TxDOT sitting on mound of TxTag cash

State is holding about $9.8 million in toll tag accounts, which generates about $400,000 a year in interest.

December 10, 2007

By Ben Wear, AMERICAN-STATESMAN CORRESPONDENT

I got my monthly e-mail from the TxTag folks a few days ago.

Having made a couple of trips up the 183-A tollway for kid soccer weekend, along with some other recent toll road drives, I wasn't surprised to see on my toll tag statement that my credit card had gotten dinged for another $20. In all, the Texas Department of Transportation was holding $23.17 of my money in safekeeping as of Nov. 30.

Which brings up a larger point. To be specific, $9.8 million larger.

That's how much TxDOT was holding in its 240,000 TxTag accounts on Nov. 30. Because many of those accounts have two or more tags tied to them, there are about 390,000 vehicles out there with the gizmos on the windshield, 302,000 of them in Central Texas. And in each case, there must be at least $10 held in reserve to cover new toll charges.

When a TxTag's stash falls below that threshold, at least for the majority of them that have a credit card on file, the agency's toll system automatically charges another $20 against the tag holder's credit card. The average tag has about $25 in reserve.

Now, on an individual basis, giving TxDOT $25 to hold more or less permanently is no big deal. The annual interest on $25 at 4 percent is $1. I'm pretty sure most people can comfortably forgo that much money, especially those willing to pay extra to get around faster.

But if you're the entity holding all that swag, the picture looks different. James Bass, TxDOT's chief financial officer, told me the money is kept in a bank account that draws about 4 percent to 4.25 percent interest (it floats with a federal treasury bill rate), meaning TxDOT makes about $400,000 a year on it.

For an agency with an $8 billion annual budget, $400,000 might actually feel like a dollar. But it's not nothing.

For Central Texans, the good news is that the money stays here, even that part of it generated by TxTag accounts on cars based in other parts of the state. TxDOT built a customer service center alongside the Loop 1 tollway in the past two years and hired a company to staff and run it, and this interest income helps defray the cost of that operation. So do the tolls charged on the roads, of course.

And when TxDOT finally gets around to applying $5 fines to the almost 1.8 million incidents of people driving its tollways without paying (the agency is still working out the kinks and has yet to send a violation notice), that money will also go to the three tollways that have opened here in the past year.

TxDOT increasingly is talking about money running out, about the looming prospect of no cash to expand the state highway system.

Its three Austin tollways are doing much better than predicted — 202,400 toll transactions per weekday, versus about 120,000 estimated for next year — but still might not turn a profit for a long time because of high debt payments and operating costs.

That interest income and fine revenue could come in handy.