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Sunset Commission votes to abolish Transportation Commission

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The Commission was divided on whether TxDOT's head should be elected. Perry has too many well-placed cronies. Sunset Commission Chairman Rep. Carl Isett tried to place an albatross over any effort to get TxDOT directly answerable to the PEOPLE of Texas by making the agency head be an elected position.

San Antonio's Rep. Ruth Jones McClendon attempted to amend the Sunset recommendations to reflect what 70% of the public feedback asked for, a single ELECTED commissioner to head TxDOT. When the Board split over her amendment, she promised to put forward a bill in the House to make it law with Rep. Linda Harper-Brown and Rep. Lois Kolkhorst pledging to back it. Nonetheless, Isett stated: "I suspect you may have a problem getting it out of the Senate." The Commission's recommendations clearly didn't go far enough. It's our job to make sure the needed reforms become law. Hold onto your hats, we're in for another wild ride.

Sunset for TxDOT board? Lawmakers prefer single chief
But 'sunset' report is only advisory to Legislature. Some want to retain five-member board, while others want to elect TxDOT leader.
By Ben Wear
AMERICAN-STATESMAN STAFF
Wednesday, December 17, 2008


The five-member ,Texas Transportation Commission should be abolished and replaced with a single commissioner appointed by the governor, the ,Texas Sunset Review Commission decided Tuesday.

However, the 7-5 vote by the commission, as well as many other changes for the Texas Department of Transportation included in the commission's report, amount only to suggestions to the Legislature. The narrow vote, and the opposition of four of the five senators on the commission, suggests that the question of how to govern TxDOT is far from settled.

"I suspect you may have a problem getting it out of the Senate," commission co-chairman Carl Isett, a Republican House member from Lubbock, said immediately after the vote.

One member pointed out one significant impact of having a single commissioner: no more open meetings of the commission, which makes key decisions. And some members, reflecting the bulk of public comment in recent months, said they would prefer that Texans elect a transportation commissioner. State Rep. Ruth McClendon, D-San Antonio, said she'll carry legislation to make that change in 2009.

"We'll continue to have this discussion for 140 days" during the coming legislative session, said state Sen. Glenn Hegar, R-Katy, also a co-chair of the Sunset commission.

The discussion, which lasted most of Tuesday afternoon, was another in a string of unpleasant ones for the TxDOT executives lined up in the Capitol hearing room's front row. The Legislature in 2007 began and ended the session in open revolt against what many lawmakers of both parties see as the high-handed tactics of TxDOT during the past five years or so. That official restiveness had the bad luck, from TxDOT's vantage point, of coming just as the once-every-12-years sunset review was scheduled to occur.

Make that once-every-four-years, at least for now. The commission approved giving the agency just four years until its next turn on the griddle. In addition — all of these changes would only become law if they are included in a final sunset bill for TxDOT next spring — a newly created Transportation Legislative Oversight Committee would examine everything TxDOT does and how it does it in the coming years. A consultant company would be hired to conduct what would amount to a management audit of the agency. And four divisions of TxDOT, including vehicle licensing and its motor carrier office, would be broken off into a new Texas Department of Motor Vehicles.

"We are trying to restructure an agency," Isett said.

But he opposed the single commissioner idea, arguing that for a service like transportation where large sums of money are spent on roads throughout the state, it would be better to retain the five-member commission and stipulate that the members come from five geographic districts. Historically, governors have attempted to maintain some sort of rough balance in their appointments of transportation commission members, but Isett would put that requirement in law.

Isett said that the real problem with TxDOT isn't the appointed leaders, but rather the "culture in that building across the street" (TxDOT's headquarters on 11th Street) of making it difficult for outsiders to accurately gauge what is going on.

But state Rep. Lois Kolkhorst, R-Brenham , one of TxDOT's harshest critics in recent years, said changing to a single commissioner will make it clear who is responsible for the agency's actions.

"It sends a clear signal," Kolkhorst said, "that we do want change."

USDOT misreports dip, sustainability of gas tax revenue

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Link to article here.

US DOT Misreports Gasoline Tax Revenue
Motor fuel excise tax revenue was up $185 million in 2008, not down, contrary to US Department of Transportation claims.
December 23, 2008
The Newspaper.com

Mary PetersThe US Department of Transportation (US DOT) has falsely suggested that the nationwide drop in vehicle miles traveled is endangering the revenue source used to maintain America's highway network. Soaring gasoline prices in the summer and the ongoing recession together forced motorists to cut back substantially on travel, resulting in 100 billion fewer miles being driven in fiscal 2008. Transportation officials seized upon these facts to argue that the gas tax is unsustainable and that the country must quickly shift to tolling to save the highway trust fund.

"As driving decreases and vehicle fuel efficiency continues to improve, the long term viability of the Highway Trust Fund grows weaker," Transportation Secretary Mary Peters said in a December 12 statement. "The fact that the trend persists even as gas prices are dropping confirms that America's travel habits are fundamentally changing. The way we finance America's transportation network must also change to address this new reality, because banking on the gas tax is no longer a sustainable option."

The federal Highway Trust Fund took in $3 billion less in revenue in fiscal 2008 than it did in 2007, and Federal Highway Administrator Tom Madison placed the blame squarely on the gas tax.

"This (drop in revenue) underscores the need to change our policy so American infrastructure is less dependent on the amount of gas American drivers consume," Madison said.

The American Road and Transportation Builders Association (ARTBA) crunched the numbers and found this assertion to be entirely untrue. In fiscal 2007, the US Treasury reported that a total of $29.4 billion was collected from the taxes on gasoline and diesel fuel. In 2008, the total figure grew by $185 million to $29.6 billion. Lower traffic volumes did cause gasoline tax revenue to drop $70 million, but this figure was more than offset by a $256 million increase in revenue from the tax on diesel, which is primarily paid by the commercial trucking industry. View revenue chart.

These truckers, hit by tough economic times, cut expenses significantly. Sales of new rigs plunged in 2008. That caused a $2.4 billion drop in revenue from the 12 percent tax on the retail sales of trucks and trailers. An accounting change in the way kerosene and similar taxes were transferred ended up showed a paper loss of $722 million from the fund. Together these factors, which are unrelated to the number of vehicle miles traveled (VMT) in 2008, accounted for the $3 billion drop in trust fund revenue.

"The US DOT misused that data to suggest the federal motor fuels tax can no longer finance federal investments in highway and mass transit improvements," ARTBA Vice President William Buechner said. "The data in fact suggest that the federal motor fuels taxes can remain a viable source of revenues for highway investments for the foreseeable future. The trust fund's real problem is not the decline in VMT, but rather the economic slowdown and the fact the federal motor fuel tax rates have not been changed since 1993."

TheNewspaper has previously reported that gas tax revenues have not plunged at the state level. In Virginia, for example, fuel tax revenues were up 2.6 percent in fiscal 2008 (more). Motor carrier fuel tax receipts likewise increased in Illinois (more). At the same time, overall traffic has plunged on toll roads forcing huge increases in the tolling rates to prevent a loss in profit for private investors (more).

Bush unleashes highest possible "market-based" tolls nationwide

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This last minute rule change MANDATES market-based tolling nationwide. Remember, it started here in Texas with the counterfeit moratorium bill, SB 792, that Rick Perry signed into law with glee largely due to the market-based tolling provision. It unleashed the MOST EXPENSIVE transportation tax on Texas and, as we predicted, across the country.

Market-based tolls means charging motorists "whatever the market will bear," bringing us the HIGHEST possible toll tax. It's runaway, punitive taxation based on greed, not the actual cost of constructing the road or retiring the debt. This will be the Bush-Perry legacy: name your price and we'll hand over Americans' wallets. We were the only grassroots group that actively fought this provision from becoming law. Help us fight to roll back this rule change and fight against tolls on freeways and the Trans Texas Corridor on the federal and state level next year. Sign-up for our email alerts here.

Bush road rule takes effect Jan-Transportation Dept
Thu, Dec 18 2008
http://www.afxnews.com by Lisa Lambert

WASHINGTON, Dec 18 (Reuters) - The Bush administration will finalize changes on toll road regulations on Friday that it says will make privatizing infrastructure more efficient, counter to the view of leading Congressional Democrats that it will rob states of revenue and drive up tolls.

A Department of Transportation spokesman told Reuters on Thursday that details of the rule will be published in the Federal Register and will go into effect on Jan. 18.

The rule will require states to charge public toll authorities fair market value to lease roads built with federal assistance, in the hopes of making the authorities equal competitors with members of the private sector, said Doug Hecox.

"When a company wants to come in and bid for the work, they need to have some idea as to what the value of that would be," Hecox said. The transportation department worked with states on the regulation changes, he said.

"In some states they may give the first pick or first chance to public agencies before they give it out to the private sector. In that case, it's a little risky because there's no guarantee they're going to be choosing the fair market value," he said.

In a letter sent to Transportation Secretary on Monday, Reps. James Oberstar and Peter DeFazio said that relying on fair market values would push up the fees to drive on those roads and that the values "bear no relation to the true financing, construction, operating and maintenance costs of the facility."

Oberstar, a Minnesota Democrat, chairs the U.S. House of Representatives Transportation Committee, and DeFazio, a California Democrat, chairs its Subcommittee on Highways and Transit.

A committee spokesman said they had no comment on the finalization of the rule, which was proposed Oct. 8.

