Since HNTB and its subcontractors perform much of
CTRMA’s work, HNTB is responsible for a majority of the
authority’s bills; these go through both approval
processes. A summary of CTRMA’s expenditures through
2004 can be found in
Appendix 7.
Inappropriate Expenditures
The Comptroller’s review team found that
CTRMA has
made a number of questionable reimbursements. While the
authority is not subject to state reimbursement
requirements, these requirements do represent useful and
appropriate guidelines for the expenditure of public tax
dollars. CTRMA has approved purchases in travel, meals
and mileage that would be considered inappropriate for a
state agency and, in some cases, violate its own
policies as well.
According to Chapter 370 of the Transportation Code
and Section 9 of the CTRMA Bylaws, board members can be
reimbursed for mileage and other expenses associated
with the performance of their duties as board members.[87]
While reimbursement for travel to and from board
meetings and other official functions is an acceptable
practice for state agency board members, many board
member reimbursements paid by CTRMA would be
unacceptable at a state agency.
According to the 2003 General Appropriations Act,
reimbursements for transportation and incidental
expenses incurred by state board and commission members
must be provided at the same rate as state employees.
Specifically, airfare for board and/or commission
members can be reimbursed at the levels established in
the State Travel Management Program (STMP), which vary
by location and distance. Mileage costs for driving by
board or commission members in their own vehicles can be
reimbursed at a maximum of 35 cents per mile.
In addition, the 2003 General Appropriations Act caps
in-state meal per diems for board members at $30 per day
and in-state lodging expenses at no more than $80 per
day. (The act does allow for higher reimbursements for
legislators, but even these are capped at twice the
amount available to state employees, or $60 per day for
meals and $160 per day for lodging.)[88]
On January 26, 2005, the
CTRMA board adopted a
reimbursement and travel policy that provides guidelines
for board members and staff concerning travel, lodging,
meals and incidental expenses associated with their
duties as CTRMA representatives.
CTRMA’s new travel policy provides only one cap for
reimbursements: mileage accrued by
CTRMA board members
and staff in their personal vehicles can be reimbursed
at the maximum level allowed by the federal government.
The policy also disallows expenses for alcoholic
purchases, entertainment (including hotel movies) and
parking or traffic tickets. It also disallows
reimbursement for expenses accrued by spouses or
“significant others” of CTRMA board members or staff who
accompany them on travel.
Other than these guidelines, the policy allows board
members and employees to use their best judgment on the
appropriateness for travel expenses.[89]
It also fails to address expenses accrued by
CTRMA
contractors or subcontractors. In general, the new
policy does not provide for the type of accountability
one would expect in governmental agency dealing with
taxpayers’ money.
From January 1, 2003 through December 31, 2004,
CTRMAreimbursed its chairman a total of $11,066.30 for
CTRMA-related expenses. A majority of this was for
mileage to and from meals and meetings with various
local and state officials, contractors and
representatives of special-interest groups.
Occasionally, the chairman received reimbursements for
the cost of meals as well. State and local board members
generally are not reimbursed for such expenditures.
For example, on November 20, 2003, the chairman
bought lunch for a state representative, the TxDOT
Austin District Engineer, the HNTB project manager, a
Williamson County Commissioner who would become the
CTRMA executive director and
CTRMA’s general counsel at
the University of Texas Club, at a cost of $92.10.
CTRMA
later reimbursed the chairman for the cost of the meal,
mileage and parking, for a total cost to taxpayers of
$125.63. The receipt filed for reimbursement simply
stated “RMA meeting.”
CTRMA also has reimbursed the chairman for
administrative work performed by the staff of his own
company. These totaled more than $3,000, at $19 per hour
and later at $23.08 per hour, between August 2003 and
December 2004. CTRMA did not have a contract with the
chairman’s staff to perform this administrative work.
These reimbursements appear to have violated several
sections of the Transportation Code. Section
370.252(a)(6) of the Transportation Code prohibits a
director of an RMA from having a personal interest in
any agreement executed by the authority. Section
370.252(b)(1)-(3) of the Transportation Code provides
that a person is ineligible to serve as a director of an
RMA if the person: (1) is employed by or participates in
the management of a business entity or other
organization that receives funds from the RMA; (2)
directly or indirectly owns or controls more than a 10
percent interest in a business or other organization
that receives funds from the RMA; or (3) receives a
substantial amount of funds from the RMA. It is a ground
for removal of a director from an RMA board if the
director at the time of appointment or at any time
during the director’s term is ineligible to be a
director under Section 370.252 of the Transportation
Code.
