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12th International HOV Systems Conference: Improving Mobility and Accessibility with Managed Lanes, Pricing, and BRT

Conference Proceedings

LUNCHEON SESSION

Dennis L. Christiansen, Texas Transportation Institute, Presiding

New Financing Options in Texas

John W. Johnson
Texas Transportation Commissioner

Thank you for that gracious introduction and for the invitation to join you today. I would like to add a word of welcome to those of you who have traveled great distances to be here. The conference agenda and the opening session indicate that your journey will be worth the effort.

It has been said that life is too short for a long story — and I hasten to add, for a long speech — so you will be glad to know that my remarks will not impact your life expectancy to a great extent.

While my comments focus on Texas, I think the challenges we face are similar to the ones that you encounter in your state or country. I think it is fair to say that Texas has undergone some drastic changes recently.

Let me put that statement in perspective. Spindletop put Beaumont on the map and catapulted our state into the petroleum age. Texas is now home to at least four of the largest oil companies in the world.

The first military flight in a Wright Brothers plane was conducted at Fort Sam Houston in the early part of the last century. Now it is as common to talk of the National Aeronautic and Space Agency (NASA's) newest venture into space as it is to hear that Southwest is an airlines industry leader.

We have come a long way since the speed limit on Texas roads was set at 25 miles an hour. Going that speed on a freeway today could get you run over, or at the very least, saluted by your fellow drivers.

The first gasoline tax in Texas was established in 1923 — at a penny a gallon — with ¾ going to highways and the remainder to public schools. While the tax is higher today, we have not had a gas tax increase in Texas since the early 1990s.

In 1910, there were a little over 14,000 vehicles in the 180 counties in the state that registered automobiles. By the time the first statewide vehicle registration began seven years later, the number had grown to almost 200,000. Staggering at the time, yes, but consider that the current count is well over 18 million registered vehicles in Texas. In the past two decades alone, the number of vehicles registered in the state has increased 61 percent.

In the first half of the 20th century, Texans numbered about seven million. Some 20 million people now call the Lone Star State home, and 85 percent of the newcomers to Texas locate in already congested urban areas. I look at my three young grandchildren; I wonder what their Texas will look like? What is on the horizon that will shape their lives? One thing I know for certain is that for them Texas and all that makes up this great state will look and be decidedly different that is it today.

We are at a crossroads. We can either choose to be as prepared as we can for the new Texas, or pretend that things will function as they always have. I do not advocate the "laissez faire" or "que sera sera" approach.

At TxDOT, we are preparing for the Texas of tomorrow. And with deference to David Letterman, here are our top ten reasons why the Department is preparing for the future.

When I was young, I was proud to be a Texan. I still am, but I do not believe that we can continue to do things the same way, and expect different results. We are, in fact, learning to think big, plan large, and execute huge. And to do that, we know that we cannot continue to only go to the public well for funding. It is running dry, and we will need to tap into new sources of revenues. Fortunately, TxDOT has been armed with a number of new methods to obtain some fresh water. I would like to discuss a few of those new ways in greater detail.

Current transportation dollars simply are insufficient to fund all the transportation needs in the state. Many citizens just do not understand the straits transportation is in. And that is understandable. Citizens look at the $2.00-a-gallon price tag at the pumps, and the connection to funding the transportation system is hard to make. Add the discussion of toll roads and toll fees to high gasoline prices, and there is a collective questioning of the wisdom of policy makers.

The basic truth is that the gasoline tax in the state of Texas is 20 cents a gallon, and has been since 1991. During the decade between 1994 and 2004, deposits of state gas tax to the State Highway Fund grew by 34 percent. During the same period, the number of miles driven on the state system grew by 42 percent.

The picture is bleaker when you consider that during that same decade, the purchasing price of the gas tax decreased by about 8 percent. True, there were more cars on the roadways, and that means more gallons of gasoline purchased, but that is not a great help when revenue from those gallons of gasoline does not go as far. If you drove 100 miles in 1994, your motor fuels taxes brought $1.36 in highway improvements. That figure is adjusted for inflation. Today, the purchasing power of that 100-mile drive is only $0.87.

In fiscal year 2003, gas tax revenue was actually less than the amount spent on maintaining the system. This means we are now spending more on the maintenance and preservation of the existing system than we are collecting - and that does not include expanding capacity. Add to this situation that we are only getting about $0.85 back for every dollar we are sending to Washington in federal gas taxes, and you can see the conundrum. Obviously, finding creative solutions to the transportation and related financial challenges we face is a priority.

