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Below is the HillCo client report from the July 2 House Select Committee on Transportation Funding, Expenditures & Finance hearing.

The committee met to hear agency updates from the Texas Department of Transportation (TxDOT), receive testimony from metropolitan planning organizations and to consider other issues surrounding transportation finance.
 
Chairman Joe Pickett began by explaining what a metropolitan planning organization (MPO) does; MPOs were developed by the federal government; the local community is charged with asking what the public wants with regard to transportation, impact projects may have, and need for projects; they develop a local transportation improvement plan which goes to the state in order for TxDOT to develop a state improvement plan; TxDOT cannot spend federal dollars without the approval of an MPO
 
Jeff Austin, Commissioner, Texas Transportation Commission

  • Received a letter from US Secretary of Transportation Anthony Fox yesterday stating that on August 1, federal funding will be decreased; were receiving about $300 million per month, will be receiving $175 million per month starting in August

 
Jeff Moseley, Commissioner, Texas Transportation Commission

  • In a recent poll of TxDOT customers 92% were satisfied with TxDOT and services provided, 95% were satisfied with district offices and the services they provide
  • The funding model that has been used for the last 50 years is being challenged with new demands for capacity
  • Fracking places a fascinating demand on our highway system
  • The ports will be impacted by new capacity at the Panama canal
  • Continued reforms in Mexico will put an impact on the 14 border crossings between Texas and Mexico
  • Rep. Ruth Jones McClendon noted that with the population growth at its current rate, cargo moving down highways causes a lot of congestion; what is TxDOT doing to help alleviate this through rail and other modes of transportation
    • TxDOT has a dedication to all forms of transportation, mass transit included; looking at adding capacity in the form of truck lanes; one idea that needs to be considered for freight is expanding capacity around ports
  • Rep. Ron Simmons asked what the number one goal of TxDOT is from a macro standpoint
    • Austin replied that safety is always number one; after that, mobility and congestion; leveraging funding to enhance the tax base of the state
  • Pickett asked how congestion levels have changed in areas where a number of toll roads have been installed; is there an ability for TxDOT to show to the public that all toll projects have reduced congestion; perhaps removing tolls would reduce congestion in some cases
    • Austin replied that sometimes Transportation Infrastructure Finance and Innovation Act (TIFIA) loans are used to finance roads and tolls are necessary to pay that money back; with funding issues the way they are tolls have been a good method of getting roads off the TxDOT books
    • Moseley replied that maintenance is a key to this whole discussion and can eat up a significant portion of the TxDOT budget; therefore alternative funding methods are needed to help mitigate the maintenance cost
  • Rep. Armando Martinez asked about the constant increase in commercial traffic around the border; has there been any thought on proposition 1 funding and what can be done in the Rio Grande valley
    • Mexico is upgrading their highway system and discussions are opening up about future projects
  • Martinez asked how proposition 1 funds will be distributed
    • Pickett noted prop 1 funds cannot be used for toll roads and funding is intended to go into fund 6 and be distributed through current TxDOT formulas
  • Rep. Dan Huberty asked how many current roads are being considered for tolling
    • Looking at adding managed lanes on I-35 and SH-183; not going to convert non-tolled roads to tolled roads but may add new tolled lanes
    • Rep. Larry Phillips noted there are some roads that have been built with the expectation that they will be tolled in the future but aren’t yet
  • Pickett asked for the agency to provide a list of tolled roads that do not have debt associated with toll revenue; also would like to see a study to determine if new managed lanes being built that will be tolled are going to help with congestion
  • Rep. Lyle Larson asked about the multi-modal approach; street cars in San Antonio will not help congestion; the urban core is not where growth is happening; the bus system is not full and residents are against the project; would like to reverse that and use the $90 million in areas with congestion issues
    • Austin noted it would be difficult to undo that project; all concerns have been duly noted; TxDOT is interested in increasing mobility in all walks of life
    • Another commissioner noted he was not for that project and abstained from voting on that issue; will work on continuing the discussion for that project
  • Larson disagreed and noted it is not too late because the project has not been started, it is still in the planning phase; 90% of the people in Bexar County are against the project
  • Pickett noted there was a $97 million trolley project approved recently in El Paso; the public is beginning to realize other projects will not be funded now such as congestion and safety projects; if the community knew all of the information to start, it would be a different story; the process of keeping those types of projects transparent needs to be worked on
  • Rep. Scott Turner noted there seems to be an overarching theme of transparency and accountability; those two ideas need to be at the forefront of everything
  • Simmons asked how trolleys solve mobility and congestion problems; that is not the business of the state; if cities and local governments want to fund those projects that is fine
  • Rep. Sergio Munoz noted the Pharr bridge is the most utilized port for commercial cargo; that area has needs and none of the key projects represented to the committee are in that area; need to make those projects a priority considering where population growth is happening in the state

