Chairman Krusee and Committee Members,
thank you for asking me to comment on the proposal.
House Bill 1198 will advance the
progressive transportation agenda of Governor Perry and Members of the Texas
With your permission I would like to
share some background on the Trans Texas Corridor and then touch on a few
sensitive issues about the idea.
Sixteen years ago the Legislature and
Governor Clements faced many of the same challenges you face today. Revenue
was not growing fast enough to maintain increases in desirable government
programs. The State was engaged in a series of federal court battles
concerning the state prison system and the state mental health program the
outcome of which would surely raise the cost of those programs due to the
economic downturn related to energy and banking. Many Texans were returning
to state supported colleges to improve their skill levels. And the number of
children enrolled in public schools was growing at a high rate.
As is the case now, those were
difficult times but difficult times often present leadership with
interesting opportunities and such was the case for Speaker Gib Lewis.
Speaker Lewis chose to appoint Governor Perry and many of his class mates in
the legislature to committees which would serve as a platform for exploring
new and different solutions to confront the cash flow crisis and speaker
Lewis gave those legislators specific instructions: no idea would be
discarded and all changes were on the table.
Over the next four years
Perry and his friends spent a great deal of time researching ideas to create
more revenue, to decrease the cost of doing business and to deliver services
to Texans as fast and as cheap as possible.
Four ideas were particularly
interesting to Governor Perry.
First was the idea of using toll debt
to build new highways in the state.
Second was the idea of building a high
speed rail system connecting Dallas-Fort Worth, Austin, San Antonio and
Third was the idea of using total
project delivery, sometimes called turn key or design build or exclusive
development agreement, as a contract process for building highways.
And fourth was the idea of creating an
additional source of revenue to finance transportation projects in the
For a variety of reasons these four
ideas were not advanced to legislation.
Two years ago the legislature passed,
and Governor Perry signed, several important laws which opened the door for
Governor Perry to focus on toll construction, rail, total project delivery
and revenue stability. Eighteen months ago the public adopted a
constitutional amendment which provides you with the unique opportunity to
advance construction of new highways in our state using a combination of tax
revenue and toll bonds.
Shortly after the session ended in
2001 Governor Perry began to outline his vision for a modern transportation
system which would anticipate and avoid some of the transportation problems
of the future. Immediately after toll equity was approved by the voters,
Governor Perry asked the Texas Transportation Commission to create a plan to
use toll equity and the laws you passed last session to establish new policy
for building in our state the transportation system of the future.
In creating the plan Governor Perry
directed the Commission to focus on the following:
revenue necessary to pay for
the system would have to be user fee driven as much as possible.
private sector would have to
be given maximum opportunity to be a partner with the state in financing,
building and operating the system.
Three: The system would include
for both consumers and business.
Four: The first segments of the system
would have to relieve traffic congestion in urban Texas.
Five: The system would have to
hazardous material away from the most populated areas of the state.
Six: The system would have to create
the opportunity to bring competitive utility service to less developed areas
of the state.
Seven: The system would have to create
the opportunity to improve air quality in urban Texas.
Eight: The system would have to
aggressively promote economic opportunity in the less developed parts of our
Nine: The system would have to provide
a stable source of revenue for transportation projects of the future.
Ten: The system could
never prevent a
Texas citizen from using an alternate tax supported state highway to travel
across the state.
With those criteria the Commission and
Department employees set about the task of describing how we would create a
multi modal fee driven network of public corridors which would serve the
interests of all Texans over the next 100 years.
Thus was born the Trans Texas
The Trans Texas Corridor is not an
alignment on a map. The Trans Texas Corridor is not a contract signed to
build a road in a specific location. The Trans Texas Corridor is not a plan
to divert money from urban Texas to rural Texas.
The Trans Texas Corridor is a way of
looking at transportation planning, design, construction, operation and
finance in a different way than we have ever looked at these processes
We are glad the Governor has chosen to
think outside the white lines. But more important to the Commission is the
opportunity the Governor provided us to build assets which will create cash
flow for the future. Because Committee Members we are running out of cash to
expand capacity and build new assets for the future.
Three trends in state government are
preventing us from expanding capacity to match our population growth and
building for the future.
First diversions from fund 006 to non
transportation related activity grows every year.
Second the purchasing power of our
traditional sources of revenue, the fuel tax and the motor vehicle
registration fee, is not increasing as fast as the cost to address the wear
and tear on our aging highway system.
Third because we are a rapidly
urbanizing state, every year we are required to spend more money on
environmental compliance, right of way purchases and local government
We estimate that in twenty five years
we will have zero cash for new construction and capacity expansion.
We are glad Governor Perry has chosen
to think outside the white lines because this is the right time, and perhaps
our last opportunity, to begin building assets which will be paid for and
providing cash flow for the entire state in time to make a difference.
