Texas Department of Transportation Workshop Meeting
Ric Williamson Hearing Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483
Wednesday, June 24, 2009
Deirdre Delisi, Chair
Ted Houghton, Jr. (Not present)
Ned S. Holmes
Amadeo Saenz, Executive Director
Steve Simmons, Deputy Executive Director
Bob Jackson, General Counsel
Roger Polson, Executive Assistant to the Deputy Executive Director
Dee Hernandez, Chief Minute Clerk
MS. DELISI: Good afternoon. It is 1:35 p.m. and I call this meeting of the Texas Transportation Commission to order. Note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State at 3:32 p.m. on June 16, 2009.
Before we begin, please take a moment to place all of your cell phones and other devices in the silent mode, please.
Today's meeting will involve a series of discussions on various topics currently before the department and the commission. Meeting in an open forum gives us a chance to deliberate and provide guidance on the direction the commission would like to take on these issues. We will accept public comment that is relevant to any of the posted agenda items but we will not have an open comment period. To comment on an agenda item, please complete a yellow speaker's card and identify the agenda item on which you'd like to speak. You can find these cards at the registration table in the lobby. We will limit each speaker to three minutes.
Before we begin, do any of the commissioners have anything they'd like to say?
MS. DELISI: In that case then, Amadeo, I'm going to turn the meeting over to you.
MR. SAENZ: Thank you, Madame Chair. Good afternoon, everyone.
As we entered this legislative session, there were many significant transportation issues that were facing the department and this has led to kind of the first discussion item that several of our staff members will be presenting to you all today. Of course, at the beginning of the year, we had the public involvement on the Trans-Texas Corridor and the I-69 and it was pretty well apparent to us that the people of Texas did not support the Trans-Texas Corridor initiative, so we developed the Innovative Connectivity Corridor concept to address those concerns where we now use the legislation as it exists but we use it to develop the projects and we use the input of all of the segment advisory committees and the advisory committees for TTC-35 and 69 to move those projects forward.
In addition, of course, during the interim we had Senate Bill 792 had a committee that was looking at the public-private partnership model. Their report indicated that yes, we needed to continue CDAs or public-private participation for projects, however, it recommended that there be some changes in the contracting process to enhance and protect the public's interest. The ensuing report also recommended looking into the role of tolling entities or local projects developed where we had local tolling entities and come up with a process to make that more efficient, so they've been doing that.
A lot of those were considered during the legislative session but due to several factors, a lot of those bills just were not able to get across the finish line. Some of those were included in our Sunset bill, and unfortunately, neither did that get across the finish line. So some of the discussion today that we have, we're going to start by discussing a little bit of what happened in the legislative session, some of the legislation that passed, some of the legislation that did not pass, and Coby Chase is going to lead that part of the discussion for us.
After Coby completes his -- and you can feel free to ask Coby all the hard questions that you want because he's ready for them -- then the next part of this first discussion item, of course, we also had the pleasure of going through Sunset during this last legislative session and the last two years, and unfortunately, our Sunset bill also did not pass, but if you recall, a lot of the recommendations that were in the Sunset Committee report, as well as the legislation that went through and passed the House and legislation that passed the Senate -- unfortunately, because of time we were not able to get a conference report back through both houses -- had some recommendations on improving the efficiency, the effectiveness and the transparency of the department, but they could be implemented without legislation.
And Steve Simmons, our chair had directed us to put together an action plan, and Steve was leading that charge for us. He's going to give us a status of kind of where we are on those Sunset initiatives and how we plan to move forward. And I would recommend that yes, we need to continue to do everything that came out or was discussed or was coming out in our Sunset bill that require legislation that we implement so that we can get those processes in place over the next two years.
Also through the session we had a lot of talk about rail and rail initiatives and we had the economic stimulus program and high speed rail initiatives, so Phil Russell is going to present some discussion items dealing with the formation of a rail division and rail initiatives that we feel the department needs to start looking into.
One of the things that was part of Sunset but also was legislation that was passed independently was the creation of the Department of Motor Vehicles which, in essence, moves four of our divisions from the department and creates a separate agency. Ed will present to you what that bill entails and the implementation plans that need to be implemented to get us there.
And then lastly, I've asked James Bass on this first discussion item to discuss the appropriation process and kind of where we are with respect to the current biennium as well as some of the things that we're going to have to be looking at or that you will have to be looking at, and staff will be coming to you all for some recommendations on how we move forward with our funding for transportation.
After they've all presented, you can feel free to ask them questions as they present or wait till the end, and we'll be happy to answer, including myself, any questions that you may have. So with that, Coby, you're up.