The representatives have said that changes to how toll roads are valued should be made in the upcoming transportation bill, to be written in 2009. But Hecox said the administration is concerned that might delay establishing a standard when the appetite for public-private partnerships is growing and states are looking into alternatives to fund infrastructure projects.

In most of the partnerships, also called "P3s," a corporation leases a road from a state and then recoups its losses through levying tolls. The leases extend for decades so the companies may also deduct depreciation costs from their taxes, according to the Government Accountability Office.

Because the partnerships are fairly new in the United States, the GAO, the nonpartisan congressional investigative office, has not been able to quantify how many exist in the country.

The rule change will provide consistency for the corporations bidding for the contracts in different states, Hecox said.

"The businesses that...are waiting to compete for this kind of work can do so from a position of a level playing field, rather than having to be the best friend of the governor in this state or the best friend of the mayor in that state," he said.

(Reporting by Lisa Lambert) Keywords: MUNIS ROADS/

( This email address is being protected from spambots. You need JavaScript enabled to view it.; +1-202-898-8328; Reuters Messaging: This email address is being protected from spambots. You need JavaScript enabled to view it.)

Commission supports TxDOT overhaul

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Our own Mel Borel attended the meeting along with several other TURF supporters and does a great job during the interview! Thanks Mel!


Lawmakers want outside review, one commissioner

Jenny Hoff

AUSTIN (KXAN) - The Sunset Commission , comprised of senators and representatives, voted almost unanimously to support an overhaul of the Texas Department of Transportation on Tuesday.

"It's an agency operating like it is in the 1920s," said Chair Rep. Carl Isett (R-Lubbock).

The Sunset staff made several key recommendations for the agency. They want a Legislative Oversight Committee to be appointed to oversee the agency both when the legislature is in and out of session. They also want more transparency within TxDOT as well as restrictions on TxDOT's lobbying capabilities. The aim is restore the public's faith in a state agency that has come under fire for tollroads, various road projects and discrepancies in the budget.

"They've had free rein to do whatever they want to do," said anti-tollroad activist Mel Borel. "They have abused legislation made years ago and imposed projects on the people of Texas."

When asked if TxDOT agreed with an oversight committee being appointed to oversee the agency, the spokesperson said they would follow whatever the legislature wanted.

"We look forward to working with the Legislature to implement policies they create," said Chris Lippincott.

Illinois Governor arrested for toll project in exchange for campaign cash

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Link to article here.

Illinois Governor Blagojevich Saw Personal Green in Toll Lane Idea
Illinois governor arrested for approving a toll lane project in return for campaign cash.
The Newspaper.com
December 10, 2008

Governor Rod BlagojevichThe green in Governor Rod R. Blagojevich's "Green Lane" tolling proposal was headed to the pocket of the Illinois Democrat, according to charges filed this weekend. Most of the attention drawn to yesterday's arrest of Blagojevich and his chief of staff, John Harris, has centered on the governor's reported attempt to sell the US Senate seat being vacated by President-elect Barack Obama (D). Blagojevich's "Tomorrow's Transportation Today" scheme to impose new tolls on motorists for the enrichment of his personal campaign contributors has received less scrutiny. Blagojevich took office in 2003 after his predecessor, George Ryan (R) was similarly arrested for corruption.

"If (Illinois) isn't the most corrupt state, it's one hell of a competitor," Federal Bureau of Investigation (FBI) Special Agent-in-Charge Robert D. Grant said yesterday. "Even the most cynical agents in our shop were shocked."

According to the indictment, a wealthy contractor promised on October 6 to make a $500,000 donation to the Friends of Blagojevich campaign account. Nine days later, the governor announced the $1.8 billion program whose centerpiece was the addition of High Occupancy Toll (HOT) lanes to the Illinois Tollway -- an extra layer of toll collection on existing lanes within the already tolled roadway. The beauty of the Tomorrow's Transportation Today concept was that it could be easily expanded to other parts of the state transportation network.

"I could have made a larger announcement but wanted to see how they perform by the end of the year," Blagojevich said in private conversation. "If they don't perform, [expletive] 'em."

According to the most recent campaign disclosures filed, Blagojevich had raised $1.9 million for his campaign in the first six months of 2008. FBI agents seized the campaign ledgers and suggested that Blagojevich's goal was to reach $2.5 million by the end of the year. After bugging the Blagojevich campaign office, agents intercepted a phone call where the governor emphasized to contractors the need to raise the additional campaign money before January 1, 2009. On that date, a new ethics law designed to stop "Pay for Play" will prohibit companies with state contracts worth more than $50,000 from making donations to officials that approve contracts.


Green Lane construction is not scheduled to begin until 2010. Under the current plans, contractors would be given $400 million in taxpayer money to install extra tolling infrastructure on the existing, already tolled lanes on 41 miles of Interstate 294 -- the Green Lanes would not create any new capacity. The extra tolls imposed on drivers would would then be handed to contractors to build expensive interchange replacement projects for the benefit of campaign donors with ties to the concrete industry.

This is not the first scandal involving HOT lanes. In 2002, the Orange County, California Transportation Authority paid the contractors who built the 91 Express Lanes $207.5 million to get out from under a cleverly written non-compete contract. The lanes only cost $139 million to build. Earlier this year, an Australian tolling contractor admitted it had made $177,000 in illegal campaign contributions to Virginia Governor Tim Kaine (D) and members of both parties in the General Assembly. Contractors that run HOT lanes stand to pocket millions even from legitimate deals because tolling by its nature is inherently inefficient. The best run toll roads in the country spend an average of 22 percent of the tolls collected from drivers on nothing but toll collection overhead (details).

Blagojevich and Harris are charged with solicitation of bribery and conspiracy to commit wire fraud. Both face 20 years in prison and up to $500,000 in fines.

A full copy of the indictment is available in a 650k PDF file at the source link below.

Source: PDF File Criminal Complaint for US v. Blagojevich (US District Court, Northern District of Illinois, 12/9/2008)

Bridge for Ports to Plains Trans Texas Corridor approved, funded

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Public Private Partnerships
Link to article here.

Ports to Plains is one of the identified Trans Texas Corridor (TTC) routes, and this Dumas bridge is a vital gateway to making it happen. So don't believe it when politicians claim the Trans Texas Corridor is dead. How can it be when it barrels ahead all over the state unabated. Unless the Legislature revokes the law and repeals all policies allowing the TTC, it WILL continue.

$17M OK'd for Ports-to-Plains Dumas bridge
By Chris Ramirez
Amarillo Globe-News
11/12/08
DUMAS - A longtime plan to stretch a railroad overpass across U.S. Highway 87 in Dumas has finally been funded.

Ports-to-Plains in West Texas
Eagle Pass Relief Route (Loop 480; five projects): $94.46 million
San Angelo Relief Route (Loop 306): $20 million
Dumas Railway Overpass on U.S. Highway 87: $17.71 million
U.S. Highway 349 expansion in Midland County: $7.55 million
Total: $139.72 millionOn the Net:

The Ports-to-Plains coalition is based in Lubbock.

The $17.71 million project was included in a $1.8 billion spending package approved last month by the Texas Transportation Commission for new construction statewide.The project is one of several pitched by backers of the Ports-to-Plains Trade Corridor, an ambitious concept that seeks to foster commercial trade from Texas to Canada. In all, $140 million will go to Ports-to-Plains projects.

The overpass will relieve congestion that erupts in downtown Dumas when freight trains block First Street, which leads to the Monsanto agriculture manufacturing plant.

Word of the funding was welcome news to police and fire officials, who have long warned about trains slowing their response to emergency calls.

"If we have a 100-car train go through here ... we have no access, none," said Milton Pax, Moore County commissioner of Precinct 3.

U.S. Highway 87 runs north-south through most of the central Texas Panhandle, but turns into a west-east road at First Street in Dumas. Getting to the Monsanto plant from the city means crossing a set of street-level railroad tracks about 1 mile from downtown.

Dumas fire Chief Paul J. Jenkins warned of the dangers of the increase in train traffic and road blockage on First Street and at Farm-To-Market Road 722, another crossing, in an Aug. 20 letter. Going around could delay response, he wrote.

Fire officials respond to 40-60 calls each year for service west of the city, records show.

"When a train comes through here, we're completely cut off from the western side of the county," said Jeff Turner, chief executive of the Moore County Hospital District. "We could literally could have someone 25 feet away and couldn't do anything about it until it passes."

Also submitting letters were Monsanto, the Dumas Police Department and the local school district.

Funding for the projects will come from bonds under Proposition 14, which voters supported in 2003.

The debt will support development and construction projects through 2011, said Michael Reeves, president of the Ports-to-Plains Corridor coalition.

The county may start taking bids on the project in December 2010, Pax said.

© The Amarillo Globe-News Online

Politicians claim Trans Texas Corridor dead without any action proving it

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Public Private Partnerships
Link to article here. During campaign season when politicians have to face the voters at the ballot box, two in particular, Texas Speaker of the House Tom Craddick and Senate Finance Committee Chairman Steve Ogden, are claiming the Trans Texas Corridor (TTC) is dead to quell the people's wrath against the deeply unpopular project. However, NO ACTION has been taken by either politician to actually stop it. No law has been changed, no legally binding changes have been made to TxDOT's environmental documents submitted to the feds, no Transportation Commission Minute Orders rescinded, NOTHING has been changed or revoked to kill the TTC or give a basis for saying the TTC is dead. In fact, it continues to barrel ahead.

