Ruby is Best for Texas 6th Congressional District

Thursday, May 10, 2007

Cintra proposes to use $2.6 Billion in U.S. Federal Money on the $2.8 Billion SH121 Project

Editorial - By Terri Hall

Problem: Spanish company to take taxpayers for 50 year toll ride

Solution: Index gas tax

Wonder why all the fuss over toll roads? Well, we’re not talking about traditional toll projects. Governor Perry and his Transportation Commission are pushing private toll road deals that limit free routes and allow the private operator to charge very high tolls. Take a gander at what the winning bidder, a Spanish company named Cintra, is telling their shareholders about the Hwy 121 private toll deal in Collin and Denton counties:
“Provides a corridor to Dallas on which there is no alternative roads.”
– Page 6, It will connect I-35 with US-75

“No planned proposed improvements to free alternative routes in the long term. Concessionaire is entitled for compensation in case existing long-term planning is modified.” – Page 11

You see, as ex-Transportation Commissioner Senator Robert Nichols, who is a stickler for details and who is also the author of a bill to halt CDAs, has noted the devil is in the details. These private toll contracts called Comprehensive Development Agreements (CDAs) include non-compete agreements like Cintra brags about to its shareholders. This means there will be no improvements made to existing roads nor any new free routes built within a certain mile radius of the toll road. Doing so would compete with or reduce toll revenues, and a private company simply won’t allow that.

Toll rates $1.50 a mile

TxDOT promises toll rates of 12-15 cents a mile, but the reality has been 44 cents up to $1.50 PER MILE on similar projects that just opened in Austin. You see, when TxDOT has admitted it costs 11 cents just to collect the tolls, they can’t possibly cover the operation or maintenance of that road with 12-15 cent tolls much less pay the private toll operator their guaranteed 12% profit. In fact, TxDOT’s mantra is that the private company will charge “market rate,” which essentially means tolls without limit since there will be few if any alternatives. Bottom line: using CDA private toll contracts is THE most expensive option for motorists. Yet the Governor and his cronies claim they’re doing all this without raising your taxes. Who do they think they think they’re fooling?

Dennis Enright, an expert in these public-private partnerships testified on March 1 to the Senate Transportation and Homeland Security Committee that CDAs cost 50% more than traditional public toll roads. He also stated it’s always better to keep these toll projects in the public sector (having a tolling authority or TxDOT do them) rather than to privatize our highways in these monopolistic 50-year contracts.

What’s perhaps even more appalling is that the U.S. Government was involved in facilitating some $2.6 billion of this $2.8 billion project. So who’s really bringing the money to the table? The U.S. taxpayer, not the private company as TxDOT claims. So the taxpaying public will pay billions both on the front end with federally backed bonds and loans and on the back end of this deal through tolls for the next 50 years just to accelerate the construction of a single 10 mile stretch of highway.

This same company won a deal to build SH 130, won the development rights to build the first 600 miles of the Trans Texas Corridor (called TTC 35), and is one of two foreign companies bidding to takeover existing highways SH 281 and Loop 1604 in San Antonio and turn them into tollways. Senator Eliot Shapleigh asked TxDOT in a recent Senate Transportation Committee hearing if giving that much of our state highway system to a single foreign company for the next half-century gave him pause. TxDOT dodged the question.

So what’s the solution?

Pass the CDA moratorium

It’s past time to rein-in TxDOT’s push to privatize and toll our public highways in these very controversial deals that amount to horrific public policy. HB 2772 and SB 1267 have more than two-thirds majority support and would place a 2 year moratorium on CDAs giving the Legislature time to get the details of these contracts right before signing away our public highways for 50 years! Senate and House Transportation Committee Chairmen Senator John Carona and Mike Krusee are tying them up. Let’s get these bills to the floor for a vote in time to override a promised gubernatorial veto.

Index the gas tax

Let’s assume that even though TxDOT’s budget has tripled since 1990 and doubled since Rick Perry took office, and even though TxDOT has $7 billion in bonds available to them, that we are still short of cash for highways. A recent Texas Transportation Institute study showed that indexing the gas tax to inflation is all that’s needed to meet our future transportation needs without tolls. Politicians in the House, in particular, need to have the political will to enact the most affordable, most sensible financing solution. All the options we’re faced with are tax increases of one sort or another since tolls are clearly a tax, an aggressive one in the hands of a private company. The gas tax increase would cost perhaps $50 - 100 more a year versus $2,000-3,000 more a year per motorist in tolls!

However, before adding ONE DIME to TxDOT’s budget, the Legislature must also pass Senator Wentworth’s bill to stop any further hemorrhaging of the gas tax that’s been going to non-transportation sources and frivolous earmarks. The taxpayers won’t tolerate putting more money into a leaky boat. That’s what got us into this mess in the first place. So since an ounce of prevention equals a pound of cure, let’s revisit the gas tax to prevent this shady widespread shift to private tolling and be done with it.

1 comment:

Faith Chatham said...

Today, Thursday May 9, 2007, Michael Morris of the Transportation Department of the NCTCOG stated that $2.1 billion of the US bond money that can come to Cintra on the SH121 project is raised by USDOT under a new program where the FEDS raise money from private sector lenders at lower than normal private sector interest rates. These are tax exempt bonds.

$700 million has already been paid by TXDOT from public tax funds on the SH121 project. Another $700 million US DOT loan/grant has been applied for by Cintra through TxDOT.

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