Section 370.260(a) of the Transportation Code
prohibits a director of an RMA from contracting with the
RMA or being directly or indirectly interested in a
contract with the RMA. And Section 370.260(b) provides
that a director who violates this prohibition is liable
for a civil penalty to the RMA in an amount not to
exceed $1,000.
CTRMA also paid $2,400 for the chairman’s personal
membership in the Austin Area Research Organization
(AARO). According to its Web site, AARO is a group of
business leaders who gather to discuss “mutual
concerns.” This membership is not a requirement of his
role with CTRMA and he was a member of AARO before being
appointed to the board. Interestingly, another
CTRMA
board member belongs to AARO and was not reimbursed for
his membership fee.
CTRMA also reimbursed a board member for $780 in
round-trip airfare from New York City to Austin. The
board member asked to be reimbursed because she “was on
business and would have missed the monthly board meeting
had the board member not bought an additional ticket to
fly to Austin and return to New York to continue the
board member business.”[90]
The Transportation Code does not specify which RMA
board member expenses are eligible for reimbursement.
CTRMA bylaws, however, state that board members “will be
reimbursed for their actual expenses of attending each
meeting of the Board and for such other expenses as may
be reasonably incurred in their carrying out of their
duties and functions.”[91]
The bylaws do not set any limits on such reimbursements,
and the new reimbursement policy only limits mileage
expenses.
CTRMA also paid the $400 registration fee for a
conference attended by its executive director for which
he registered before he became a
CTRMA employee. He
registered for the Institute for Participatory
Management and Planning conference on November 17, 2003,
was hired on December 5, 2003, and attended the
conference in Monterey, California from January 12 to
18, 2004. He did not bill CTRMA for his room or airfare,
but did bill the authority for copies, a long-distance
call, alcoholic drinks, meals, parking and taxi fare. He
approved his own expense statement (Appendix 8).
The CTRMA expense statement does not include a section
explaining the purpose of the trip.
Such examples may represent common practice for
executives of some private businesses with expense
accounts. These expenses may represent a very small
portion of CTRMA’s total expenditures. Such practices,
however, generally would be considered unacceptable for
government agency employees and board members. If
CTRMA
does not establish policies limiting the range of
acceptable reimbursements and capping their amounts, it
puts itself at risk of approving exorbitant,
inappropriate or illegal expenditures.
In addition, it appears the policies that
CTRMA has
regarding travel and meal expenses for its board members
are applied inconsistently. There have been several
occasions in which one board member has been reimbursed
for an expense while other board members have not.
The lack of reimbursement caps for travel, meals and
other incidental expenditures accrued by
CTRMA board
members, staff, contractors and subcontractors, as well
as the inconsistent applications of the limited policies
they do have, make it impossible for the authority to
budget for these types of expenditures accurately.
Contractor Travel Expenses
State agencies in the executive branch of government
must participate in the Texas Building and Procurement
Commission’s (TBPC’s) State Travel Management Program
(STMP), using existing state contracts for travel
services. These contracts include travel agency
services, charge card services, rental car companies,
airlines and hotels. Other entities such as cities and
counties, school districts and public community colleges
can use the STMP as well. State law does not identify
RMAs as an entity eligible to participate in the STMP.
STMP services and contracts are available for
business-related travel for elected and appointed state
officers; state agency employees; prospective employees,
when their travel is being paid by the state; and other
persons traveling on behalf of state agencies when their
travel expenses are being paid by the state in
accordance with guidelines established by the
Comptroller’s office. All travel made through the STMP
is reimbursable according to guidelines established in
the 2003 General Appropriations Act.
CTRMA has reimbursed travel expenses far in excess of
state guidelines. One HNTB employee flew first class
while on CTRMA business from Austin to Kansas City at a
one-way cost of $677.31 including taxes and fees. The
documentation obtained from the Peña Swayze accounting
firm regarding this travel includes a handwritten
note—“flight plans changed at clients [sic] request.”
Upgrading from coach-class airfare to first class
directly conflicts with the guidelines and expenditure
levels established in the STMP.
This upgrade also conflicts with HNTB’s Employee
Policy Memo 66, which states, “All employees are
expected to travel in coach class with only one
exception: For international travel...all charges
associated with upgrades to first class are not job
chargeable or overhead chargeable. The employee will
bear the costs of upgrades.” Yet HNTB,
CTRMA and TxDOT
all approved this reimbursement.
Sales
Taxes
As a publicly funded entity,
CTRMA is exempt from
state and local sales and use taxes.[92]
In a detailed review of CTRMA expenditures, the
Comptroller review team found that the authority usually
exercises its exemption, but it has unnecessarily paid
sales and use tax on a number of expenditures. It is
entitled to and should seek reimbursement for the sales
and use tax it has paid.