 
Ashby Johnson, Executive Director, Texas Association of Metropolitan Planning Organizations

  • Some MPOs are housed in Councils of Government (COGs) who act as the fiscal agent; in some cases they are housed within the city as the fiscal agent
  • A good portion of funding comes from the federal government through TxDOT; 80% comes from the federal government along with a 20% match from TxDOT
  • The main decision making within an MPO comes from the policy board which is made up of local elected officials and others; they take recommendations from staff and the public and determine how public funding will be spread across projects; TxDOT generally sits as a voting member on policy boards

 
 
Michael Morris, Director of Transportation, North Texas Council of Governments

  • MPOs have differing levels of federal, state and local responsibility
  • Phillips asked why now, all of a sudden, so much more money is needed for state transportation
    • Infrastructure is getting older so maintenance needs increase; fuel efficiency is changing so revenue sources are depleted and inflation has also depleted revenue sources
  • Projects need to be considered in two categories and with two sets of staff to streamline processes
    • Projects that just require maintenance and upkeep; and
    • Projects that need substantially more capacity, etc.
  • The process all the way from the federal side to the local side need to be integrated to make them easier to understand  and deal with
  • Largely, projects should be completed in their order of prioritization at the local level
  • Pickett noted he doesn’t want it to get to the point it has been at in the past where local MPOs have to come to the legislature to beg for funding for projects
  • Need to smooth out the funding forecasts; through the Sunset process, the regulations on financing have been tightened down too far; when money comes along that was not anticipated there aren’t projects ready to use the money
  • It is important to tighten up the contracting side but tightening too far doesn’t allow other projects to get in line and get ready
  • There must be a bottom up approach to developing projects
  • Need to keep the public involved with transportation plans because they forget about projects that were discussed years in the past and opposition can form against projects because people have forgotten the details
  • The TxDOT executive director should be given time to make necessary changes within the agency
  • There is growing support for a vehicle miles travelled (VMT) tax and support for some portion of vehicle sales tax to go toward road funding
  • Using a portion of the clean air money coming in from inspection sticker fees to fund capacity increases and congestion projects is another option; in January there will be $200 million in the Houston and Dallas accounts that is being used to certify the budget
  • Simmons asked if Morris agrees that mobility and congestion should be the major focuses of transportation entities
    • Mobility and reliability should be the focus
  • Simmons noted a process should be developed that lets the legislature and the public know that projects are going through the bottom up filter when they are being put into plans; there should also be a formula that takes into account how many people are in an area and how many cars drive on the roads to determine what projects are needed
    • That information already goes into the planning processes; necessary maintenance and safety concerns are also a big part of the planning

 
Allan Clark, Director of Transportation Planning, Houston Galveston Area Council of Governments

  • Needed to sustain activities based on longer term – long range planning is needed 
  • Prop 1 is time to rethink process as they have in the past  – collaboratively look at how funds are allocated and better partner
  • UTP gives a 10 year look at priorities and use this as significant tool
    • He thinks dialogue has already started in regards to Prop 1 and UTP
  • Morris interrupts to state there are unintended consequences through tightening of revenue stream
    • In a way TxDOT is coming up with “supplemental” UTP – argues this “supplemental” proves something wrong with UTP
  • Agrees with Morris that there needs to be a way to look at small transportation opportunity for example they are spending money on purchasing old truck engines – more funding from TERP & LIRAP and utilization of those funds would help
    • Member asks how much funding is needed?
    • $20 million a year is amount spent on the current grant program  
    • Currently using highway dollars for clean engines program and every source they have
  • Construction on 35E shoulder example – if non-toll section can they partner with TxDOT to pay for a project and maybe it could be cost effective
  • Two studies are being performed to determine how ports can be accessed without sending all traffic through downtown Houston
  • Johnson noted that developing regional committees when long term plans are made for highways similar to what was done for I-69 and what is being done for I-35 is a good way to build consensus and take the public opinion into account
  • Larson asked if safety is considered first and then mobility when planning for projects
    • Safety is considered along with mobility; many times mobility issues are directly related to crashes; safety is a factor for all projects
  • Huberty asked how many cars are using roads in Texas from out of state; it seems that roads are being paid for through property tax dollars and other means when a significant percentage of people are using roadways without paying into all the funding systems that fund roads
    • Pickett noted that is a hard number to figure out; tried in El Paso because of all the traffic from Mexico and New Mexico
  • Rep. Phillips inquires about representation of ports and role they play in MPO – Phillips wants to get a state wide port plan
    • Yes they share information with each other
    • Phillips also inquires about transit – all transportation elements are part of MPO

