Three billion reasons to shut down toll authorities
By Terri Hall
April 2, 2016
It’s been a rough week for Texas’ Regional Mobility Authorities (RMAs). They’ve come under scrutiny in recent years as duplicative, wasteful, and even corrupt governmental entities that exercise a lot of power, control billions in tax money all with very little oversight and financial accounting. So much so that Lt. Governor Dan Patrick created an interim charge to investigate the state funds that flow to RMAs and asks the Senate Transportation Committee to recommend additional oversight procedures to ensure RMA expenditures are a valid and accountable use of state funds. Ouch!
RMAs were created in state law, Senate Bill 342, in 2001 with their powers expanding incrementally and significantly since then. County commissioners vote to create one (with the exception of El Paso where a city can elect to form an RMA which it did in 2006) and the Texas Transportation Commission appointed by the governor vote to approve it. RMA board members are appointed by the county commissioners and the chair is appointed by the governor. Today, there are nine RMAs with several representing multiple counties like the Central Texas RMA (two counties), Sulphur River RMA (4 counties), and Northeast Texas RMA (12 counties).
RMAs, unlike regional or county tollway authorities created in separate chapters of the Transportation Code, do not rely strictly on toll revenues to fund its projects nor are their powers restricted to roads. RMAs can operate other transportation projects including aviation, transit, rail, as well as bicycle and pedestrian facilities, and they can move their funds around to subsidize projects that can’t pay for themselves.
For instance, they can use toll revenues to subsidize a transit or rail project that will never be self-supporting at the fare box. RMAs can also access local taxes to pay for its projects. Several had their counties pass a $10 vehicle registration fee hike (with the help of the Texas legislature) to pay for its projects, including toll projects, which is double taxation. RMAs can also access local property taxes to fund toll projects through Transportation Reinvestment Zones (TRZs) —also double taxation.
But the key sticking point for the public is the RMA’s access to state highway revenues to subsidize its toll projects. Using tax money to build the toll project and then charging drivers again to use it is yet another instance of double taxation. The Texas Department of Transportation (TxDOT) has obligated $3 billion in state highway funds to RMAs. RMAs have relied on the state to enhance their credit in order to secure financing for its projects, leaving taxpayers vulnerable for billions more in off-budget debt. So many taxpayer advocacy groups, especially anti-toll groups, Texans Uniting for Reform and Freedom (TURF) and Texans for Toll-free Highways, believe that gives the state three billion reasons to pull the plug on RMAs.
The Texas Transportation Institute (TTI) at Texas A&M University issued a report in February that raises questions about the scant oversight over RMAs both by the local counties and by the state, as well as their financial reporting which it calls ‘minimal.’ The report contends RMA financial reports ‘lack detail’ and said their annual reports are “geared toward displaying the RMA’s achievements, in a public-friendly brochure that lacks specific project management-level details.”
The report goes on to suggest greater accountability measures: “RMAs could improve reporting by identifying sources of funding more clearly to show if and when taxpayer dollars the state highway fund were applied and where taxpayer dollars are used for RMA projects.”
In its testimony to the Senate Transportation Committee, TTI explained the limitations on its report emphasizing there was no attempt to perform an independent audit to assess the finances of the RMAs, their solvency, ability to meet it debt obligations and whether or not each has adequate reserves. TTI researchers found it difficult to confirm RMA claims that it accelerates projects due to a lack of a standard report format that clearly documents costs, spending, and impact on system performance.
Senator Don Huffines, who authored a bill to require the State Auditor to conduct a thorough outside audit of RMAs last session, asked TTI is they would recommend the RMAs undergo an outside audit and the witness, Ginger Goodin, dodged it with an answer that she had no position on that. Huffines also asked whether RMAs could eventually be weaned from state funds and he was met with silence from the panel, though the Cameron County RMA Executive Director Pete Sepulveda shook his head ‘no.’
When the greatest source of RMA funding is the state highway fund, TTI’s suggestions on improving financial reporting needs to become law and quick. At a minimum, a thorough top to bottom independent financial audit of each RMA is a must and certainly if they’re scheduled to receive more state funding. Access to local taxes and financial assistance from the state along with its leveraging of toll revenues, TxDOT rules also give RMAs a leg up in the project prioritization and selection process. This makes toll roads take priority over non-toll projects.
At Tuesday’s Senate Transportation Committee hearing, Senator Bob Hall also brought up another key issue - the RMAs use of state funds to hire lobbyists. Hall cited the Texas Government Code Chapter 556 that prohibits state funds from being used to hire a lobbyist or any person that is required to register as a lobbyist.
While Brian Cassidy, an attorney and lobbyist for six of the RMAs, claims no state funds were used to pay his firm Locke Lord, state funds were the sole source of RMA funding for many RMAs prior to them getting an independent source of revenue through toll revenues or local taxes. Hall also brought up concerns with the ethics rules within each RMA after Texans for Public Justice recently filed a formal ethics complaint against several Central Texas RMA board members who have real estate interests near RMA toll projects creating conflicts that should preclude them from serving on the board (Transportation Code 370.2522).
With such a cloud of doubt remaining about conflicts of interest and lack of robust financial reporting and accountability plus the fact RMAs have been granted $3 billion in state highway funds, RMAs deserve much deeper scrutiny as calls to abolish them will only grow louder. The committee chair, Senator Robert Nichols, only allowed invited testimony which could be characterized as a cheerleading session for RMAs by the RMAs themselves. But last session lawmakers clearly don’t trust RMAs since they introduced bills not only to audit them (Sen. Huffines/Rep. Tony Dale), but also to subject them to sunset review (Sen. Konni Burton and Rep. Lyle Larson) and even to end them altogether (Sen. Hall). Simply saying RMAs are accountable to local county commissioners and local transportation boards who also fail to audit them or exercise tough oversight over these agencies does not absolve the state of its job to exercise proper oversight, especially when it has three billion reasons to know how state funds are being spent.