Human
Resources Expenses
CTRMA hired and contracted to pay an independent
consultant $4,000 at $250 per hour to help develop a job
description for the authority’s chief financial officer
(CFO) position. The consultant developed a job “model”
based upon interviews and surveys with key stakeholders
and an analysis written by CTRMA’s executive director.
The consultant described the characteristics of the
person most suited for the CFO role; appropriate terms
for creating a job description; and a survey to be used
in evaluating applicants.
This consultant was hired without competitive
bidding, upon the recommendation of a friend of the
executive director’s who has no formal connection with
the authority.[93]
According to Section 8.3 of CTRMA’s procurement
policies, the executive director may obtain consulting
services for less than $25,000 via such a single-source
contract if he determines that only one consultant
possesses the knowledge, competence and qualifications
to provide the needed services at a reasonable fee and
within the time limits required by the authority.
Nothing furnished to the Comptroller’s review team
indicated that these criteria were satisfied. A glance
at the Austin phone directory identified 13 “Human
Resource Consultants,” 21 “Employment Consultants” and
82 “Executive Search Consultants.” Neither the
consultant nor her company, “Between the Lines,” is
listed in the directory.
Food and
Beverage Expenses
Employees and contractors of
CTRMA often are
reimbursed for meals and beverages that would be
considered unjustified by both state and local
government agencies. While the amounts involved are
negligible in terms of the overall budget, these
incidents—and the fact that they were approved for
reimbursement—demonstrate a lack of appropriate
oversight over the expenditure of tax dollars by both
CTRMA and TxDOT.
For example,
CTRMA’s executive director received
reimbursement for alcoholic beverages purchased in
Monterey, California. Other reimbursements cover beer
purchased by contractors. When asked about reimbursement
for alcoholic beverages, CTRMA told the Comptroller
review team that its policy does not allow such
purchases.[94]
Another difference between
CTRMA and government
practice is the reimbursement of in-town meals. State
guidelines reimburse employees only for meals taken out
of town when on government business, and only on a per
diem basis. CTRMA staff, board members and contractors,
however, commonly receive reimbursement for meals while
in town. As noted earlier, CTRMA has reimbursed its
board chairman and its executive director for meals in
both Williamson and Travis counties.
CTRMA also has
reimbursed an employee of HDR, a subcontractor for HNTB,
for meals with temporary HNTB employees.
Some of the executive director’s meals reimbursed by
CTRMA were taken with
CTRMA board members, county
commissioners, TxDOT officials, CTRMA’s general counsel,
Pete Peters of The Communicators (an HNTB
subcontractor), Trey Salinas of Martin & Salinas (an
HNTB subcontractor) and CTRMA contractor Everett Owen.
On September 30, 2003 HNTB held a “CTRMA Kick-off”
event, billed to and paid for by
CTRMA , at the Omni
Austin Hotel South for new subcontractors, at a cost of
$309.90.
The CTRMA Planning Committee met on April 23, 2004.
As part of the meeting, lunch was served at a cost of
$219.64 for four CTRMA board members,
CTRMA staff and
contractors. The cost of the lunch was billed through
Locke Liddell & Sapp.
More
Guidelines, Employees Needed
CTRMA hired a professional engineer experienced in
transportation matters to review HNTB documents and
billings. When questioned about CTRMA expenditures, he
said he was concerned about some HNTB purchases and
travel billings. In addition, he said he thought
CTRMA
could have negotiated a better deal for the GEC contract
and that the 15 percent profit-margin clause in the GEC
contract is probably too high.
He indicated that while the 15 percent profit margin
is within a generally accepted profit margin of 10 to 15
percent for GEC services, it could have been negotiated
for a figure closer to 10 percent. Unfortunately, at the
time of the negotiation, CTRMA had no staff. He
indicated that CTRMA should have hired an in-house
general counsel with contract negotiation experience
before it sought its GEC contractor.[95]
He also thought the authority needed more formal,
written policy guidelines regarding HNTB’s work, and
stated that some functions could be performed more
cost-effectively by CTRMA employees rather than by HNTB.
As noted in Chapter 2, he also stated that CTRMA should
have hired staff more quickly to allow it to evaluate
HNTB’s work effectively.[96]
In October 2004,
CTRMA’s executive director told the
Comptroller review team that he expected to hire more
staff over the following year.[97]
On November 29, 2004, CTRMA’s chief financial officer
(CFO) began working full-time for the authority. In
February 2005, CTRMA hired a director of operations and
a communications director.