Is Trans-Texas Corridor dead or only undead?
By Fred Afflerbach
Published October 31, 2008

Put a fork in it. That’s what two Texas politicians recently said about the controversial Trans-Texas Corridor.“Everybody in Austin knows it’s dead. Everybody across the state knows it’s dead. It’s just something to be talking about,” House Speaker Tom Craddick, R-Midland, said at a debate in Midland on Oct. 19, according to a published report.

But folks fighting the corridor here in Central Texas call it election season bluster.

“Yes, they are still planning to do it,” said Mae Smith, Holland mayor. “That’s nothing but political talk. I don’t believe anything Mr. Craddick says, or any politician says prior to election.”

Ms. Smith is also president of the Eastern Central Texas Sub-regional Planning Commission, a group of mayors and school board members who are working to stop the corridor by pushing environmental impact studies. The commission says expansion of Interstate 35 is a viable alternative.

“We’re not denying there is a traffic problem. But keep it in the footprint of I-35 . . . and not destroy our prime farm land, school districts and towns,” Ms. Smith said.

A spokeswoman for Craddick responded Thursday.

“The House overwhelmingly voted to place a moratorium on the Trans-Texas Corridor because of various issues that were raised, such as property rights and toll roads. Currently, the House Transportation Committee, the House Appropriations Committee and the Sunset Advisory Commission, as well as the state auditor, have been investigating these matters. It is clear from what has come back from these committees that the Trans-Texas Corridor will be addressed once and for all in this next session of the Legislature.”

And that worries folks like Ms. Smith. Once the election is over, the Legislature will go back to work pushing the corridor.

Speaking from the Milam County seat of Cameron on Wednesday, State Sen. Steve Ogden, R-Bryan - not up for re-election until 2010 - said he agreed with Craddick’s statement.

Toll road ridership drops, economic crisis means trouble for toll roads

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Link to article here.

Toll road ridership down plus economic crisis equals no rationale to continue to build massive leveraged debt toll projects that will bankrupt the next generation. See article below. Remember this is written by the Father of toll roads, Peter Samuel.

The Great Crisis and tolling - declining traffic and dismal prospects
Toll Road News
Mon, October 6, 2008

In the spring and summer there was the big runup in gasoline/diesel prices. Now in the fall there's the startling financial crisis and a likely economic recession/depression - events without precedent at least in living memory in their potential severity. But we'll leave for later such analysis wandering into speculation and punditry.

First to report some traffic and revenue data from some of the tollers who report monthly. (Why don't they all?)

Orlando Orange County Expressway Authority (OOCEA) collected tolls of $14.99m this August against $17.92m in August last year - down 16.4%.

Tropical Storm Faye saw tolls suspended for a day and a half 8/20-22 which could account for 4 to 5 percentage points (100/31 x 1.5).

Adjusted for that storm the decline for the month would be 11.4% to 12.4%.

July + August 2008 vs same bimonthly total last year is down 10.8%. Adjust for ther storm and that's about 8% down.

July 2008/July 2007 had been down 5.2%, roughly the drop seen for several months.

August traffic and tolls were sharply worse - going from about 5% below to around 12%-storm-adjusted below the same month a year earlier. Suddenly the debt service ratio (net revenues before debt service/debt service) don't look as healthy: in July they were 1.51, in August 1.27.

The Beachline (previously Bee Line) Expressway to the Atlantic coast is down the most - 19% on same month last year. That's the most vacation/weekend oriented of the toll expressways.

OOCEA had forecast a decline in traffic and revenue this year, but way less than occurred. In August tolls were only 0.874 of those forecast.

The 12% reduction of August if applied to the coming year would produce annual tolls of $181m vs $206m in the year ending June 30, a drop of $25m.

Orange Co California: Foothill/Eastern Toll Road in August 2008 collected $8,215k vs $9,393k 07/08, a drop of 12.5%.  Transactions were down 12%. July 08 had been down 8.3% in revenue and 7.8% in transactions.

On the basis of August numbers toll revenues would drop from $102.3m to $89.5m, $12.8m less.

Further west on the San Joaquin Hills Toll Road toll collection this August was $7,781k vs $8,570k, a drop of 9.2%. Traffic was down substantially more - 2,396k 08/08 vs 2,773k of 07/08, a drop of 13.6%. Revenue drops were cushioned by toll increases. Most tolls went up 25c July 7 which is about 7% at the mainline plaza where the tolls for cars now are in the range $3.50 to $5.25 depending on cash/transponder and peak/off-peak. There were double digit percent increases at the ramp plazas. Overall the toll rates seem to have been increased 8%.

Based on the August revenue drop of 9.2% annual tolls in the coming year would be $83m, down $8.4m from last financial year's $91.4m.

91 Express Lanes down

The largest decline is in traffic and revenue on the 91 Express Lanes (91XL) where we have weekly data to 9/27. The lower levels of traffic and revenue were established earlier there and haven't shown further declines. 91XL's weeks of course straddle months, but crudely taking weeks ending within the month traffic this September was 894k vis 108k Sept last for a drop of 17.6%. Revenue us $2,740k vs $3,187k, down 14%.

91XL has been steady on the same month last year through July, August and September - traffic down 17 or 18%, revenues down 14 to 15%.

Colorado

E470 in Denver CO reports a definite increased drop in traffic in August. March through July were down about 4%.  In August traffic was down 8.2%, and revenue was down 11% - suggesting trip distances were shortened.

West Virginia

West Virginia: West Virginia Turnpike traffic continues to be down about 6% on the same period a year ago, according to Greg Barr just days ago.

WSA numbers

Ed Regan head of traffic and revenue at Wilbur Smith Associates said at a session at the recent IBTTA annual meeting in Baltimore that toll traffic is generally declining by the same amount as non-toll traffic.  The exception is those toll facilities which relieve congestion on parallel tax-supported roads. With traffic and congestion down on the untolled roads there will be a disproportionate drop in toll traffic as motorists shift to the free route.

Regan cited the San Joachin Hills Toll Road as a classic of this. Even more so would be the toll lanes within a freeway like 91XL.

The WSA figures through August were roughly as follows:

- Illinois Tollway down 4%

- Maryland 3 to 4% down

- Penn Pike 5% down

- MDX Miami 1% down

- Tampa 4 to 5% down

Regan said trucks were down a percentage point or two more than cars. He attributed the majority of the decline in those numbers to the big run-up in fuel prices.

Going forward - the bursting housing bubble and the wider panic

Going forward the economy is apparently going to be a more significant downer as the financial crisis starts to have effects on spending and employment.

First there is the bursting of the housing bubble pumped up 2002-2006 by:

- loose money since 2001

- governmental pressure to lend to bad prospects

- securitization of mortgages

The housing bubble has been deflating for the best part of two years, but house prices look to be still too high to clear markets, so it has some way to go.

The Panic

The last couple of weeks have seen a wider panic about the stability of financial institutions and a breakdown in normal financial business. Panics don't go on very long. The greater the panic the more prices fall, and at a point bargain hunters start buying. The opportunity for profit is seen as outweighing the risks.

The "prices" of short term private money as reflected in the inverse of spreads between 3 month interbank lending (LIBOR) and Treasury bills (TED) have dropped so far - the spread  has risen so much -  there are now strong incentives to take the minimal risks with the interbank lending.

Most of the banks aren't in danger so the 'prices' of their money have already dropped too low - the yields are too high. The correction there could come quite quickly as this realization sinks in. The panic of the last few days will then abate.

However the correction in housing prices and the write-downs of mortgage based securities and other feeble 'derivatives' will take a lot longer to be worked off. It isn't clear that the federal government will help here. To the extent that it holds prices artificially high by holding out the promise of being an above-market buyer it will delay a clearing of the market.

Marx's definition, the American Marx, that is

I'm indebted to Matt Brouillette of the Commonwealth Foundation for Groucho Marx’s definition of politics and government as: “The art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.”

It is unclear how far the rot has spread beyond mortgage-based securities. Auction rate securities, credit default swaps, swaptions and other derivatives have clearly been vastly oversold and their risks understated.  It is a pathetic reflection on the incompetence rife on Wall Street that securities traded in their billions for years now are widely described as incapable of being valued because of their complexity. The Bear Stearns and Lehmans and Merrills never considered there might be any difficulty in valuation?

Charlatans claiming to be able to give organizations unprecedented risk-free leverage managed to con rating agencies and supposedly smart chief financial officers and get awarded "Deal of the Year" by the likes of Bond Buyer magazine building financial structures so flimsy they have been collapsing in large numbers over a considerable period now. Many of these people were worse than charlatans, they apparently were fools who believed in the crap they were selling.

Democrats have been running the Congress and are the most responsible

But government, especially the Democrat majority in the Congress deserve a lot of the blame too - for their failure to allow any sensible restructuring or containment of the bastard public-private Freddie and Fannie monsters which manufactured the mass of "toxic" mortgage based securities and insured them ith taxpayer backing.

As Kevin Hassett AEI economist writes: "many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years."

Fortunately in "conservatorship" they can't continue to buy protection directly.

Prize for the most asinine bumper sticker of this election campaign surely goes to this: "It's Time for a Change: Vote Democrat 2008." Last time we looked Dem Nancy Pelosi's party was in the majority in the House of Representatives and Dem Harry Reid's party had the numbers in the Senate. Giving this crew larger majorities will change them?

McCain has blown the presidency?

