

  • Appreciates this hearing and Pickett’s leadership on HB 2612, important for the public to know about the magnitude of the debt
  • Shares interest in reducing or eliminating tolls on 130, any reduction in truck traffic on I-35 would be significant
  • 130 was originally sold as a bypass for I-35, tolls are a barrier to this purpose
  • Statewide issue, I-35 is a vital artery for the entire state
  • Has “tremendous frustration” with the RMAs, one head is earning $100,000 more than the head of TxDOT, that much money combined with little oversight is a bad combination
  • RMAs need oversight, audits, and more transparency
  • Phillips – How are the RMA commissioners appointed?
    • Organization votes on them
  • Phillips – Then how much more oversight can you get beyond voting for them?
    • Organization does not have oversight over day to day activities
  • Phillips – So remove them from the position
    • Does not have the votes
  • Phillips – So do you want it to be a popular vote?
    • City of Austin should have at least one member on the RMA, it’s unusual that there isn’t
  • Phillips – So the city of Austin does not have the majority population on the commissioner’s court?
    • It is
  • Phillips – I’m hearing the system needs to be changed because you cannot get the votes
    • Do other RMAs have audits?
  • Phillips – They do annual audits, I would be surprised if RMAs do not do more audits over a PNL
  • Phillips – Where does the money come from to remove the toll roads on 130
    • Pickett – “Give me 20 minutes”
  • Phillips – Would like to know where the money is going to come from for this region
    • Pickett – Can ask that for every single transportation project in the state
  • Phillips – And I’m asking that question
    • Suggestion is a surcharge for electric vehicles as they do not pay a gas tax, electric vehicles are trending upwards and gas tax revenue is decreasing
  • Phillips – what is a fair way to electric vehicles?
    • Would defer to the greater expertise of the committee
  • Burkett – Do you not have legislative authority to request an audit of the RMA?
    • No
  • Burkett – So would legislative authority to do this would it be helpful?
    • Yes
  • Pickett – Will need to clarify what is meant by audit later in the session
  • Murr – Has yet to see an electric vehicles that costs less than gas vehicles, wary of adding fees beyond the sales tax and price differential on electric vehicles
  • Pickett – Cost used to be quite different, not sure if difference is still there
  • Murr – Would like to look at this when cost is equal between types of vehicles
  • Burkett – What is the term length for RMA commissioners?
    • 2 year terms, policy exist to seek new candidates after 3 terms
    • So effectively a 6 year term

 
Terri Hall, Texans United for Reform and Freedom

  • Would like to see all the tolls come down
  • Phillips – That’s great, let’s just find out how to pay for it
  • Pickett – Would like to ask for innovative solutions or new ideas to fund this
  • 4 issues standing in the way:
    • Huge debt, facilities will almost cost double actual value considering debt
    • Restricting capacity with toll lanes is not beneficial for the public, impedes efficiency and connectivity
    • System financing, tandem financing means problem roads are not easily severable, HB 1112 authored by Phillips set us on this road
    • State should want to guard gasoline tax money from being used for toll roads, toll revenue and gas tax funding is a “double tax”
  • Phillips – Systems existed before HB 1112
    • Understanding was that the bill cleaned up some legal issues
  • Israel – Do you have a position on buses being able to use assets for no charge
    • No problem with buses using public roadways, however exclusive bus lanes remove tax-funded capacity
  • Israel – What about veterans getting a toll discount
    • Giving some classes of people preferential discounts is problematic
    • All Texans “should get a discount” in the form of removing tolls entirely
    • Opposed to any and all capacity diminishing policies
  • Phillips – So all roads should be supported by the gas tax?
    • This is the system as it was set up, any vehicle related tax is what should be used to maintain road
  • Phillips – But you agree that gas tax revenue is not enough to pay for the roads?
    • Yes

 
Kelly Davis, Save Our Springs Alliance

  • Supports making 130 and 45 southeast toll free
  • TxDOT plans consistent of adding managed lanes each way, would likely end up costing more and spurring endless construction
  • Area to the east and south of Edwards aquifer is where development should be encouraged

 
Don Dixon, Himself

  • Current system is very costly to the public
  • Public funds should be used prudently and budget should be balanced
  • It is a mistake to finance key functions of the state with debt, would hope legislature is trying to get back to debt-free system
  • Very distressing to see tax-funded roads require taxpayers to pay again for use
  • Pickett – If the gas tax and other public funds are not enough, if the state has done everything it can do, how are the roads maintained?
    • Would not support debt issuance to handle this, maintenance of roads is a statewide function
    • State has regressed to inefficient patchwork system as in 1917, transportation authorities were established to fulfill state duty of maintaining roads
  • Pickett – We do not have the money, what is the solution?
    • State funds should be used to dig Texas out of the hole, perhaps let the federal government help
  • Pickett – Current plans involve taking funds from other areas
    • General fund and dedicated funds would be involved, should be a priority

 
Melissa Cubria, Texas Public Interest Research Group

  • “Very opposed” to managed roads, toll ways, etc., Texas is essentially selling its roads to private investors and this is causing problems
  • Said 8 years ago that the 130 project would end in bankruptcy and has distributed materials for a long period of time
  • Pickett – So you were right about that, but do you believe the testimony that Texas taxpayers are not on the hook for sections 5 and 6 of 130?
    • Deals are bad for the public, these schemes are initially funded by public money and tend to turn into “boondoggles”
    • These schemes are focused on shuffling debt around
  • Simmons – These programs are not intended to hide debt
    • Can agree to disagree, public has no idea about debt
  • Pickett – Would be happy if reporters report on the debt?
    • Would be happy if RMAs disappear
  • Pickett – So how does Texas start?
    • Would like a transportation council
  • Pickett – But this would be made up of employees you don’t trust
    • Does trust state employees
  • Pickett – State has $18 billion in debt above and beyond $21 billion, plus another $10 billion in other aspects
    • Does have problems trusting data coming from TxDOT and RMAs, need independent auditing
  • Current plans are complicated financial and legal documents, system is of contracts rather than roads and this will impede removal of tolls
  • Bankruptcy proceedings will involve more costs to untangle the legal implications
  • Also cautions against revenue and toll speculations
  • Important viability studies and other documents are shielded from public access; PIRs must be submitted for any relevant information
  • Taxpayers will shoulder burden for the debt balance
  • Who represents taxpayer in bankruptcy proceedings?
    • AG’s office
  • Would like some public representation

 
Vic Suhm, Exec. Dir., Tarrant Regional Transportation Coalition

  • Prior to now, state was informed TxDOT funding gap was $5 billion
  • This calculation involves all of the tools available to the state, including public-private partnerships, gap becomes much wider when not considering these tools
  • Tolling and CTAs are important tolls that Texas uses to advance transportation projects
  • Pickett – Would you oppose finding additional detail on systems?
    • Examination of debt is very useful

 
Wendi Hundley, Herself

  • Got involved in this issue after hearing of proposed elevated toll roads over Lady Bird Lake
  • Pickett – CAMPO can be asked for assistance on acronyms or complications with the systems
  • Austin is outvoted by suburbs in CAMPO, city itself should have more say on what should run through Austin
  • Pickett – Proper way to address this is through the current board and gathering popular support for your position
  • Does not think it benefits toll authorities to reduce congestion, congestion would drive traffic to use toll ways
  • Pickett – Worries that increasing toll lanes will drive congestion higher on non-managed lanes

 
Next hearing scheduled for May 24th