News Release

Kay Bailey Hutchison’s transportation plan revives the Trans Texas Corridor

For Immediate Release

Kay Bailey Hutchison calls for some good reforms in her transportation proposal, Putting Texas Transportation Back On The Road to Success. However, her plan falls short in providing public protections and offers no method to finance the state's transportation system other than through privatized toll roads which are fraught with risk for taxpayers.

Hutchison is correct to demand that the state reform TxDOT's broken financing system and enact measures that will regain the public's trust at an agency that admitted to making a $1.1 billion accounting error in 2008 because officials counted proceeds from bond sales twice. She is also correct to insist that data be more transparent and consistent across all regions, especially data that pertains to controversial projects such as private toll roads.

Hutchison outlines good ideas for developing both local and statewide outcome-based accountability measures for transportation projects. Finally, we applaud the inclusion of a strategic freight initiative and the emphasis Hutchison places on high-speed and commuter rail as alternate modes of transportation, as well as the emphasis she places on rail relocation for urban freight rail networks--the first step to getting Texans moving on tracks.

In her transportation plan, Kay Bailey Hutchison states she "will work with the legislature to repeal the relevant provisions in the Transportation Code and kill the Trans-Texas Corridor once and for all." While we applaud Hutchison's willingness to work with the legislature, her promise to kill Governor Perry's Trans Texas Corridor (TTC) project isn't backed up by what she proposes.

The failure to provide funding sources to address chronic revenue shortfalls combined with a loophole for new privatized roads would mean that TTC-style private tolling would become the default option for funding new roads. Without a new method for funding the multi-modal transportation system she proposes, her plan sounds a lot like the TTC-style private toll road arrangements that have come to define Governor Perry and TxDOT over the course of the past decade.
Reviving the unpopular Trans Texas Corridor

The Trans Texas Corridor will not be dead until we rid the state of TTC-style private toll road arrangements that lack meaningful public protections. These are the same type of road privatization deals Governor Perry proposed to fund the hugely unpopular TTC project. Comprehensive Development Agreements (CDAs) and Public Private Partnerships (PPPs) are fraught with problems and are characterized by the same leveraging of debt, reckless shifting of risk and conflicts of interest that triggered the recent financial crisis. CDAs and PPPs place transportation policy and planning in the hands of private Wall Street investors seeking reliable returns from rising tolls.

The plan to build Governor Perry's TTC ran into fierce public opposition and fiscal constraints. Thousands of Texans attended anti-TTC rallies and meetings across the state and continue to voice strong opposition to private toll roads today. Texans worry about the potential government seizure of farmland, the prospect of foreign ownership of state roads, rising tolls and the loss of public control when road policies are dictated by contracts with Wall Street investors. As the recent financial crisis shows, what is good for Wall Street is not always what is good for taxpayers.

Public-Private Partnerships cost taxpayers money

Hutchison's transportation proposal states, "Public-private partnerships are an important part of a modern transportation system, and can often build roads faster and cheaper than the government could do it working alone." This statement is misleading. While privatized toll roads offer a hard-to-resist "quick fix" for state politicians, they have major hidden costs and big potential downsides for the public. Long term privatization deals typically relinquish public control over Texas' future mobility needs.

Privatization contracts often forbid the public from improving nearby roads or force taxpayers to pay private toll road operators if policies will interfere with maximizing their profits from tolls. Furthermore, according to testimony given by the federal Government Accountability Office regarding private toll roads, "there is no 'free' money in public-private partnerships and it is likely that tolls on a privately operated highway will increase to a greater extent than they would on a publicly operated toll road" (GAO-08-44).
Hutchison's plan creates a loophole that will open up future roadways to privatization

Hutchison is correct to outline public protections against risky road privatization deals in her plan, but wrong when she includes a loophole that will enable the state to privately toll future roads and associated structures. She states that "No existing road should be tolled, except to add capacity through new tolled lanes within existing rights of way." This opens up any future road constructed in Texas to privatization and grants the state the right and power to use private toll road deals to build highways, new lanes and additional roads adjacent to the state's "free" roads.

Furthermore, upon reading this section of Hutchison's proposal, thoughts of Senator Nichols' Senate Bill 17 from last session come to mind. While at first glance, SB 17 acknowledged the need to protect Texans against the dangers of private toll roads, it contained a number of hidden clauses that seriously undermined this goal. SB 17 contained loopholes that would have opened up Texas' roadways to private investment by permitting TxDOT to avoid upholding the public protections from the many harmful private toll road deals that were already at early stages of planning. As governor, if Kay Bailey Hutchison intends to safeguard taxpayers from bad road privatization deals, she should eliminate loophole language that would bypass public protections.

Protecting Texas taxpayers once and for all

As Hutchison accurately states, too often, these "partnerships have given unfair advantages to private parties at public expense." Therefore, if Hutchison intends to build the multimodal transportation system she puts forth in her proposal using private toll road deals, she must insist on the strongest possible public protections to ensure complete transparency, full value for taxpayers and continued public control of transportation policy. The protections she outlines in this proposal do not go far enough to safeguard Texans from risky road privatization.

In order to protect Texans, Hutchison should strengthen the public safeguards in her proposal by ensuring that the public retain control over decisions about transportation planning and management and that taxpayers receive fair value so future toll revenues cannot be sold off at a discount. No future private toll road deals should contain non-compete or compensation clauses nor should any deal last longer than 30 years because of uncertainty over future conditions and because the risks of bad deals grow exponentially over time.

Contracts should require state-of-the art maintenance and safety standards instead of statewide minimums and there must be complete transparency to ensure proper public vetting of privatization proposals. For full accountability, the legislature must approve the terms of a final deal, not just approve that a deal be negotiated. And finally, no existing roads should be privatized.

Restructure TxDOT from the top-down or the bottom up?

Hutchison's transportation plan also veers off track when she proposes two changes to TxDOT's structure that contradict one another. First she states that she will make the executive director of TxDOT a CEO. A few sentences later she makes a very different claim when she calls for a "bottom-up, grass roots approach that will put the local communities and citizens of Texas first." So what will TxDOT look like if Hutchison is elected governor? Will Hutchison impose a corporate top-down structure on the agency, one that will prioritize profit over the long-term good of the public? Or will she take the more mindful approach and shake TxDOT down from the bottom up? Right now it is hard to tell.
Transportation will be a big challenge for the next governor of Texas

There is no question that the next governor of Texas will face the very difficult task of fixing the state's broken transportation financing system. Some state lawmakers have suggested indexing the gas tax. There has also been talk of creating a Vehicle Mileage Tax (VMT) pilot program as the state of Oregon has done. Texas must also start investing in more sustainable methods of transportation such as rail that will reduce our dependency on oil, cut global warming pollution, create a more efficient, faster way to travel around the state and create more jobs than building new roads and highways.

Continuing to push irresponsible road privatization is not the answer. Reliance on these deals will simply mean business as usual at TxDOT. Texans have made it abundantly clear that they oppose private toll roads schemes such as Governor Perry's Trans Texas Corridor project. It will be the responsibility of the next governor of Texas to ensure that the public gets what the public wants.

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