Lawmakers question transportation officials on cash flow issues

Feb. 5, 2008

By APRIL CASTRO, The Associated Press

AUSTIN — Lawmakers on Tuesday accused state transportation officials of falsely blaming the Legislature for their own poor financial planning and creating an exaggerated public impression of budgetary woes to promote private toll roads.

"The impression out there is that, really, this is a ploy to put pressure on us to go back to the toll road plan," said Sen. Judith Zaffirini, D-Laredo, who said she also believed the Texas Department of Transportation was scheming to promote its own agenda.

Republican Lt. Gov. David Dewhurst called the hearing in response to the agency's repeated warnings of a budgetary shortfall, including a December decision to postpone new highway projects and instead focus on existing roads.

In a letter to Hope Andrade, interim chairwoman of the Texas Transportation Commission, Dewhurst said the forecast used to project a $3.6 billion revenue shortfall by the year 2015 "does not show the complete financial picture."

Specifically, the projection did not include more than $9 billion in bonds approved by the Legislature, including $5 billion already approved by voters.

"This is screwed up," said Sen. Steve Ogden, chairman of the Senate Finance Committee. "I understand how to do a cash flow statement. I understand how to do an income statement. This isn't one of them. This is really bad."

Executive Director Amadeo Saenz blamed slow federal funding and budgeting mistakes within the agency.

"These are very real problems that were caused by a motley collection of factors including external pressures ... like inflation and self-inflicted mistakes including misinterpretation of our cash flow statement," said agency spokesman Chris Lippincott.

Saenz said the agency is streamlining operations to avoid such miscommunications and errors in the future.

Lawmakers were skeptical of the explanations.

"Texans today saw convincing evidence of a fact that many of us have known — they cannot trust the Texas Department of Transportation or the policies that are consigning Texas to inadequate roads and privatized toll ways," said Sen. Kirk Watson, D-Austin.

Andrade, who was named interim chairwoman of the transportation agency last week by Gov. Rick Perry, seemed reluctant to tap the bonds, saying she did not want to "leave this agency indebted." But she dodged Ogden's repeated attempts to get a direct response, saying that bonds as well as toll roads were options.

"You have these financial tools and projections need to include them," Ogden said. "Or say we don't think these financial tools are good public policy and we're not going to use it."

Critics have complained that using bonds for road projects would be a temporary fix that doesn't address long term needs.

Ogden, a Republican from College Station, argued that using bonds for road projects were a sound investment because interest rates the state would have to pay would be "negligible" when compared to inflation increases of as much as 20 percent a year that would be added to construction costs if officials decide to wait on the new road projects.

Lawmakers agreed last session to freeze most new privately financed toll road projects for two years. The issue is expected to be revisited in the next legislative session.

A spokesman for Perry said using bonds alone is not going to fully address all the state's growing transportation needs.

"Toll roads, public-private partnerships — all these things have to be a part of a larger solution to solve the larger transportation needs of the state," said Perry spokesman Robert Black.

"It's going to be imperative for the Legislature to step up and look for a solution to this issue. Just saying no isn't going to be an option."

Ogden and other senators questioned why the agency did not address the shortfall projections when they came before the Legislature last year for biennial state budget request.

"If you come to me and say 'look we're going to have to compromise our maintenance program which would have an adverse effect on safety' ... I will find a way to pay for it," Ogden said.

"Do not compromise maintenance if it's a safety issue. That's too big of a price to ask Texans to pay."