However John McCain has probably blown his chances of winning the presidency by failing to take a firm stance against the abominable "bailout." In a single huge misstep he undercut completely his claim to be a reformer who would fight Washington corruption and bumbling. The bailout will be a source of continuing frustration and developing scandal to all associated with it.

While McCain dramatized his intervention in support, Obama went along with the bailout as he always goes along with the establishment. But Obama was politically savvy enough to keep a low profile.

No Great Depression just Protracted Chaos

It is most unlikely there will be any 1930s style Great Depression. it was caused by a highly restrictive monetary policy over several years. And Amity Shlaes excellent "The Forgotten Man: A New History of the Great Depression" makes clear how disastrous was the dominance in this period of Franklin D Roosevelt - totally clueless about the economy and whose capricious measures almost invariably prolonged the depression.

Neither McCain nor Obama inspire any more confidence in terms of their economic understanding, but it seems most unlikely either would dictate monetary restrictionism like Hoover and Roosevelt. And neither would dominate decisionmaking as FDR did for a grim decade.

More likely than a Great Depression is the Great Chaos Recession.

But how big and how long?

IMF economists Stijn Claessens, M. Ayhan Kose and Marco E. Terrones have systematically reviewed the data from 122 recessions in 21 advanced nations since 1960.  Their findings suggest recessions accompanied by burst bubbles and credit crunches are much costlier and slightly longer than average recessions.

A recession on average lasts about a year or as they measure it 4 quarters with substantial variation  — the shortest recession is 2 quarters and the longest 13 quarters. The typical decline in output from peak to trough, the recession’s amplitude, tends to be about 2%.  The cumulative loss of output in a recession is typically about 3% of GDP, but this number varies quite a bit too.

The three write: "Recessions accompanied with severe credit crunches or house price busts last only a quarter longer, they typically result in output losses two to three times greater than recessions without such financial stresses. During recessions coinciding with financial stress, consumption and investment usually register much sharper declines leading to the more pronounced drops in overall output and unemployment."

On this basis a fair expectation is the Great Chaos Recession will:

- last about five quarters, that is through 2009 and perhaps into early 2010

- involve GDP dropping 4% to 6%

- a cumulative loss of output of 6 to 12%

This would be the worst economic downtown in the past half century, but not comparable in amplitude or duration with the Great Depression.  Hopefully the US will handle the Great Chaos with average competence/incompetence. If you are pessimistic on this score it would be bigger and longer, mostly longer. If you're optimistic then it should be shorter and less severe.

Further downside risks

There are two further downside risks:

- that destructive "protectionist" measures will be taken that will depress imports and subsequently exports compounding present problems

- that the American financial mess will be so mismanaged by resistance to market clearing prices and profligate government handouts that the US will suffer capital flight, a further serious decline in the US$ and a deteriorating terms of trade

These could turn a housing-related recession of about two years into a deeper and prolonged economic malaise like Japan's lost decade in the 1990s. If so all those traffic growth projections need to be severely pruned back.

There are some modest upside possibilities:

- oil prices and fuel costs at the pump will continue to come down so the price effects on traffic seen from April through July should abate moderating the effects of declining economy

- the rampant inflation in construction costs of the past few years will come to an end and there will be some bargains among construction contractors short of work

Capital Area MPO steals money from 183A toll road to fund 290 toll road

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Vote frees NE Austin tollway project to move ahead in 2009
Transportation officials approve financial pairing of U.S. 290, 183-A
By Ben Wear
AMERICAN-STATESMAN STAFF
Tuesday, December 02, 2008

Transportation officials decided to create a financial marriage between two toll roads Monday, a move that could allow the U.S. 290 East tollway project to break ground sometime next year.

The Capital Area Metropolitan Planning Organization board voted 15-3 to create a tollway system made up of the existing, and profitable, 183-A toll road in Cedar Park and U.S. 290 East, which based on projections will not have sufficient revenue to persuade investors to lend more than a half billion dollars to build it. The existing tollway, which opened in March 2007 and is making a profit of about $5 million a year, will in effect act as a co-signer for the new project.

The U.S. 290 East project would cost $623.5 million, the Central Texas Regional Mobility Authority says. It involves expanding 6.2 miles of the existing four-lane, divided highway between U.S. 183 in Northeast Austin and Parmer Lane just west of Manor. It would have six toll lanes and six free-to-drive frontage road lanes alongside.

Some CAMPO members objected to the financial partnership Monday, saying it violates the intent of policies adopted in October 2007, when the board approved the U.S. 290 East project and four other potential toll roads. At that time, the board agreed that excess toll revenue from the five roads would be spent first in the general area of each road rather than being used for improvements far afield.

That will still be the case, according to the mobility authority, which operates 183-A and will build and operate U.S. 290 East. Given 183-A's profitable status, they say, no money would need to go from U.S. 290 East to 183-A.

In fact, mobility authority Executive Director Mike Heiligenstein said no money is likely to go either direction. The authority says that preliminary traffic and revenue studies show that U.S. 290 East will be able to meet its debt payments and operating costs without any transfer of money from 183-A.

However, investors normally require that toll road revenues be well beyond projected costs. A summary of the traffic analysis released Monday shows that, based on charging 20 cents a mile for U.S. 290 East, the road would make about a 30 percent profit — which Heiligenstein said was not high enough for the mobility authority to borrow the full amount needed to build U.S. 290 East without riding on the back of 183-A.

Voting against the plan were Travis County Commissioner Sarah Eckhardt, Sunset Valley Mayor Jeff Mills and state Rep. Eddie Rodriguez.

Heiligenstein said Monday's vote was necessary to sustain engineering work and keep the project on schedule. Officials expect to get federal environmental clearance for the road in the first half of 2009, borrow the money on the bond market later in the year and begin construction soon after that.

Senators make plea for more transportation taxes

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Texas Transportation at a crossroads
By Senators John Carona and Kirk Watson
Express-News
November 30, 2008

Texas highways were once the pride of the state — and justifiably so. Our extensive infrastructure allowed generations of farmers and ranchers to feed the state and the world, and it turned our cities into economic powerhouses. Our transportation networks allowed generations of Texans to charge into a prosperous future without having to catch up with the present.But for a generation, the state has approached old and new transportation challenges in a very different way. We have struggled simply to keep up with our needs. This has left Texas at a critical intersection, and the choices that the Legislature makes over the next several months will determine both how we live in the short term and what opportunities our children will inherit.

Texas now faces a transportation crisis. We spend more and more of our lives in traffic instead of with our families. We seldom, if ever, see major roads built without tollbooths. And the rail lines and highway lane miles we know we need are being scaled back or scrapped in the face of a hopeless inability to pay for them.


It is only becoming harder to address these needs. The costs of concrete, steel and other basic road building materials have risen by 60 percent over the last five years. However, the state motor fuels tax— our primary source of transportation funding — has been frozen at 20 cents per gallon since 1991. The disparity has left the state facing 21st century challenges with a 20th century tool.

In January, the 81st Texas Legislature will begin weighing opportunities to make a meaningful investment in transportation. Here are alternatives that we believe the state must explore:

• End Transportation Funding Diversions: The State Highway Fund has long provided money for the Department of Public Safety and other priorities. We must focus this money on roads and other transportation projects.

• Use Bond Funding Transparently: A year ago, Texans voted to dedicate $5 billion in tax-supported bonds to transportation projects. The Legislature should appropriate this money for its intended purpose and commit to using it with complete transparency and accountability.

• Support Regional Financing Tools: Other than toll roads and privatization schemes, the state has provided few options for cities, counties and other local jurisdictions to fund transportation. The Legislature should offer new voter-approved funding mechanisms for regions to plan and pay for roads, rail lines and other projects.

• Rewrite the Gas Tax: Texas' primary source of transportation funding cannot provide for the state's transportation needs. The Legislature must have a serious debate about restructuring the motor fuels tax to reflect the enormity of our tasks by indexing it to inflation.

• Explore New Alternatives: Texas must move past a 20th century model that relies so heavily on single-occupancy vehicles and work to create a truly comprehensive statewide system for moving people and freight. This should begin by funding the Rail Relocation Fund that voters overwhelmingly approved in 2005.

• Reform the Texas Department of Transportation: With its overt advocacy of privatization and occasional disregard for the Legislature, the Department has rightly incurred the wrath of Texans and their representatives. While we applaud the department's recent efforts to be more transparent and accountable, the Legislature must fundamentally reform the agency so Texans are fully aware of its activities and never question its objectives.

These changes will not be easy, and they will confound the frequent promises of something for nothing. But they are necessary if we are to address the needs we see every day at rush hour — challenges that will only become greater. Our children must not be the first generation of Texans to inherit an inadequate transportation infrastructure with nowhere to grow.

Perry signals he wouldn't block indexing the gas tax

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Link to article here. For the first time since his push for toll taxes, Texas Governor Rick Perry indicates in this article that he would not veto a bill that would index the gas tax to keep pace with inflation. This could give communities an alternative source of funding to avoid the most expensive transportation tax....tolls.

Pouring billions into aging U.S. infrastructure urged to help avoid recession
Tuesday, October 14, 2008
By MICHAEL A. LINDENBERGER / The Dallas Morning News


Would spending billions putting engineers and construction crews to work rebuilding the nation’s aging infrastructure keep America out of a recession?

A group of leading governors, transportation experts and House Democrats say it’s worth trying, with Gov. Ed Rendell of Pennsylvania and others arguing Tuesday that the federal government should immediately spend billions on America’s highways, bridges and rail systems.