 
TxDOT Panel – John Barton, Russell Zapalac, and James Bass

  • Rep. Huberty inquires about the value of design build jobs and why it is not used on every major project
    • Savings of 2-3 yr could be achieved by accelerating construction of project so a savings of about 12% of total costs
    • Additionally there is collaboration which also saves money long term
    • And “warranty” build in the process so no long term maintenance costs – another savings that the state acquires
    • Barton expects this contract type to become more and more common for major projects
    • Home construction industry uses this type of construction almost exclusively says TxDOT staff
    • Huberty inquires about expanding CDA authority and giving them a pilot program
      • Pilot program would be a great way to dip toe in the water
      • They could take utilize broader use of tool 
      • Estimated benefit based on experience sees a 20-25% return on value
    • James Bass agrees with members conclusion – bottom line is that more is delivered using design build model
  • $1M for maintenance and $1M for energy would not be for these types of projects when talking about funding requests
  • Members continue to ask questions including confirmation that there is no additional capacity until 2031 under authority “authorized” – Prop 14 which is capped at $6B and when issued it is a 20 yr debt
    • $5.3B has been issued out of this fund to date
    • It is one time funding
    • Prop 12 GO program $5B in constitution
    • Prop 14 is in statute
  • Discussion of paying down debt to reduce interest payments
  • Rep. Pickett asked about $150M in efficiencies and wants to make sure no fire sale occurring in regards to selling surplus property
    • TxDOT staff is still going through looking for efficiencies
    • Examples include savings of $6B for management of fleet maintenance, $3M for electronic system submission for certain reports, $3M for print management, etc
    • Currently at $115-120M
    • $55-$60M of that total is for surplus property
    • Pickett wants more detail on the efficiencies TxDOT is working on and is interested on surplus property details
    • Pickett cautioned TxDOT may not want to count on getting too much credit for selling off surplus property
  • Rep. Martinez inquired why major projects in the Valley are not in plan and how can they be included?
    • TxDOT said the information is not “a plan” but how need can be easily understood so asked 5 major metropolitan areas and it does not represent nor did they reach out to every area
    • Picked off the major areas of improvement in plan they submitted – they were a few examples
    • Martinez says when you include all counties in the Valley then you get a population larger than Austin and says the area is a large metropolitan area
    • General Weber said he wants to go back and look at the rationale and all the formulas
  • Pickett asked how many changes were made this year to UTP
    • 5 changes this year
  • TxDOT staff noted projects have been discussed for some time
    • Pickett inquires about participating in discussions and how do projects get added into UTP
  • General Weber points out they are named “Texas Department of Transportation” and agency needs to consider bridges, pavement, asphalt, as well as looking at multi modal approach and connectivity of all those systems
  • Pickett asked for clarification on transit funding and possible rumors on grant funding
  • TxDOT said it is $30M per year over 10 year transit program
    • Pickett said will fund one year and not rest of 9 years? How does it work?
    • TxDOT said they are expecting funding now but the plan is a 10 yr plan
  • Bass in regards to question on how many Reinvestment Zones there are
    • Thinks 7 but may be outdated on that number
    • There are no sales tax Reinvestment Zones
      • Pickett stated that although no one formally has done this there are people talking about it
  • TxDOT staff confirms LBB claims 82% bridges are meeting standard – Texas has best and most bridges in the nation
  • 88% last year and around 86% this year of roads meeting standard
  • $1B to improve road pavement but keep it no worse than it is – member confirms and then asks for more specifics, micro information, on what the $1B will do
  • According to analysis Energy Sector repairs of $1B are needed for repairs every year as long the energy sector continues
  • Engineering competitive bidding – don’t currently do in Texas – would it help if we allowed in statute?
    • TxDOT staff said currently they use a qualification based system but if took that system and allowed it to be best value as well it is sorta like design build contracts today – then intuitively staff would say yes it would help but no data to really tell 
    • Barton said does not believe Design Build causes any safety risk
      • Pickett wants to know then why any push back?
      • Barton said it’s a tool and has a very valuable role and agency would use it more if they had the flexibility to do so
      • Large projects fit for this type of program – if project is too small it would not fit within design build arena
  • LBB Fiscal Size up – total debt service is $1.1B per year but projecting it to go down in 2015
    • Yes said staff
  • Zero based budgeting on each level of program could make it difficult to see the larger picture
  • TxDOT is currently evaluating employee count and how they can maintain and keep properly equipped
  • Rep. Howard reads statement into record speaks saying Austin needs to address their congestion issue, etc
  • Huberty – any estimate on non-Texas divers on highway?
    • TxDOT will get the committee that data
  • Huberty – compared to other states what is our total spend per mile ranking to other states?
    • TxDOT staff said have been improving in position and about 20% below national avg in terms of spend per mile in system
  • $3.56 B in certain fees (ie license plate, motor vehicle sales and use tax) goes to GR that do not fund transportation activities – largest one is motor vehicle sales and use tax
  • Rep. Workman – asked about two complaints chip seal noise complaints and how long a project takes to complete
    • TxDOT said they are hopefully working on that
    • TxDOT staff said there are incentives for timely completion, not on every contract but looking to do it on more contracts