Enter the Trans-Texas Corridor (TTC), which represents one of the biggest changes in the way we finance transportation in the state. The TTC is a long-term plan that addresses the state's future transportation needs. Based on projected demand, the immediate need is to provide a long-term solution to congestion on I-35 and along the proposed I-69 corridor. Both corridors connect to the state's busiest international bridges and play a vital role in moving commercial truck traffic through the state.

Last month, TxDOT and Cintra-Zachry, an international consortium of engineering, construction and financial firms, formalized a partnership to develop TTC-35. The TTC-35 route will generally parallel I-35. It is also the first element of the TTC from Oklahoma to Mexico.

The centerpiece of new financing tools is House Bill (HB) 3588, which was approved by the Texas Legislature in 2003. It included such innovative strategies as Regional Mobility Authorities (RMAs). A county or counties may establish an RMA and essentially set their own transportation priorities because they have the ability to build, operate, and maintain toll roads and other transportation projects. Another key addition is the concept of pass-through tolls, which work by allowing local communities to fund their projects, with the assurance that TxDOT will reimburse all or a portion of the project costs based on the number of vehicles which use the facility.

HB 3588 affectionately became known as MOAB, or the Mother of All Bills. This session, MOAB has a son or two. Bills have been filed to make some changes in the 2003 legislation. The bills are quite wide-ranging, and differ in some respects, but there are provisions for entering into Comprehensive Development Agreements (CDAs) for rail facilities, establishing CDAs for state highways in general, clarifying the type of non-tolled highway that can be converted to a toll road, and repealing both the toll equity cap and the cap on expenditures for rail facilities. Last we checked, the House bill is scheduled for a public hearing tomorrow, and the Senate bill has been left pending in committee.

Another approach is to allow TxDOT to invest its capital in toll projects. There are financial limitations or a not to exceed cap, however. Last week the House debated a separate bill to repeal the toll equity cap. That bill passed to third reading. It was, however, amended, to raise the current cap from $800 million to $1.5 billion. That bill could be up for third reading as early as today.

Using the tools created by HB 3588, the Texas Transportation Commission has already authorized the creation of five RMAs that literally spread across the state: Travis and Williamson counties in central Texas, Bexar County in the San Antonio area, Cameron County in the Rio Grande Valley, Grayson County in north Texas, and Smith and Gregg counties in east Texas. TxDOT has a new partner to work with in those counties in addressing transportation issues.

Last February, the Commission also approved the state's first pass-through toll agreement. The agreement is with Montgomery County, a rapidly growing area just north of Houston. Under the agreement, TxDOT will reimburse the county the construction costs for improvements to several state roadways. That is not just a good thing from the county's perspective, in that some needed projects are done faster, but part of the agreement includes the county's concurrence to reinvest a portion of those funds into other projects. I would call that a win for the state because now state dollars are spread a lot farther.

I do not want to overlook why we are gathered here. The use of HOV and HOT lanes is increasing in Texas. Although, I am not a fan of barricaded HOV lanes, HOV and HOT lanes are key parts of our transportation system as shown by their use in Dallas and Houston.

In Houston, there are a little over 100 miles of HOV lanes on six radial freeways. More than 116,000 passengers utilize the lanes daily, making approximately 37,500 vehicle trips. The QuickRide value pricing program, which allows two-person carpools during the 3+ period, is one option we are using on two of our local freeways; I-10 West, affectionately called the Katy parking lot, and US 290 or the Northwest Freeway.

Four freeway corridors in the Dallas area have HOV lanes, including the contraflow lanes on the East R. L. Thornton, which uses the movable barrier technology. But while the business of HOVs and HOT lanes is not about the dollars, but about saving time and moving people, the key is finding innovative ways to do so.

The state legislature has obviously given us some tools to creatively manage transportation. But as I said earlier, the transportation business is a partnership. Innovation cannot begin and end at our state capital, it has to extend outside our borders to the nation's capital.

The House version of the reauthorization bill directs the secretary of transportation to take appropriate action "to preserve and enhance the Interstate system to meet the needs of the 21st Century." What those appropriate actions are, I can not say. I will leave the discussions up to the think tanks around the country to debate how to handle increased demand on the system, rising freight movements, road capacity challenges, and the interconnected roles of the state and federal governments.

I will offer one suggestion, however. That suggestion is that whatever actions we take we must take them with the view of making sure the difficulties we face in transportation today do not become the insurmountable challenges of tomorrow. We can and will take those necessary steps. Future generations are depending on it.

Thank you again for allowing me to share this time with you. I hope that by my remarks, you can get a sense of how important the work that you do is.


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