MR. CHASE: Good afternoon. For the record, I'm Coby Chase, director of the Government and Public Affairs Division here at TxDOT. My comments will be very brief and focus on legislation other than Sunset and appropriations. As Mr. Saenz mentioned, Phil Russell will speak about rail legislation and Mr. Serna will discuss the new Department of Motor Vehicles.
As a point of reference, my colleagues in the Government and Public Affairs Division tracked about 1,600 pieces of legislation that had some bearing on our operations. Some of those actually did pass and my presentation will focus on a few of them that were signed by the governor.
Senate Bill 1382 -- which Mr. Russell will discuss more -- requires TxDOT to create a long term plan for a statewide passenger rail system which is required to include annual updates on existing and proposed passenger rail systems, analysis of potential inter-connectivity challenges and ridership projections.
Senate Bill 348 provides the authority for the creation of TxDOT advisory committees. These committees may be created to address any issue under the commission's purview to focus on the needs of public concern.
House Bill 1796 amends current law relating to the offshore geologic storage of carbon dioxide, but what is important is that in the crush of legislative business, the Texas Emissions Reductions Program, or TERP, extension was amended into this bill. What that means to us is that transfers from Fund 6 to TERP will be extended four more years -- I apologize, on my original presentation I wrote five -- four more years to 2019 at about $80 million per year.
Senate Bill 970 changes the requirement that the executive director of TxDOT be a registered professional engineer and adds the requirement that he or she have organizational management experience and skills. The change in law does not affect the current executive director's right to continue to serve and these new requirements will apply to future candidates in the position of executive director for the department.
Senate Bill 1609 would amend the Transportation Code to make all the commission's determinations on the designation and denial of access locations on a controlled access highway subject to new rules. Just think about driveway permits, that's an easier way to say that. The details of most of the access management rules are contained in TxDOT's access management manual and this bill codifies many of the manual's rules. The most significant portion of the bill is that is a departure from current access management practice is that 1609 provides that if an appeal is not decided before the 91st day after the date the appeal was filed, then access is automatically granted, so it puts a deadline in there now.
MR. HOLMES: How long did you say?
MR. CHASE: Ninety days, we have ninety days to decide.
Senate Bill 883 prohibits the department from pledging or otherwise encumbering money deposited into the State Highway Fund to guarantee a loan obtained by a public or private entity for costs associated with a toll facility, or another way to say that, using Fund 6 to backstop a loan. It also prohibits the department from insuring bonds issued by a public or private entity for costs associated with a toll facility. The revolver legislation -- which at the end did not pass -- was intended to address this issue and to cover that gap. Regardless of whether an agreement is finalized on or after the effective date of Senate Bill 883, about a dozen projects are exempted from the bill. I have a list of those projects attached to my presentation if you're interested.
Senate Bill 585 establishes standards of conduct for metropolitan planning organizations. It requires each policy board, not later than January 1 of 2010 to adopt bylaws establishing an ethics policy consistent with the standards prescribed by the bill. It should be noted that if the adopted policy conflicts with TxDOT's policy, TxDOT's policy takes precedence.
House Bill 2572 provides that a gas corporation has the right to lay and maintain pipelines over, under and across certain roads, railroads, bodies of water, streets or alleys. It permits all gas corporations to lay pipes -- I don't use this word often --longitudinally -- you know, you would ask an engineer how to say that word, wouldn't you -- in the right of way, however, the legislation contains some protections. The pipelines must comply with the Railroad Commission's safety standards and state and federal utility accommodation requirements. Under this bill, only those gas corporations that are also gas utilities or a common carrier are eligible for reimbursement under the department's utility relocation statute.
That concludes my remark. Thank you for your time and I'm happy to answer any questions you might have, or otherwise, I will turn this over to Mr. Simmons. Yes, sir.
MR. MEADOWS: One quick question on this 2572, refresh my memory, was there not another piece of legislation that was enacted that affected pipelines that was vetoed?
MR. CHASE: There were two.
MS. DELISI: There was a total of three pipeline bills that passed. The problem at the end of the day was there were two other bills and once you read the three bills together, they conflicted with each other. This is a statewide bill, there was a local bill that addressed the Barnett Shale. I believe the understanding is that this bill addresses not only the Barnett Shale but the rest of the state as well.
MR. MEADOWS: Okay, that's helpful. Thank you.
MR. SIMMONS: Good afternoon. For the record, I'm Steve Simmons, deputy executive director of the Texas Department of Transportation.
And as you know, we've spent the better half of the past two years undergoing independent reviews of the department, a formal Sunset review, and working with the Sunset Advisory Commission and the Texas Legislature on ways to improve department operations. The main focus of the recommendations adopted by the members of Sunset included increased transparency and accountability for the department. To that end, the Texas Transportation Commission and the department committed to implement what recommendations could be accomplished without legislative action.