“We can’t wait for this to be discussed next summer,” Mr. Rendell said Tuesday. “Congress and the president-elect must undertake major investments in our infrastructure.”

Mr. Rendell and others on Tuesday called for a two-pronged approach to transportation: More spending now, with an eye toward adding jobs for construction workers, engineers and others, and a much more expensive plan that would involve completely rethinking the way America views transportation.
Tuesday’s announcement by the governors comes just a day after House Speaker Nancy Pelosi took similar steps. On Monday she ordered House committee leaders to begin hearings on a so-called second bailout plan, and promised a renewed push for tens of billions of dollars in new spending on infrastructure.

The House passed a $61 billion stimulus package earlier this year, but it did not pass the Senate. With the nation either already in or fast headed toward a recession, Ms. Pelosi said Monday said she will try again, and this time include even more transportation spending.

“The benefit of the thinking that we’ve had in the week since we passed that [$700 billion] recovery package is that another recovery package is needed,” Ms. Pelosi said Monday. “It may have to be larger than the one we passed in the House in light of the events that have transpired since [then].”

A panel of leading economists, including former Treasury Secretary Lawrence Summer and Nobel Prize winner Joseph Stiglitz, met with Ms. Pelosi on Monday and endorsed her plan to pump transportation money into the economy. Mr. Stiglitz said the stimulus bill would have to be “be a comprehensive recovery program, not just based on trickle-down economics, not just giving money to the financial markets but going directly -- at least some of the money going directly to households, to meet infrastructure needs, to meet the variety of -- of challenges facing our society today.”

Some experts, however, say increased government spending on infrastructure is unlikely to improve the U.S. economy or prevent a recession.

“The short answer is no,” said Professor Mike Davis of the Cox School of Business at SMU in Dallas, when asked if billions in new spending on highways would shore up the economy. “The most obvious reason is that these projects take a long time to get up to speed, to identify the needs, to get the contracts in place, and to have the actual money spent. If you are looking to improve things between now and Christmas, I just don’t see that working. I have a hard time imagining that there is sort of a construction site with a big pad lock on it, and as soon as Congress votes to approve these things then we’ll see 1,000 new people at work and the heavy equipment moving.”

Will it work?
Both presidential candidates have also called for billion-dollar rescue plans for the economy, though they disagree over the role transportation spending should play.

Sen. Barack Obama, the Democratic nominee, has called for immediately spending $25 billion on improving the nation’s infrastructure, money that would be targeted to new highways, rail lines and meeting the system’s growing maintenance needs. Madhuri Kommareddi, a member of the Obama policy team, said the campaign calculates 1 million jobs would be saved or added by spending the $25 billion. “We’ve been certain to focus the plan on projects that are already in the pipeline, that are immediately ready to go.”

Pete K. Rahn, president of the American Association of State Highway and Transportation Officials, said states desperately need money to build more roads and highways, and said $25 billion would put a lot of people to work. Mr. Rahn, who is also Missouri’s transportation secretary, said a survey of state agencies earlier this year found that there were 3,000 such projects — costing $18 billion — ready for an immediate start, should funding be available. With winter coming on, he said that number would likely be smaller now. “But there is still a very large number of projects that would benefit from this spending immediately.”

Sen. John McCain, the Republican nominee, also supports a stimulus package, but his focus is on reducing Americans’ taxes, rather than spending more money on highway projects. His campaign declined an interview request Tuesday but issued a position paper that reiterates his opposition to funding earmarked transportation projects and demands that inter-city rail service be put off until federal rail initiatives can be made more efficient.

His $52.5 billion stimulus proposal would cut capital gains taxes in half for two years and temporarily remove taxes on unemployment benefits.

Mr. Davis said neither candidate’s stimulus approach is likely to have a real impact on the economy. Tax cuts — especially those like the rebate checks sent earlier this year — hardly ever bring about long-term economic improvements, he said, in part because just like new spending they take too long to work.

Instead, he said systemic fixes, like the $700 billion effort already approved by Congress that is aimed at restoring confidence on Wall Street and heating up a frozen credit market, are more likely to succeed.

In Austin, Texas Gov. Rick Perry applauded the idea of reducing taxes, but said trying to stave off a recession by spending more tax money is exactly the wrong idea.

“The government bail-out is a very slippery slope, and we will look back on this in a few years and say, ‘What were they thinking?' ” Mr. Perry said. “The government giving money back to us is just another way of raising taxes. That’s the reason that this whole government bailout was so ill-conceived. They have this idea that if we just shovel more of our own money back to the states, gosh they will be happy. Government spending is going to very little if anything to help our economy.”

Looking at long-term solutions
The long-term solutions offered this week by Mr. Rendell and Ms. Pelosi each call for increasing America’s transportation spending by tens of billions of dollars — and maybe much more — each year. Both presidential candidates have been quiet about making commitments to long-term spending goals, though Ms. Kommareddi said Tuesday that Sen. Obama backs more federal spending on both rail and highways.

But to Mr. Perry, those ideas are dead wrong. About the only thing he said he agrees with the Democratic proposal is their conclusion that the current system is broken.

“If they said that, and stopped there, I’d agree with them,” he said. “But one shoe doesn’t fit all. This is the classic problem with D.C. … : The idea that they ought to be sitting up there collecting our gas tax, and then peal whatever it is out for their bureaucratic largesse, and then send some of it to other states, and then give us the rest.”

He’d rather see the federal government send Texas back every penny its drivers pay in gas taxes and give it the flexibility to build roads as it sees fit.

But in calling for more spending, Mr. Rendell said states can’t fix the system alone.

“America’s highways, bridges, tunnels, and mass transit have fallen behind because the federal government is contributing only 25 percent of infrastructure funding and the rest is coming from financially strapped state and local governments,” he said.

By the time President Dwight Eisenhower left office in 1961, he said, the federal government was spending 12.5 percent of its nonmilitary spending on infrastructure, but it's spending just 2.5 percent now. “Washington needs to step up its commitment of resources.”

He said Mr. Perry’s approach — luring private investors to build toll roads — is one solution, and he agrees with the Texas governor that federal restrictions on tolling existing highways ought to be lifted. But he said even with those steps, Congress must spend more money or the states will never maintain the roads they have much less invest in rail and other projects they will need in the 21st Century.

Mr. Perry said he agrees to a point. He said the next Legislature will see him supporting a variety of measures aimed at increasing funding for highways and bridges, a departure from years past when he has pushed relentlessly for tolls.

“I am not one of these guys who says, ‘I did it right the first time and there is nothing to change,’ ” Mr. Perry said. “I wish I had the benefit of perfect hindsight, but I don’t.”

Come January, he said, he’ll support spending cuts to find as much as $600 million a year in new money for transportation. He’s not going to champion any tax increases, he said, though he also said he won’t veto legislation to index the state motor fuels tax to inflation.

“I think it is an appropriate debate to have,” he said about whether Texas should allow the gas tax rate grow each year to keep pace with inflation. “I am not going to block the debate, or if it is the will of the people, and of the legislature, I suspect I would go along with it.”

Guerra: 281 toll road study needs trustworthy agency

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Link to article here.

Time for a new participant in toll-road controversy: AACOG
By Carlos Guerra
Express-News
12/02/2008

Amazing how an already long tale keeps growing, all because we refuse to deal with the reality of our drinking water.

Commuters who drive into town via U.S. 281 know all about long morning waits. Of course, that's because they moved into the city's then-unincorporated northern reaches, where they could have expansive yards, be away from the city's hustle and bustle and. initially at least, pay no city taxes.

The problem is they weren't alone.

Over the past five years, more than half of all new “San Antonio” homes have been in unincorporated areas of the city's northern extraterritorial jurisdiction, and the impact has been significant. Especially along the U.S. 281 corridor, where every morning tens of thousands of cars pour onto the highway in a southerly migration.

But much of the congestion is around the light-controlled intersections, where arterial roads pour thousands of additional cars into the flow.

The Texas Department of Transportation proposed an absurd plan to deal with it all: Instead of building overpasses over the congested intersections that would allow southbound drivers to cruise over them, the agency proposed toll roads along the route, and along the northern reaches of Loop 1604, so a foreign-owned company could excise tolls from all those who wanted to get into town quickly.

Two minor problems arose.

First, the Legislature ordered that no toll roads replace existing highway lanes, which in essence required TxDOT to double the highway lanes on 281 so they could toll them.

The other problem was that the entire area lies over the most sensitive areas of the recharge and contributing zones of the Edwards Aquifer, our sole water source, and, because the project requires federal money, federal laws apply, so they had to take environmental concerns into account.

TxDOT's “outside contractor” for the “environmental assessment” — a lightweight appraisal of the environmental impact — turned out to be a company for which a TxDOT employee's husband worked. It found that a U.S. 281 toll road over the most sensitive part of the aquifer's recharge zone would have no significant impact.

Bill Bunch, lead attorney for Aquifer Guardians in Urban Areas, took TxDOT to court, not once but twice — and won twice.

“We've beat them twice, and both times, each time, before ever going to trial,” Bunch says with a chuckle.

But the next step is nothing to laugh about.

A news release from the Alamo Regional Mobility Authority states: “County Judge (Nelson) Wolff requested the Alamo RMA take the lead role in developing a new environmental document for 281 ...”

Now, honestly, do we want the Regional Mobility Authority, which was created for the sole purpose of selling toll roads, to conduct an “impartial environmental assessment of a new toll road route” now?

