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Toll roads are speculative debt bombs in the worst case scenario, and unaccountable slush funds, in the best case scenario (when they actually cash flow and have excess revenue, that is). Either way, people who care about responsible fiscal policy and freedom to travel should want none of them. This article ought to make every Texan hopping mad!
Toll road authority doubles as bank for county
By Mike Morris | December 1, 2012 | Updated: December 3, 2012 1:59pm
Houston Chronicle
The Harris County toll road system is many things: The route to work for thousands of area commuters; a 120-mile colossus of engineering and concrete; and the growing region's best hope, members of Commissioners Court say, to ease traffic congestion.
It also has become a cash cow, collecting nearly $520 million in tolls a year.
Arguably, the toll road authority's most crucial role is that of a bank.
Toll revenues have covered a $26.3 million debt for the Harris County-Houston Sports Authority, paid $33.5 million to clear debris and repair roads after Hurricane Ike, sped project approvals with $4.9 million for the county's Public Infrastructure Department and bridged temporary shortfalls in the county's general fund.
The County Attorney's Office also gets $1 from each toll violation, netting $1.1 million last year alone. County attorneys have used that cash to cover everything from employees' parking to meals at local restaurants and a $100,000 documentary.
By far the largest transfer of toll revenue, however, is the annual infusion into the four commissioners' road budgets, now at $120 million a year. By the end of the fiscal year in February, $900 million in toll revenue will have been diverted to the precincts since 2003, greatly bolstering each commissioner's spending power and making it highly unlikely the court would do anything to disrupt the flow of cash.
Prevents raising taxes?
Without the toll road system, Harris County would have fewer resources for all purposes, dramatically less cash for mobility and would be far more likely to raise taxes, said Art Storey, who oversees the toll road authority as director of the Public Infrastructure Department.
"How would the county cope with the absence of that, if we went back 30 years and we didn't do it? The elected officials and all of us on staff would have to figure out how to do less with less," Storey said. "I'm glad I don't have to know what that would look like."
Nearly all uses of toll road revenue have bolstered "connectivity, capacity and repairs" for transportation infrastructure, Storey said, adding that loans for unrelated purposes typically are county budget office decisions that occur under "extraordinary circumstances." Storey said his department was not aware of the 2006 Sports Authority loan until after it had been extended, for example.
"Usually the money that's lent is money we have to have on hand for reserves anyway against our debt," he said. "In terms of $550 million a year of income, $25 million or $30 million loaned in-house to keep us from having to go to the marketplace is very often a good business deal."
Proposed loan
On Tuesday, Commissioners Court will consider lending Montgomery County up to $20 million to help officials there design their portion of the Tomball Tollway, the first phase of which is slated to start construction from Spring-Cypress to FM 2920 in Harris County next fall. Similar financing arrangements were used to develop the Westpark Tollway and the Fort Bend Parkway in Fort Bend County.
Critics said they are comfortable with transfers of toll revenue outside the toll road authority, but only when they benefit transportation.
"The fees and taxes we collect ought to go to the purposes for which we collect them, or be reduced," said Tom "Smitty" Smith, director of Public Citizen Texas. "If they're generated to pay for toll roads and transit expansions within the Houston area that's one thing, but moving it off to other demands of the county is just not appropriate."
Boosting other modes
Tom Dornbusch, a board member of local advocacy group Citizens Transportation Coalition, said his group sees the value in self-supporting toll roads, but said the group would like to see mobility funds directed to boost modes of transportation other than roads.
"When you look at all these other purposes, they just don't have any transportation basis to them," said small-government advocate and former county tax assessor Paul Bettencourt. "What you're really taking about is morphing the toll road into a general-purpose, one-stop-shop bank for government."
County Judge Ed Emmett agreed that toll road funds should be used only to enhance the toll road system, but stressed that is how nearly all of the revenue has been used.
The county fronted toll money for Hurricane Ike recovery efforts in 2008 knowing insurance payments and federal reimbursements would come later, he said. The outstanding principal on that $33.5 million loan is $7.7 million.
"Everything else since has gone to mobility," Emmett said. "If you're only talking about $7.7 million for Ike relief, criminy, we've got hundreds of millions set aside so we can build roads. I put our system up against any system anywhere in the country, and that's what I just hate about getting off into discussions that cause people to think, 'Oh well something's really wrong there,' when it's not."
The principal balance on the $26.3 million Sports Authority loan from 2006 is $19.3 million, Chief Budget Officer Bill Jackson said.
Benefit to all residents
Commissioner El Franco Lee disputed the characterization of the toll road authority as a bank, saying it has ample funds on hand because it takes a prudent, incremental approach to building projects.
"That's not extra money that you don't do nothing else with. We're able to maintain a balance and not tax people out of existence," Lee said. "Affordable housing is still in reach of a lot more people here and you still have reasonable access to employment centers. Mobility is a mislaid term, because mobility fosters development and spurs commercial and residential development."
Commissioner Jack Cagle, in whose Precinct 4 the Tomball Tollway will be built, agreed, saying the county's use of toll revenue allows even those who do not use the system to benefit from it.
"Some might say, 'Well that's not fair either,' except to the extent that your commerce is increasing, so that engine drives and benefits the overall economy," Cagle said. "If we were to build all of our roads on the taxpayers' back without the toll road system being in place, we'd have to increase their taxes to a level that would be extremely uncomfortable and unpalatable."