Public
Relations
Of $16.5 million in work authorized by
CTRMA thus
far, $2 million has been approved for public relations
contracts. At least 12 firms are providing public
involvement and public relations work.
CTRMA may need some survey and market research
related to toll tags and toll rates, and gathering
public input is critical, but its spending on public
outreach in parts of Travis County far removed from the
path of its only project, US 183-A, raises questions.
When asked why it was spending money for public
outreach in Southwest and East Austin, miles away from
any impact US 183-A may have, CTRMA responded that such
spending was legitimate because US 183-A is part of a
larger transportation program, and that the amount of
funding TxDOT would provide for US 183-A depended upon
CAMPO’s approval of the overall program.
CTRMA also
noted that such public outreach spending was “encouraged
by several CAMPO board members.”[98]
CAMPO, however, has already approved the plan; TxDOT
has committed toll equity funding; and
CTRMA continues
to spend on public outreach. Furthermore, TxDOT is
building all roads in the plan aside from US 183-A, and
thus TxDOT would seem to be the entity that should take
responsibility for public outreach in the areas of
Travis County where their construction projects will
have the greatest impact.
As discussed in Chapter 2,
CTRMA controls work and
compensation through the use of work authorizations
(WAs). Each WA is dated and numbered and approved by
board resolution. The first “Public Involvement Services
for 183-A” (Board Resolution 03-46,WA 3.3) specifically
included reference to a grant of $12.7 million from
TxDOT and tasked HNTB with performing various public
involvement activities within 12 months at a cost of no
more than $350,000. The scope of services was defined as
“Public Involvement Services...for the development of US
183-A from SH 45 at US 183 to a connection with US 183,
north of Leander, a distance of approximately 11 miles.”[99]
On September 29, 2004 the
CTRMAboard extended and
expanded “Public Involvement Services for 183-A.” Board
Resolution No. 04-44 extended Work Authorization 3.3 for
12 additional months and compensation not to exceed
$744,630—a 113 percent increase from the first year’s
work. The scope of work was defined as “Public
Involvement Services associated with the development of
the US 183-A Turnpike.”[100]
On March 31, 2004, the board approved Resolution
04-10, adding more than $156,000 to public involvement
and marketing efforts regarding electronic toll tags.[101]
Resolution No. 04-48, approved on September 29, 2004,
authorized $750,000 in payments to TateAustin, an
Austin-based public relations firm, for marketing
efforts over the next two years.[102]
Compensation authorized through 2006 for public
relations and public involvement totals $2,000,875.
Exhibit 16 indicates the amounts that have
been authorized for public involvement and public
information work.
EXHIBIT 16
CTRMA Public Involvement/Information
Authorizations |
| Board Resolution Number |
Date |
Amount Authorized |
Source |
Service |
| 03-46 |
9/24/03 |
$350,000 |
GEC WA 3.3 |
Public involvement services for
US 183-A |
| 04-10 |
3/31/04 |
$156,245 |
GEC WA 3.5 |
Public involvement and
marketing for toll tags |
| 04-44 |
9/29/04 |
$744,630 |
GEC WA 3.3 Supplement 1 |
Public involvement services for
US 183-A |
| 04-48 |
9/29/04 |
$750,000 |
Resolution to retain TateAustin |
Marketing plan, advise on
public information |
| |
Total |
$2,000,875 |
|
|
| Source:
Central Texas Regional Mobility Authority.
|
Political Advocacy
Chapter 556 of the Texas Government Code forbids
governmental agencies from engaging in lobbying.[103]
In a November 2003 status report, however, HNTB
subcontractor Amos “Pete” Peters stated that “elected
officials have been shored-up and alliances have been
formed to see the HWY 183-A through to completion.”
In addition, an April 15, 2004 memo from Don Martin
of Martin & Salinas, a public relations firm contracting
with HNTB, to TxDOT’s Austin District Engineer and
CTRMA’s executive director concerned what Martin
referred to as “the appropriate time to move into
‘campaign mode’ with the toll efforts.” In that memo,
Martin discussed examples of previous efforts and
proposed establishing a private citizen’s group to raise
money and run the campaign, separate from the public
education efforts authorized and funded through
CTRMA.
Martin’s proposal included participation by some groups
already contracting with CTRMA, such as Adelante
Solutions, Martin & Salinas and Peters.[104]
A copy of this memo can be found in
Appendix 9.
CTRMA’s executive director appears to be aware that
governmental agencies are prohibited from lobbying,
because he responded to the Martin memo with an April
21, 2004 letter stating that:
...as you note in your memo, it is essential that
any ‘advocacy efforts’ be separate and distinct from
the educational efforts which may be undertaken by
CTRMA.