 
Public comment
Don Dixon – citizen

  • Expects tax money to go into public road system and at least $7.6B has gone into the toll road which people have to pay again for
  • TxDOT has lost public trust and Dixon requested they look for long term funding stream
  • In 2003 offloaded much funding onto the locals and not a good system – the funding should be set at a higher priority level

 
Dwayne Gordy – Community Director of Education Foundation

  • Mix of funding streams and funding needs
  • Originally tried to pay for it with ad valorem base and now have added TRZ – there are now 21 and created CRTs to balance the equation
  • Local governments have learned that those tools are revenue management tools
  • Local projects have tools currently in box to fund the bulk of them – for example the road and bridge tax and add flood control farm to market tax they collect around $1B but under by about $6B a year they are not even asking for and combine with local option tools and they have the funding to get projects completed if they really want and it will free the fuel tax dollar for other needs
  • Statutorily local governments are authorized to collect but they are not collecting
  • Farm to market flood control – they are locally and constitutionally authorized and they have the ability to issue plus it is a much more transparent tool

 
TxDOT Panel comes back

  • Working on supplemental programing authority said Mark Williams Director of Planning with TxDOT
  • There is an unpredictable nature in planning
  • Very complex project could take 8 yr to get ready
  • There is unpredictability in funding – for example the federal authorization bill expires in 2 months 
  • They are trying to develop framework to identity programs or projects that are being worked on and understand where they are in the process this would include projects in UTP and those aspiring going into UTP
  • It will also help with federal requirements – Federal Map 21 outlined certain requirements that they need to be more performance based
  • TxDOT staff stated the UTP is financially constrained document – how asked Pickett?
    • Williams understanding of state law required UTP be tied back to official forecast from the department and so they routinely go back and make forecast based on current law and what they know today
    • Forecast is now tied into planning process so the forecast may not be best fit for planning document
  • UTP used to be knowingly over programmed and that is not the circumstance now
  • Pickett wants working group moving forward so they can continue to dialogue
  • Supplemental programming authority is intended to work with planning authorities across the state and take longer range projects and give them the ability to start developing
  • Pickett said they need to recommit to small communities on how to include all transportation planners in the process and outreach may be needed
  • TxDOT is reaching out across the state to discuss next steps if voters approve constitutional amendment in November
  • In regards to how much return Texas sees of the federal gas tax
    • There were conflicting numbers but right about $1.01 for each $1 – however, it is an unbalanced equation
    • Texas was still lowest rate of return said Workman
    • The most Texas could get back for highways would be 85% and since we are a donor state – for every $1 get around 77 cents for highways comes back
    • There is some funding going to transit but not easy to track
    • List requested of who is getting the most for their federal fuel taxes and least – state getting biggest return is Alaska and Texas was the bottom
  • Workman – what does Texas spend per lane mile?
    • Staff will get report to committee – it will vary on what type of lane mile and those figures will include right of way
    • Workman does not want the figures to include right of way
  • Pickett and Members make the following recap statements
    • Pickett wants to a Working Group of TxDOT staff to meet with MPOs on some recommendations
    • Need list and wants to get further details on selling of surplus property
    • At next hearing they hope to talk about funding possibilities for funding sources
    • Rep. Myra Crownover says drove over 35E and really appreciates what TxDOT is doing up there and communication to the public

 
Also TxDOT is requested to get information to committee on tonnage of ports, fees at ports and other port details.