Monday, January 31, 2011

Texas road system being constructed on credit cards

This story really pissed me off, in part I suppose because I haven't paid close attention to road funding issues for the last decade:
Texas soon will be shelling out more per year to pay back money it borrowed for road construction than it spends from its quickly vanishing pile of cash to build new highways.

Legislative leaders characterize the state's transportation funding as a crisis. Most Texans, they say, are unaware of its severity and must be educated before the state can find new ways to finance new roads.

The gasoline tax pays for road maintenance and construction but has not increased in 20 years. Gas tax revenue peaked in 2008 and likely will decline as vehicles become more fuel-efficient.

"It's not a crisis until everybody agrees that it's a crisis. Right now, people who don't understand it are saying, 'You're crying wolf,'" said House Transportation Committee Chairman Joe Pickett, D-El Paso. "Yes, it's a crisis."

Senate Transportation and Homeland Security Committee Chairman Tommy Williams, R-The Woodlands, agrees.

"The gravity of the situation is that in the absence of further action by the Legislature this session, we will literally be out of money for new construction in 2012 in the fastest-growing state in the country and in one of the largest states in the country," he said. "We need to begin to have a discussion about it."
The whole story is worth a read. That makes me mad because state government - especially Texas - supposedly pays as it goes, as opposed to the federal government which has run up a $1.5 Trillion annual deficit. We're not supposed to be borrowing for our entire damn road budget! The feds do that. "Oh, let's have a couple of wars and put it all on the credit cards." But state government at a fundamental level shouldn't be operating that way. Apparently the bonds we're currently operating from were issued in 2007 and we'll completely run out of road money by next year. Genius. (/sarcasm)

It sort of reminds me of the spate of county "road districts" we saw for a while during the go-go '80s S&L fiasco, where developers owning empty land would move several employees onto it in trailers, have their employees "vote" to declare a "road district," then issue county-backed bonds to pay for essentially private road construction, making roads a) much more expensive than they should be and b) designed in service to suburban developers instead of overall public need. Some of these, like the one built at the behest of former Governor John Connally and former Lt. Gov. Ben Barnes southwest of Austin, were paid for essentially with junk bonds back when credit was cheap and easy.

Road districts, though, were at most only ever a small fraction of county road building. By contrast, state government is using debt to finance our road system entirely, in many cases proposing to pay for them by building or designating toll roads. TXDoT now mostly doesn't pay to build roads, a majority of its budget will soon, and for the foreseeable future, go to pay bondholders. What a friggin' mess. I honestly don't see how the Lege can get a budget that pays for everything it needs to without raising some taxes somewhere. If Texas just stopped building roads in 2012 because the Lege didn't allocate enough money, I'll bet that 101 member majority presently enjoyed by the GOP would evaporate as quickly as it appeared.

This is one of those issues that voters really want government to get right. They don't like "tax and spend," but "borrow and spend" has even greater drawbacks, and on roads, "stop spending" is not a viable option..