Annalisa Peace, head of the Greater Edwards Aquifer Alliance, a coalition of 45-plus water activist groups, had this to say: “I think that the Alamo Area Council of Governments would be the appropriate agency to conduct the (environmental impact statement) for 281 and all tolling projects within the San Antonio area. AACOG is the agency tasked with addressing our air quality compliance, certainly an important issue for an EIS to address. And the many small municipalities and county governments that will be impacted by these projects are members of AACOG.

“The sooner we can begin to address transportation issues on a regional basis, the better. The EIS process for 281 is an excellent opportunity to begin doing this.”

Makes sense to me.

Citigroup spends bailout money to buy debt-ridden toll roads

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Link to article here.

Bailed-Out Bank Goes on Toll Road Buying Binge
Bailed out Citigroup fund spends $10 billion buying 44 foreign toll roads.
The Newspaper.com
December 1, 2008

Citi toll roadJust one week after receiving a pledge of $306 billion in support from US taxpayers, Citigroup announced the intended $10 billion acquisition of a debt-laden Spanish toll road group. Citi Infrastructure Partners will hand over $3.6 billion in cash and assume $6.3 billion in debt from Sacyr Vallehermoso, the parent company of the Intinere Infraestructuras toll road group. Itinere operates 32 toll roads in Brazil, Chile, Costa Rica, Portugal and Spain and Ireland. Another twelve concessions are under construction. Sacyr today issued a statement to Spanish investors noting that the company succeeded in offloading 37 percent of its total debt to the US firm.

"With this transaction, the group reaps the value that Itinere accumulated for its mature concession assets and strengthens its financial situation by considerably reducing its indebtedness," the statement explained.

On November 23, the US Treasury announced that it had invested $20 billion in US taxpayer funds in Citigroup in addition to "protection against the possibility of unusually large losses" on $306 billion in bad debt the company had acquired primarily in commercial and residential real estate markets. Armed with the new taxpayer capital, Citigroup believes its purchase of the toll roads will hold long-term value. In the immediate term, Citigroup will sell off Itinere's stakes in five Spanish and Chilean toll roads to Spanish tolling giant Abertis, allowing that company to assume full ownership of its tolling assets. The deal is valued at $786 million.

Other analysts, including Fitch Ratings, view tolling as a risky investment as toll road volumes have plummeted in response to the recent spikes in gasoline prices and the global economic slowdown. In August, Fitch issued a warning that its outlook on tolling had changed to "negative," reflecting a dim view of the creditworthiness of the long-term transactions. In October, Citigroup and Abertis gave up on their joint bid to collect tolls on the Pennsylvania Turnpike. The consortium spent millions bankrolling a slick public relations campaign that ultimately failed to sway public opinion on the wisdom of the 75-year proposal.

TxDOT public relations, lobbying arm questioned

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Link to article here. Read the damaging evidence TURF's lawsuit to stop TxDOT's illegal lobbying and ad campaign to promote toll roads and the Trans Texas Corridor uncovered here.

TxDOT spends $10.5 million to inform public
Key legislator takes issue with how agency's money is spent
By PEGGY FIKAC
Copyright 2008 Houston Chronicle Austin Bureau
Nov. 30, 2008


AUSTIN — When state lawmakers expressed surprise at the size of the Texas Department of Transportation's government relations and public affairs operation, they didn't know the half of it.

The heft of TxDOT's Government and Public Affairs division, which is budgeted for 63 people and nearly $6.5 million a year, raised eyebrows earlier this year after concerns the agency had promoted issues such as toll roads and the ambitious Trans-Texas Corridor network despite opposition from the public and a number of lawmakers.

It turns out the GPA division is only part of the agency's public-information picture. Sixty-seven more people do public information or media relations for TxDOT, including those working at the agency's district office.

TxDOT said it couldn't tally how much is budgeted for such duties outside of GPA, saying most, if not all, the staffers also perform other tasks. Their salaries alone amount to $4 million a year, according to figures released in response to a public information request from the Houston Chronicle.

That means $10.5 million is spent annually on government and public affairs by TxDOT, largely excluding staffers who promote tourism and travel.

"So, $10.5 million to communicate as poorly as we have communicated is probably not acceptable," said Rep. Lois Kolkhorst, R-Brenham, a member of the Sunset Advisory Commission, which is considering possible changes at TxDOT and had a hearing earlier this year that included a look at GPA's size.

Kolkhorst, who pushed a moratorium on privately operated toll roads in 2007, has taken issue with TxDOT's approach. TxDOT's commission is appointed by Gov. Rick Perry, who has championed toll roads and the Trans-Texas Corridor, and the agency has been accused of too actively following suit.

TxDOT spokesman Chris Lippincott said agency efforts have been within the parameters of the law.

A huge response to town hall meetings and to a solicitation of comments on the Trans-Texas Corridor shows the effectiveness of its efforts, Lippincott said.

He said issues such as toll roads make up only part of TxDOT's public information operation, which also works to inform people on such things as routes to take when hurricanes are imminent.

"We touch just about everybody in this state that gets in a car or gets on a bus or a train," he said, "and that requires a lot of interaction."

Outgoing House Transportation Committee Chairman Mike Krusee, R-Round Rock, said

TxDOT handles complex issues that require communication and public hearings.

Lippincott noted that the amount spent on the GPA division and other public information efforts amounts to a tiny fraction — 0.125 percent, or just over one-tenth of 1 percent of TxDOT's nearly $8.4 billion annual budget.

He noted TxDOT is in a hiring "chill" affecting the GPA division, which currently has 54 positions filled.

The total is, however, larger than what the other five largest state agencies in Texas calculate they spend under the label of government and public affairs.

The one that comes closest is the Department of State Health Services, with 30 people in its consumer, external affairs and Web office, with a combined budget of $2.54 million. That's 0.09 percent of the agency's total annual budget of nearly $2.8 billion.

Among others:

•The Texas Education Agency has 17 people in communications, governmental relations, media services and Web services, budgeted at $1.3 million. The total is nearly 0.005 percent of the $26.3 billion in funds that flow through the agency.
•The Health and Human Services Commission has 21 people in communications and external relations offices, budgeted at nearly $1.6 million — 0.0099 percent of its $16 billion annual budget. That total doesn't include $2.35 million for advertising work related to two public information campaigns.
•The Department of Aging and Disability Services has 21 people in communications and government relations, with a $1.15 million tab for overhead and salaries nearly 0.019 percent of its total budget of nearly $6.2 billion annually.
•The Texas Department of Criminal Justice has 18 people in government and public affairs, budgeted at $769,717. That's nearly 0.027 percent of its total budget of nearly $2.9 billion.
But Krusee said that comparing TxDOT to another agency is "not apples-to-apples."

"They have a different mission, and it's a far more complex process which requires communication with the public at a level of pervasiveness and complexity probably unmatched elsewhere in state government," Krusee said.

Kolkhorst said, "The No. 1 thing that the Sunset report talked about was that this agency had lost the trust of the people.

"And how do you lose trust? You lose trust by actions and words, and I'm very disappointed that we're spending $10.5 million, more than we've ever spent, and the trust could not be at a lower level than it is today."

TxDOT employee FIRED over 281 fraudulent study

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Link to article here. Read more detail about TxDOT's illegal actions here.

Firing, reprimands follow tainted study for 281 tollway

By Patrick Driscoll - Express-News
11/26/2008

Two months after a lawsuit revealed a conflict of interest that spoiled yet another environmental study for the U.S. 281 tollway, the Texas Department of Transportation has responded by firing a biologist and disciplining other staffers.

A recent internal audit said TxDOT biologist Valerie Collins, based in San Antonio, was involved with several contract jobs being done for the U.S. 281 study by a consulting company her husband works for.

Her supervisor, Transportation Planning Director Judith Friesenhahn, and other TxDOT employees knew about the relationship, the audit says.

“District staff attempted to implement controls to mitigate a conflict,” TxDOT's San Antonio manager, Mario Medina, said in a memo Friday to agency Director Amadeo Saenz. “But the controls were insufficient and in some instances were circumvented by” Collins.

TxDOT fired Collins on Nov. 13, more than seven weeks after the in-house probe started, Medina said. Other employees were put on probation or reassigned and will undergo extra training on the agency's conflict of interest policy.

Also, TxDOT is reviewing other projects involving the firm Collins' husband works for, SWCA Environmental Consultants, to see if there might be other conflicts. That report is due next month.

Collins, her husband and SWCA officials didn't return phone calls.

Flubbing the environmental study put the 8-mile U.S. 281 tollway behind at least three more years, and doing another will cost an estimated $8 million. A bruised TxDOT, under pressure from lawsuits, has now let two federal clearances on the project slip away since 2006.

“Incidents like this one ... are an affront to the thousands of TxDOT employees who strive conscientiously every day to be good stewards of the state's resources,” Saenz said in a statement.

Toll critics, who suspect the agency's problems are more widespread, have called for a housecleaning.

“It's been obvious to us from day one that TxDOT was willing to do and say anything to get a toll road on U.S. 281,” said Terri Hall of Texans Uniting for Reform and Freedom. “I don't think one biologist should take the fall. It should be management that pays the price.”

Hall lately has pointed to a copy of an alleged e-mail, received by mail from an anonymous source, as an example that shows TxDOT predetermined the outcome of the U.S. 281 study. Such a fix would violate federal regulations.