CTRMA cannot and will not, engage in advocacy
efforts. All public relations efforts on behalf of
CTRMA will be educational in nature.[105]
Yet the public may have difficulty distinguishing and
separating the roles of these contractors. For example,
the Citizens for Mobility Web site lists Don Martin of
Martin & Salinas as its “media relations” coordinator.
Citizens for Mobility, according to its Web site, is a
“privately funded committee formed to support the
recently proposed toll road funding initiative.”[106]
Thus Don Martin, who, according to the Martin &
Salinas Web site, is a Central Texas real estate
developer, is under contract to perform public relations
work for CTRMA’s general engineering consultant, while
at the same time working for groups actively trying to
build public and political support for
CTRMA’s plan.[107]
Furthermore,
CTRMA has hired Adelante Solutions, an
“entity” of Martin & Salinas, to answer public inquires
it receives. In other words, a public relations firm
owned in part by a developer who has a vested interest
in seeing US 183-A and other road projects completed, is
responding to questions posed to
CTRMA by members of the
public.[108]
The letter from
CTRMA’s executive director cited
above recognized the need to separate the authority’s
public outreach and education efforts from political
advocacy. CTRMA’s reliance on contracted public
relations firms engaged in parallel public advocacy
efforts, however, makes it difficult to ensure that its
money is not spent on political advocacy.
CTRMA only recently hired a public information
officer. CTRMA has relied on outside contractors for
guidance concerning how much to spend on public
relations and what to spend it on.
Recommendations
20.
State law should be amended to require RMAs to
follow the restrictions detailed in Article IX of
the state General Appropriations Act concerning the
reimbursement of staff and board member expenses.
State law should be amended to allow RMAs to
participate in the State Travel Management Program
(STMP).
RMAs
should adopt spending policies that reflect the
organizations’ use of public funds and should limit
reimbursements to expenses directly related to RMA
board meetings and other official business. As part
of these policies, RMAs should establish rules
requiring a written contract or memorandum of
understanding between any board member and the RMA
before the authority can reimburse the member for
any work, including administrative and clerical
work, performed by a business in which he or she has
any financial interest.
If
state law allows, CTRMA should participate in the
STMP.
21.
CTRMA should seek a refund of all sales and use
taxes charged to it for purchases it has made.
CTRMA
is a tax-exempt governmental agency and should
declare its exempt status. CTRMA should have its new
CFO examine its purchases and retroactively seek
refund of any sales and use tax it has paid.
22.
CTRMA and other RMAs should assume responsibility
and be held accountable for ensuring that all
expenses submitted for reimbursement are
appropriate.
CTRMA
and TxDOT have approved questionable expenses,
including some that would violate state law if the
RMA were a state agency, and some that violate the
authority’s own policies as well. TxDOT, under the
guidance of the Texas Transportation Commission, has
granted a great deal of local control to RMAs. It is
important, therefore, that CTRMA ensure that all of
its expenditures are appropriate.
CTRMA
should make its in-house staff responsible and
accountable for ensuring that only legal and
appropriate expenses are reimbursed.
CTRMA should
give its new CFO or his designee the responsibility
for reviewing and approving all requests for
reimbursement from CTRMA staff, board members,
contractors and subcontractors.
23.
CTRMA and other RMAs should employ an in-house
general counsel to ensure that the taxpayers’ best
interests are protected.
According to one of CTRMA’s consultants, the
authority might have negotiated a better deal for
GEC services had it had an in-house general counsel
with contract negotiation experience looking out for
its interests.
24.
CTRMA should not reimburse contractors for food,
entertainment, meetings or social functions without
previous approval by the CTRMA executive director,
who must justify the cost of the event.
25.
CTRMA and other RMAs should limit public relations
and public information contracts to projects
directly under their authority.
US
183-A is the only road for which
CTRMA is
responsible at present. CAMPO is responsible for
planning the region’s mobility projects and TxDOT
approves them. The authority worked with TxDOT to
create the current plan for Central Texas, but it is
not responsible for the construction of any road
other than US 183-A at this time, and should
dedicate any public information spending to that
project.
26.
Shortly after their formation, RMAs should employ
public information officers to limit their
dependence on public relations contractors.
CTRMA’s
recently hired communications director should help
the authority prioritize its public relations
spending and reply to questions received from the
public.
27.
State law should be amended to prohibit RMAs from
contracting for public relations or public
involvement services with any entity engaged in
transportation-related advocacy efforts.
RMAs
should establish clear policies prohibiting any
public relations or public outreach contractor or
subcontractor from working on political advocacy
efforts connected with their projects.