It is important to note that there were no actions taken by the legislature which impacted any of the recommendations that we have already implemented, however, some Sunset recommendations were altered throughout the process and we feel the department needs to update our implementation plan to incorporate those changes.
As you know, I have periodically provided updates to the commission and to the legislature on our implementation status, and I'm happy to say we have been quite successful, and one can see some of our efforts just by viewing the department's website. Not only is the site more user-friendly, we have added programs such as Project Tracker which was also adapted to incorporate federal stimulus projects, and I've been working as a representative of the department with the Governor's Office and the General Accounting Office in their review of how we've implemented the stimulus projects, and they have just raved about the Project Tracker project because we were able to incorporate the stimulus projects into it also. We continue to integrate updates regularly based on comments we receive and technological advances we can apply to the program.
We also now have a central location listing public meetings around the state on our website and we have been working closely with the Federal Highway Administration on ways to enhance the involvement process to include more interaction with the public. Our complaint receipt and tracking process has been updated per Sunset recommendations and we have implemented clearer communication policies regarding contract solicitation for professional service contracts.
In an effort to increase openness and accountability, the department established our internal compliance program which includes the training of every department employee on ethics. We also have an anonymous and confidential toll free ethics hotline called TxDOT Watch which is up and running for use by department employees and the public. We continue to work on these efforts with our new commission subcommittee on openness and transparency, and we have also been working with our comptroller on her similar program to incorporate such initiatives. You'll recall our review of what aspects of Sarbanes-Oxley that we could apply to department operations and your adoption of those recommendations.
But even without passage of the TxDOT Sunset bill which was House Bill 300 which included many of the Sunset staff's recommendations, we have been reviewing the latest version of the bill to determine how the original recommendations were altered and if they can be implemented without changing statute. Many of the provisions included in the governance, planning and communications portions of the bill can be added to our current implementation process. For example, we can work to provide online sound and video postings of the commission meetings within 24 hours as an initiative to provide more and transparent operations. We're already posting the videos of it on the website. We were doing a little bit more and above, but to meet the 24-hour, we can do that very easily.
In relation to the original Sunset recommendations to revisit and update the department's planning process, staff created a task force made up of representatives from MPOs, Federal Highway Administration and TxDOT staff which was led by a Texas Transportation Institute facilitator to see how current procedures can be improved upon and enhanced. In addition, staff has been reviewing performance measures and an implementation of work plans to see how these can increase accountability and transparency for the department.
As you can see, we've been working on and continue to work towards incorporating many of the planning and reporting items included in Article 2 of the latest version of House Bill 300 to see how the department can best implement the process envisioned by the legislature. I would like to note that there are some new proposals and concepts in House Bill 300 we will continue to review for the possibility of implementation and we will need to return to the commission in the future to receive further guidance. Some of these include language requiring the department to train and certify department employees performing environmental work on a project and reviewing the appropriate roles and possible funding scenarios for rural planning organizations.
We remain dedicated to our promise to implement the original recommendations and to further review the new proposals brought forth throughout the session and we look forward to continuing to work with the commission and legislature on these initiatives.
That concludes my remarks and I'd be happy to answer any questions. With that, I'll turn it over to Mr. Russell.
MR. RUSSELL: Good afternoon, commissioners. For the record, I'm Phillip Russell, assistant executive director. What I thought I might do today is visit with you a little bit about rail and some of the things that have occurred over really the last couple of years -- Mr. Saenz mentioned over the last legislative session -- and ultimately I think we need to start mapping out a strategy of how we're going to move forward and take advantage of some of the opportunities that are out there.
I think they're trying to load up that PowerPoint presentation, and I apologize for the disconnect on that. Do you have in your notebook the PowerPoint presentation itself? It should be in your notebook. If it's not, I'll take you through it. It should be behind the orange tab. They don't have it? Okay.
MR. HOLMES: I think it's in the Ted Houghton briefing book, I'm not sure.
MR. RUSSELL: Now we have it, commissioners. I'm sorry. We have it on the big screen.
Commissioners, first off, let me state we obviously have many folks in the department that have a lot of rail expertise: Jim Randall, of course, heads up our TP&P Division, Wayne Dennis, his deputy, and Jennifer Moczygemba runs our Multimodal Section which encompasses railroad, and we have several other rail experts as well that I'll mention throughout my presentation.