But a separate TxDOT audit cast doubt on the authenticity of the e-mail, which on its face implies Friesenhahn told Collins that a “finding of no significant impact,” known as a FONSI, is wanted to avoid a more detailed “environmental impact statement,” or EIS.

The alleged e-mail says:

“pls do whatever you need and make sure this handled .. based on the emails i have seen so far we have a problem. We have been directed to get a FONSI and get this project on its way .. nothing else will work per David . something like this could send us into an eis per (scratched out)”

TxDOT investigators couldn't find proof that the e-mail ever existed, says the audit, which was released late last week along with the audit covering Collins' conflict of interest. The e-mail also included a tag line that records show Friesenhahn hadn't started using until several months later.

“The department is seeking to hire an independent forensic specialist in an attempt to validate the existence of the e-mail,” the audit concluded.

TxDOT discovered the conflict involving Collins and her husband while gathering documents in response to a lawsuit filed in February by TURF and Aquifer Guardians in Urban Areas. The groups challenged the FONSI from the U.S. 281 environmental study.

After coming across e-mails that raised suspicions, TxDOT ordered the audit Sept. 22.

On Oct. 1, citing possible contract irregularities, the agency asked the Federal Highway Administration to pull the U.S. 281 environmental approval. Two days later, Collins and Friesenhahn were placed on administrative leave.

While with TxDOT, Collins wasn't allowed to choose consultants, negotiate fees or approve payments, but that wasn't enough to avoid conflicts, according to the audit. E-mails show she worked with SWCA and reviewed three jobs that her husband also worked on.

Collins corresponded often with SWCA, sometimes copying her husband or communicating directly with him, the report says.

She once asked that time and money be added to a work authorization, and another time offered to work with her husband to meet a deadline.

Friesenhahn said she knew about the wife and husband connection but had assumed Collins' husband didn't work on the U.S. 281 project, the audit says. However, it adds, an e-mail the husband sent to Friesenhahn indicates otherwise.

Obama FOR congestion tolling, nationalized toll road bank

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Link to article here.

For those who breathed a sigh of relief thinking we were finally rid of George W. Bush's pro-toll agenda, think again. Not only did Obama support the idea of a toll road bank in March, it's now confirmed his administration wants to charge you a pain tax (from $9 for motorists up to $22 for trucks if he adopts the Manhattan congestion tolling proposal he supported) to enter major U.S. cities during rush hours. This congestion tax was overwhelmingly rejected by New York lawmakers. So in other words, when 99.9% of working people have to get to work, motorists will have to pay a tax to reach their place of employment. How is that an incentive to make a living? Some might choose to draw unemployment instead of pay such punitive taxation!

Obama Transition Team Examines Congestion Tax
UK congestion charge consultants report Obama transition team interested in tolling
The Newspaper.com
November 12, 2008

Jack OpiolaBritish newspapers report that President-elect Barack Obama (D) may import congestion charging programs from the UK. Jack Opiola, a transportation principal for the firm Booz, Allen and Hamilton, was hired to design a program to tax drivers at least £5 (US $8) when entering the city of Manchester during peak hours. Opiola told the Manchester Evening News yesterday that the president-elect's transition team approached him for additional details on the plan.

"I was 'noticed' by key people in the Obama campaign and I have been providing input to his strategy team in Chicago, including information about Greater Manchester's bid," Opiola said.

If approved in a referendum later this month, drivers entering an 80 square mile section of Manchester would be subject to the charge. The program would generate £120 million (US $180 million) in annual profit. A similar program in London cost drivers £268 million (US $408 million) and failed to provide promised reductions in congestion, according to Transport for London data (view report).

Until now, Senator Obama has been circumspect when discussing his administration's transportation plans. Previously, his most specific proposal was the creation of a $60 billion toll road bank (view details). In March, Obama endorsed New York City Mayor Michael Bloomberg's idea to charge a $9 toll on cars and a $22 toll for trucks that enter downtown Manhattan during working hours.

Hoping to fill the gap with specifics, the American Association of State Highway and Transportation Officials (AASHTO) last month submitted a detailed $544 billion transportation reauthorization proposal designed to encourage the new administration to shore up the domestic economy with heavy spending on infrastructure projects. The new programs would be paid for with massive new tax hikes, including a per-mile driving tax that would begin with "proof of concept" trials as early as 2010. The tax would initially be one cent per mile and generate $32.4 billion a year. An extra one cent per gallon in the federal gasoline tax would generate another $1.8 billion, and a national sales tax on cars of one percent would generate $7.6 billion.

"With this historic election, AASHTO is optimistic that the new administration can help to foster the political will necessary to bridge the gap between today's transportation needs and the transportation system we must build for tomorrow," the group said in a statement.

Source: Obama team study c-charge (Manchester Evening News (UK), 11/12/2008)

QUID PRO QUO: Pro-toll Rodriguez gets expedited, non-toll FREEway project on 1604 W

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News

Link to WOAI-TV news story.

After repeatedly voting to toll (also see here) existing freeways on the northside as a Board member of the San Antonio MPO (SAMPO), Bexar County Commissioner Chico Rodriguez is cashing in by getting an expedited, NON-TOLL, FREEway fix to 1604 (west) in his own district. Can you say quid pro quo? This is how TxDOT controls the majority of SAMPO, by quid pro quos and goodies for those who tow the TxDOT toll road line.

Rodriguez' most recent SAMPO vote was to move ahead in a hostile takeover of the Hill Country by the MPO. He admitted prior to the vote that the purpose of engulfing the Hill Country into SAMPO was to get access to the Hill Country's gas tax allocations in order to fund needed road projects in his precinct. Also, remember that Rodriguez denied he EVER voted for toll roads when his SAMPO votes were made known to his constituents prior to his last re-election campaign in March.

So to get re-elected, he ran away from his controversial toll road votes to keep an angry public at bay. Many of his constituents drive north for work and WILL be impacted by toll taxes (hence their opposition to tolls), yet he sold them and ALL the motorists who depend on 281, 1604, and the other proposed toll projects (on existing state highways) down a river.

 

Big Plan to Get Traffic Moving in SA
By Leila Walsh
November 7, 2008
WOAI-TV

SAN ANTONIO - With toll roads on hold here, News 4 is breaking news about the biggest project planned to get traffic moving in one of the busiest parts of town.

People who live near Potranco and Loop 1604 say they get stuck in traffic every day on the way to and from work. Now News 4 has uncovered a plan that could make life a whole lot easier for tens of thousands of people in that area.

The county and TxDOT will meet next week to discuss the terms of a plan that would do two things: widen Potranco to four lanes from Loop 1604 to the county line and extend State Highway 211.

"We need relief and relief is coming because we're thinking ahead," said Bexar County commissioner Chico Rodriguez.

The project is not a toll road and it is not expected to involve a tax hike. If approved, work on the first phase could get started in just over a year.

For a detailed look at the plan, click here. For a map of the area, click here.

ARMA puts out propaganda at taxpayers' expense

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Regional Mobility Authority
The Alamo Regional Mobility Authority (ARMA) is waging an all-out propaganda war on the citizens who oppose their toll agenda. Using our taxpayer money, they're sending this letter to every property owner in the 281 corridor, in some cases, more than one letter per household! That's a heap of dough! This affirms why ELECTED officials, not un-elected bureaucrats seeking to justify their continued existence at taxpayer expense, should be making these tax decisions and getting all parties to the table for the simple solution NOW.

Here's our response to help you discern TRUTH from the half-truths and outright deception in the ARMA letter:

1) One of the fatal flaws to the most recent 281 environmental study conducted by TxDOT is that management conspired to pre-determine the outcome of the study BEFORE the study was ever conducted. They suppressed documents showing the potential negative impacts of the mega toll road, and only divulged the information that would get the feds to give them the clearance for the toll road.

This email shows TxDOT management colluded to break federal law in how they conducted the study by ordering a Finding of No Significant Impact (FONSI) regardless of what their study found. Now ARMA's letter essentially puts them on track for the same violation of the law. By virtue of the tolling authority doing the study, it again biases any 281 study in favor of the toll road, hence tainting any honest consideration of the non-toll option which over 90% of the public feedback on the last 281 study demanded.

2) ARMA claims it is the entity in charge of our regional transportation "options" (code for tolls), which is a blatant falsehood. Our elected officials who have oversight over TxDOT, especially those who sit on the Metropolitan Planning Organization (MPO) and vote to allocate our gas taxes and who decide which projects are tolled or not tolled (and who must agree to the market valuation and toll rates of toll projects), have a broader and more superior role in transportation decision-making than a mere tolling authority whose only "option" is toll taxes. ARMA is gettin' too big for its britches!

3) ARMA claims no capacity can be added to 281 for 3-5 years. Not so. If TxDOT would immediately agree to the original, non-toll, gas tax funded plan which all concerned groups have asked for, there are provisions in federal law that would allow for an expedited environmental assessment that would be subjected to public review for a 30 day period, and the feds could re-instate the clearance and commence with the non-toll solution immediately thereafter. They have to make the public believe there are NO OTHER OPTIONS but the path that leads to the approval of their toll road.

4) ARMA's letter cleverly states that an "overpasses only" option has been rejected by the feds for "safety" concerns when that's NOT what the citizens have been asking for. There is no "overpasses only" plan. The plan we refer to is TxDOT's plan promoted and promised in public hearings in 2001 that included overpasses, 2 extra highway lanes, and frontage lanes where needed (to give access to businesses). See www.281OverpassesNOW.com for proof.

