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 Transportation Commission.

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 Governor 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 Houston.

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 future.

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:

One: The revenue necessary to pay for the system would have to be user fee driven as much as possible.

Two: The 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 rail 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 divert 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 state.

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 Corridor.

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 before.

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 assistance.

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. State 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 natural resources.

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. The Governor was not interested in picking a spot for new roads. He was interested in changing the way we look at planning and execution. The Trans 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 the 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 contracting.

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 of competition.

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?