State transportation officials admit to billion dollar mistake

February 06, 2008

By Ben Wear and David Doerr, Cox News Service

The Texas Department of Transportation made a billion-dollar error, officials with the agency admitted Tuesday under stern questioning from legislators, a mistake they said contributed significantly to the department’s sudden cash crunch.

Transportation department officials say agency planners inadvertently counted $1.1 billion of revenue twice, a mistake that caused them to commit to more road projects than the agency could handle. And about $225 million of the resulting cuts came from projects in the transportation department’s Waco district, said state Sen. Kip Averitt, R-Waco, who attended the hearing.

The Waco district, encompassing eight Central Texas counties, received a greater proportion of the cuts “by far” compared with the transportation department’s 24 other districts, he said.

“We can’t let stand having Waco take the brunt of the process,” Averitt said in a Tribune-Herald phone interview after the hearing. “The folks in Central Texas are paying their fair share of the taxes and we are due our fair share of the road improvements.”

Independent audit sought

Lawmakers, always skeptical and often openly hostile during a lengthy Senate committee hearing, let transportation department officials know they remain suspicious about the fiscal crisis’ legitimacy.

Texas Transportation Commission members, said state Sen. Kirk Watson, D-Austin, “have an agenda. And that’s to privatize the second largest (highway) system in the world. And you are hell-bent-for-leather to do that.”

State Sen. Tommy Williams, R-The Woodlands, suggested that a third party needs to take a hard look at the department’s books.

“It’s important to me that we get the state auditor’s office in there as quickly as possible,” said Williams, who carried legislation last year that substantially curtailed the department’s authority to agree to long-term leases with private companies to build and run tollways.

Amadeo Saenz, TxDOT’s executive director, said he would welcome an audit. Saenz and chief financial officer James Bass, along with three transportation commissioners, spent three hours answering questions in an unusual, out-of-session joint meeting of the Senate Finance Committee and the Senate Transportation and Homeland Security Committee.

Money counted twice

Department officials first announced a money shortage in November, ascribing it to a number of factors: inflation, reduced federal transportation grants, the need to spend much more on road maintenance and, most tellingly to legislators, the loss of revenue from those private toll road leases. Until Tuesday, top department officials had said nothing publicly about having made a serious bureaucratic error.

According to Saenz and Bass, the $1.1 billion it counted twice was money borrowed through selling bonds. As a consequence, top agency officials told their various divisions and districts that they had $4.2 billion to spend this fiscal year.

“As soon as I heard that number,” Bass said, “I knew it was an overestimate.”

Soon after, with projects for 2008 now trimmed to $3.1 billion, officials announced huge cuts in spending on right of way and project design and a freeze on starting many road projects that were ready to go. That sudden halt to projects got legislators’ attention and their goat. The Legislature and voters last year gave the agency authorization to borrow an additional $8 billion — though $5 billion of that will require further legislative action in 2009 — so legislators aren’t happy that critical road projects are suddenly up on blocks.

Saenz said he has brought the planning function, along with project procurement, under Bass’ control to avoid the sort of left hand-right hand problem that caused the error.

The so-called transportation funding crisis was one of the factors local officials considered when they approved amendments to the Waco Metropolitan Planning Organization’s five-year planning documents that would finance the expansion of Interstate 35 through the city by adding two toll lanes. Averitt said he believes the MPO’s policy board made the right decision to keep the toll option in the plan so the transportation department wouldn’t stop its surveying work during the time it takes for lawmakers to solve the problem.

“It is not going to happen overnight, but we do expect to make progress,” he said. “I think if we can all understand the direction we are finally headed that we can make those kinds of decisions.”

In the meantime, Averitt said he will continue to fight to get funding for projects in the Waco area restored.

“There are ways to fund those projects that they have delayed, and we want to get them back on track,” he said. “It would be my intention to help get them back on track for those projects, particularly in the Waco district.”