A shortfall; Senators baffled by TxDOT's explanation

Members of state Senate committees were baffled last week at the Texas Department of Transportation's explanation for its $1.1 billion funding shortfall, some even leaving a Feb. 5 hearing with the impression that it was a ploy to promote toll roads, said Sen. Judith Zaffirini. The inadvertent duplicate count of bond proceeds is a major reason for the shortfall, which is halting transportation projects statewide, said Chris Lippincott in a phone interview Thursday.

"We went from about $4.2 billion to about $3.1 (billion in bond proceeds)," Lippincott. "This was a one-year error. It should have been detected earlier. … They double-counted the bond proceeds.

"Basically, we're doing everything that we can internally in ensuring that the mistake is not repeated," he added.

Nonetheless, Zaffirini said she and other senators will not tolerate such action.

"In a billion-dollar agency like this, where we have so many internal controls, it is incredible that the bond proceeds would be counted double," said Zaffirini, vice chairwoman of the Senate Finance Committee.

TxDOT answered to the Senate's Finance and Transportation committees during a joint hearing and explained the shortfall, which is affecting two Laredo mobility projects totaling $41.2 million.

"We couldn't believe what we were hearing," Zaffirini said about the hearing. "All of us. It wasn't as if one person reacted negatively. It was just total disbelief."

Zaffirini said she believes it may have been a trick to convince the Legislature to allow toll road construction. During the last session, the Legislature halted TxDOT's ability to work with the private sector on toll roads. The Legislature also increased the transportation department's funding for the next two years by $1.1 billion, or 6.3 percent, to $16.7 billion, Zaffirini's office said.

"I think it was a ploy … to cause outrage and reaction among tax payers, among the traveling public," Zaffirini said. "If we are correct in saying that was their ploy, then we have foiled it for them."

Lippincott said the shortfall was a mistake and internal changes have been put in place to solve the problem.

Amadeo Saenz, TxDOT's newly appointed executive director, has consolidated, under the chief financial officer, the functions of the department's fund forecasting, management and accountability, Lippincott said. The change breaks down barriers between divisions of the department that previously did not work together as closely, Lippincott said.

When the funding shortfall was first announced, Zaffirini said, TxDOT misled the public and legislators by not owning up to its internal error.

"They were being critical of the Legislature and then talked about increased maintenance needs," the senator said, adding that TxDOT's maintenance plans are to bring road quality from good to very good, which is unacceptable during a funding shortfall.

In the beginning, TxDOT did not admit it had counted bond proceeds twice; instead, engineers and other department officials cited other reasons, Zaffirini said.

"It was a blatant cover-up made increasingly serious by … finger-pointing," she said.

TxDOT said other factors also contributed to the funding shortfall, Lippincott said, including the inflation of highway construction costs, debt service for bonds and increased transportation needs.

With Senate members now fully aware of the actual reasons behind the $1.1 billion funding shortfall, Zaffirini and Lippincott said communication between the Legislature and TxDOT will continue during the time until the 2009 legislative session.

As infrastructure needs increase, there must be a variety of funding options, including toll roads, Lippincott said.

"It's difficult to imagine that toll roads will not play a role in meeting our state's transportation needs," Lippincott said.

Zaffirini said there are some situations for which toll roads are appropriate, but it seems TxDOT pushes toll roads on too many projects.

In the interim, the senator said, oversight, not just monitoring, has been established to solve the problem.

"We are going to play a leadership role," Zaffirini said. "Getting angry about it is simply not good enough. We must go beyond anger to be responsible and to solve the problem."

Lippincott said TxDOT is dedicated to answer the Legislature's questions and comply with requests to be more open. Last week's meeting was just the first step in a series the Legislature and department expect to have.

"I don't think that either committee, nor the department, viewed the hearing as the end of a conversation, but (as) an important one," Lippincott said.

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