There is neither citizen nor environmental opposition to that plan, and we announced that on the day we filed the lawsuit. All parties are well aware that if TxDOT would build the original plan and not convert an existing freeway into a toll road, the fix would commence immediately WITH NO OPPOSITION. Their intractable insistence on clinging to the toll road as the only solution (and routinely dismissing out of hand all other viable, more affordable, less invasive solutions), is tantamount to abusive government bent on using its billy club to beat the taxpayers into submission.

Another immediate option to improve the flow of traffic, and hence the safety of the corridor, is synchronizing the timing of the stop lights. This improvement is noticeably absent from the letter and the fundamental way TxDOT and the ARMA create gridlock on 281 to punish citizens who oppose their toll road.

5) It is an outright lie to state that the environmental clearance was pulled for "contract procurement irregularities" and not because the study was "flawed or inaccurate." We have evidence from our lawsuit that TxDOT suppressed a study showing the potential severe impacts of the toll road (hence making the study inaccurate on its face), hired firms with clear conflicts of interest, and that management conspired to rig the outcome of the study to get clearance for the toll road, all of which makes the study fundamentally flawed and inaccurate. It's this failure to admit wrongdoing that requires law enforcement and the court to step-in to ensure an honest study is conducted without further violations of the law.

6) ARMA's letter ends saying they are the local leadership for transportation and will look at other modes of transportation as options. First of all, all RMA's were formed under STATE law (HB 3588) and are officially subdivisions of the state. Currently, ARMA is 100% funded by TxDOT. Though there may be locally appointed figureheads as the un-elected bureaucrats in charge of raising your taxes on driving, they are NOT a local entity but a STATE agency.

Also, by their own admission in public meetings, they have NO OTHER SOURCE OF FINANCING THAN TOLLS! So if they "consider" other modes of transportation, they would have to use their toll slush fund from congestion-weary motorists to subsidize other modes, unlike TxDOT who can use non-toll revenues.

SAMPO pushes forward in hostile takeover of Hill Country

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In what can only be described as the biggest political blunder at the San Antonio MPO (SAMPO), the Transportation Policy Board had egg all over its face when New Braunfels Mayor Bruce Boyer and Comal County Judge Danny Scheel told SAMPO they were never officially notified that it was set to vote on pursuing extending its boundaries into Comal County at today's meeting.

They had to find out from their State Representative Nathan Macias and constituent emails. This move by SAMPO not only shows a total lack of consideration and political couthe, but also demonstrates a hostile takeover of the Hill Country by SAMPO was in the works. The inept lack of professional courtesy isn't exactly how SAMPO engenders a spirit of cooperation!

Our thoughts for Comal County officials? Welcome to the toll road steamroller. They may be back-peddling and even appear to be accommodating as a result of their colossal faux paux, but once they rope you in, don't expect their treatment of you to improve. You'd be one vote on a board of 20 with all but a small minority FOR toll roads, which your constituents adamantly oppose.

Why the rush to gobble up the Hill Country?

The law allows the Hill Country to form its own MPO once New Braunfels reaches a population of 50,000. But none of this relevant until the next census. Why the rush to do it now? Think TOLL ROADS and SAMPO seeking the Hill Country's gas tax funds.

This boundary extension is no small issue. It means both counties have less control over their local transportation decisions. Comal County doesn't want to be one vote on a Board of 20, and Bexar County doesn't need the expense or hassle of taking on the Hill Country's transportation costs nor another Mayor Jack Leonhardt who goes along with TxDOT (and the toll road agenda) to get his small city, Windcrest, some goodies at the expense of everyone in the larger urban areas.

Despite SAMPO having made presentations in the past to some Hill Country officials regarding the possibility of joining SAMPO, they still voted to take official action to "formally engage in a discussion" about a boundary expansion to engulf the Hill Country.

Why take action against the wishes of thousands of people as expressed by two of their elected officials in Comal County if they've already engaged them in discussions? In plain English: it's to officially force a decision by New Braunfels, Comal County, and other counties north of Bexar County in an aggressive posture that's totally unnecessary until the next census.
SAMPO presented 3 scenarios of how the extension could occur. In one scenario, they'd take in all the area up to Hwy 46 (which TxDOT has already studied for tolls) and another showed them engulfing three entire counties: Kendall, Comal, and Guadalupe. A hostile takeover indeed!
Outright lies and deliberate deception

Mayor Boyer took exception to SAMPO's bogus federal re-certification report that says New Braunfels did a census of its own prior to the 2010 census to see if it qualifies as an urbanized area SAMPO could engulf. Boyer stated there is no nor was there ever such a census conducted by the City. He called SAMPO on the carpet for this deliberate fabrication and misrepresentation of the facts to the federal government!

Boyer also spoke of constituents' angst over taxation without representation in a sort of New Braunfels Tea Party that's sprung up as a result of the threat of being absorbed by pro-toll SAMPO without any say by City officials. He also challenged their population growth figures stating they'd be hard pressed to provide water to all of these "new" hypothetical residents considering the situation of providing water to current residents is already dire.

"We're all for regional cooperation, but we haven't even decided what we're going to do yet," Boyer said.

Boyer and good guys Commissioner Tommy Adkisson and State Representative David Leibowitz all agreed that they can achieve planning and cooperation through existing entities like the Alamo City Council of Governments (AACOG) without having to surrender Comal County's independence to the overly aggressive and rabidly pro-toll SAMPO.

We're after your money

Bexar County Commissioner Chico Rodriguez admitted that one of the reasons SAMPO is trying to force a decision by New Braunfels well before the 2010 census is because Bexar County wants access to their gas tax allocations. He said, "We don't want to lose any money. People need to realize we're losing mooney. We hope Comal and Guadalupe counties will join us, because we need the money."

It's also been made known that the Alamo Regional Mobility Authority (ARMA) is seeking toll projects outside Bexar County since they cannot advance any toll projects without clearance for 281 (the lynchpin to the whole system, without 281, they can't do toll roads in Bexar County), which won't happen for another 3-5 years.

"You have representation on this Board"

Pro-toll Selma Councilman Bill Weeper tried to pass off his one vote on SAMPO as representation for New Braunfels since their city touches 3 counties, Comal being one of them. Yet when thousands of constituents have asked SAMPO to vote down toll roads, Weeper has consistently and gleefully cast his vote FOR toll roads.
Councilwoman Diane Cibrian, the subject of a recall campaign due to her betrayal of voters regarding toll roads, also tried to claim she was the voice and vote of the Hill Country that touches her district.

After Boyer made his constitutents' opposition to toll roads perfectly clear, Weeper's and Cibrian's comments were more like a slap in the face than any reassurance.
Since SAMPO has staked itself out as a pro-toll board despite the opposition by taxpayers, they have made an ardent enemy of the tax-averse Hill Country who already suffer from the pro-toll railroading of SAMPO.

Good Guys vote with the PEOPLE

Only two heroes showed up to vote with the PEOPLE against expansion:

Bexar County Commissioner Tommy Adkisson

State Representative David Leibowitz.

Who were the ones that voted to steal the Hill Country's gas tax allocations and shove their expansionist agenda down the throats of sovereign cities and counties in the Hill Country?
Bexar County Commissioner Chico "We need your money" Rodriguez
Councilwoman Sheila "Those people can afford the toll roads" McNeil

Councilwoman Diane "Flip Flopper, I'm your Hill Country vote" Cibrian

Councilman John Clamp
Selma Councilman Bill "I'm your Comal vote" Weeper

Windcrest Mayor Jack LeonhardtAll the un-elected bureaucrats, including two TxDOT votes

No shows

Senator Carlos Uresti
Commissioner Lyle Larson

Councilman Louis Rowe

Adkisson nailed the public sentiment when he again expressed his long-standing objections to the board being stacked with bureaucrats who "can cram a lot of garbage down the throat of this community wihtout reprecussions at the ballot box." He went on to say "until this board can find its way past toll roads and put elected members in the place of bureaucrats," he'll vote against such moves.

Leibowitz was visibly appalled by the fact that neither SAMPO Chairwoman Sheila "Those people can afford the toll roads" McNeil nor its Executive Director made any attempt to reach out to New Braunfels or Comal County officials to inform them of today's possible action. He asked Boyer if it was a fair to say "that you have not been given enough information to make an appropriate decision at this time." And Boyer concurred. Leibowitz reassured Boyer he concurred with his position against toll roads and said he would never vote to make a decision to New Braunfels' detriment.


Only a total revolt at the ballot box and a mass dumping of incumbents, including voting down term limits, will re-shape this corrupt board that's just as tone-deaf to the taxpayers as TxDOT.

TURF VOTER GUIDE

Details
News
Click here to download TURF VOTER GUIDE FOR GENERAL ELECTION 2008.

Find out where the candidates stand on toll roads and the Trans Texas Corridor with our Voter Guide. If you don't see candidate responses for your district, call them and ask them why they didn't respond and find out where they stand on the specifics of our legislative agenda for next year! Doing a statewide Voter Guide (we focused primarily on state legislative races) is a massive undertaking and a handful of dedicated volunteers contacted all candidates for 150 Texas House races plus some Senate races. Many chose to dodge the issue, because they do NOT want to commit to ANYTHING in writing. Don't let them wiggle out of it!

Subcategories

Eminent Domain

Trans Texas Corridor

Public Private Partnerships

Regional Mobility Authority

Metropolitan Planning Organization

Climate Policy

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