As you consider the legislation filed
by the Chairman it is important to point out we can build the highway
portion of the corridor without the authority offered in HB 1198.
In fact we have already started.
Highway 130, east of Austin, is the beginning of a state wide toll system
which will parallel existing tax supported highways across the state. We are
using toll equity matched with toll bonds to pay for the construction of
State Highway 130. We are operating under a total project delivery contract,
in this case the exclusive development agreement, to lower the cost and
build the asset faster.
We will build the Trans Texas Corridor
without HB 1198. But it will cost us more and it will take us longer.
Without HB 1198 we cannot build the rail system which logically belongs in
the same right of way. Without HB 1198 we cannot provide the utilities which
logically belong in the same right of way. Without HB 1198 we cannot offer
owners of property the opportunity to trade their land for an equity
interest in the asset. And we will not be able to offer Texans, all Texans,
the opportunity for economic growth which always comes with access to high
speed roads, high speed rail, high speed communications, water and other
But we will build the corridor because
we have no choice.
Advancing the plan has encouraged a
fair number of concerns around the state. Transportation planners are
concerned we will not take local and regional concerns into account. Design
engineers are concerned we will force them to compete with one another in a
process they do not understand. Contractors are concerned they will become
sub contractors to large multi national companies and financial
conglomerates. Urban legislators are concerned we will divert scarce cash
away from urban Texas.
Some of these concerns are well
founded. And some of these concerns are founded in protecting narrow self
interest at the expense of the common interest of all Texans.
You no doubt have concerns you will
express but allow me to comment on those I hear about most often.
The corridor will drain scarce
resources away from my projects which need to be built in my area today.
This concern is valid if private
sector and other public organizations do not come forward with proposals
which are 100% financed. We believe passage of HB 1198 will encourage but
not guarantee private sector interests will come forward with projects which
are 100% financed.
And if not,
at the instruction of
Governor Perry and the Commission, our administration has adopted an
operating policy which clearly states the corridor will be constructed in
priority areas where scarce resources are going to be spent anyway.
Under existing practices, our
administration selects projects and presents them to the Commission.
Diversions from your projects in your
area will be no more painful than the pain we all feel today as cash
continues to be diverted from construction of projects in your area anyway
because we are running out of cash.
Local transportation leaders were not
consulted in developing the corridor plan.
Guilty, but for a good reason.
Governor was not interested in picking a spot for new roads. He was
interested in changing the way we look at planning and execution.
Texas Corridor is a state of mind, not an alignment on a map.
The corridor plan was developed from
the perspective of the state and for the future.
The Governor recognizes that for many
years the state perspective and planning for the future have been sacrificed
for needs of today in our respective communities.
The Commission believes local
transportation leaders will have ample opportunity to participate in
corridor plans as proposals are made by the private sector and as the
Commission makes proposals for its own account.
The Commission wishes local
transportation leaders would propose segments of the corridor in partnership
with the State but as of yet we have not seen any takers.
The corridor is designed to move
traffic quickly across the state but the big problem in Texas is congestion
in the urban areas. The corridor does not relieve congestion in Houston,
Dallas, fort worth, Plano, Sugar Land, San Antonio or any other city near
Houston and Dallas.
To a certain extent we understand this
concern. But again the corridor is a state of mind. We are wide open to
proposals from urban Texas.
In the past month we have entered into
a partnership with Harris County to expand Interstate 10 in much the same
way we imagine the corridor could be constructed in urban Texas.
But please remember the self interest
of the Commission members. The Trans Texas Corridor is the first real
opportunity we have seen in twelve years to stabilize and
increase cash flow
available for new construction and capacity expansion.
Properly planned and executed
Trans Texas Corridor will produce cash for transportation projects
throughout the state including urban Texas.
There is too much opportunity for
cronyism, brother-in-law deals and other forms of non competitive
This would be a valid concern if the
Commission does not take great care to establish fair and consistent rules
to govern the process by which we will select proposals and vendors.
State Highway 130 is our laboratory
project for the Trans Texas Corridor.
The companies which won that bid are
happy. The companies which lost that bid are not happy. Such is the result
And the Governor will be proposing
common sense improvements to the current law which will encourage
competition while assuring all interested parties have a fair shot at the
work. The current Commission Members share a few common experiences in life.
We are not lawyers - it has been a long time since the Commission has been
without a lawyer member - we are self-employed business owners who have each
built our business in the rough and tumble world of competitive proposals.
We believe the states interest, the
common interest, is best served by a contracting system which encourages the
private sector to combine resources, to take a risk in preparing a proposal
and to live with the consequences of that proposal.
We are open to your suggestions on how
to make the process better but we firmly believe the corridor will grow
faster and become a valuable asset more quickly if total project delivery
and unsolicited proposals are the norm and not the exception.
In closing I would suggest you ask
yourself the same question Governor Perry asked of us just last year.
Knowing what we know today, why would
we continue to plan and execute the same way?