Just as a little bit of a backdrop, if you look at rail system in Texas, it's the largest, it has more rail miles, Jim? -- it's not lane miles, I guess rail miles than any other state in the union, almost 11,000. There are dozens and dozens of short line freight railroads as well. On the passenger side, of course, we have several different, I guess, versions of passenger rail -- at least that's what I would view it as. Of the eleven high speed rail corridors in the country, two of those are in Texas, the South Central and the Gulf Coast -- and I'll talk a little bit more about those in a few moments. Amtrak, of course, has three lines, the Texas Eagle, the Sunset Limited and the Heartland Flyer. There are light rail systems now that are up and operating in both Dallas and Houston; Dallas has a commuter rail, the TRE, as well; and hopefully this year -- a show coming quickly to you this year -- will be Cap Metro and their first commuter rail line.
Depending on how you slice and dice it, commissioners, there's probably at least four basic rail functions that the department is currently looking at: planning, project development, operations, and safety. Planning and the operations are primarily in our Transportation Planning and Programming Division. Planning, of course, gets into our Statewide Transportation Plan. I think the latest version is the 2005 version. As Coby mentioned a minute ago, 1382 will require us now to have a yearly update on our transportation plan. The operations, of course, there's a group that's looking at our South Orient as well as a couple of other rail lines that we're currently looking at. The planning also, I should mention, we're working with Amtrak. They perform a lot of our passenger rail studies, we've got several of those that they're looking at across the country. We work with the big Class 3 railroads, UP, BNSF and KCF, as far as some of the logistics and freight business in their area.
The project development probably is primarily in Transportation Planning and Programming, but they also work pretty closely with other divisions in TxDOT. A good example, we had a discussion here a few months ago about replacing the Ballinger bridge on the South Orient Railroad. That's a bridge that needs to be reconstructed to provide the ability to bring in the big blades on the wind power, wind generation in the new Martifer plant there in San Angelo. That bridge is being reconstructed to accommodate those extra wide long fan blades that are coming out. So Transportation Planning and Programming is working closely on that project development with both the San Angelo District, the Bridge Section has a group that does bridge design, and of course, they're working closely with ENV.
The fourth major area is safety and that's an area that's probably sprinkled across several different areas of TxDOT. Jim has a group that does a lot of the FRA mandated safety inspections. That's some authority that was passed down from the Railroad Commission and the Class 1 railroads actually pay for those sorts of safety inspections, all the way from their actual trains themselves to the track and so on and so forth. Eric Gleason, over in public transportation, has an employee, Susan Hausmann that also does some safety inspections. And I guess, Jim, that's probably more of the light rail? Yes. And so Susan handles a lot of that as well. And then a third area is over in Carlos's former location, the Traffic Division, and Carlos has Darin Kosmak over there that handles all of the department's at-grade rail crossing safety program.
So you can see we have a lot of those rail functions that are kind of scattered out across the department. Amadeo and I talked really over the last couple of years about we need to start looking at trying to combine some of these functions either as a single section or into a rail division itself.
Let me get into some of the funding issues that are swirling around there. This is pretty complex, at least for a relative neophyte as myself. The federal funding is probably one of the bright spots, it really creates some opportunities, I think, for the department in moving forward. Just among several of the programs that are out there, of course, the first stimulus money, the $2.25 billion that John Barton and his group have been working to try to utilize, that was open to rail projects -- in fact, you all selected the South Orient rehab project.
The next stimulus package project that will be coming down is the $1.5 billion TIGER funding, and again, it's open to whether it's road or rail projects, and I think Mr. Barton is working on a plan now to work through how we're going to prioritize what the Texas submission will be on that program. The thing that I think is the most intriguing to us, though, of course, is the Obama Administration has pushed very rapidly towards intercity and high speed passenger rail program to the tune of about $8 billion.
Again, it's pretty complex, at least from my viewpoint, on how all that's going to fit together. The 17th, last week, we just got the proposed rules that are out there so we're reading through those rules now, we're going to be providing some comments back to the FRA, I think on July 10 of next month.
Let me just show you very quickly the high speed rail corridors I mentioned earlier in the program. Again, here are the two main designated high speed rail corridors; of the eleven in the country, two of those are in Texas: the blue is the South Central line coming down and the red, of course, is the Gulf Coast corridor.
Here's a couple of others that I think are worth at least discussing. Many of you have heard of the Texas T-bone. What I think that really represents -- and there have been a couple of different versions over the years -- but I think there has been and continues to be a need to somehow try to link up those two high speed rail corridors. The last one is one, again, that's kind of unique. It's a plan, a corridor, I guess, that really came up back in the Trent Lott days I believe in the '90s, and the notion was being able to hook up Meridian, Mississippi through Shreveport, on to the Dallas-Fort Worth area. It manifested itself continuously during the last legislative session -- I think Representative Merritt had some legislation out there -- trying to hook up the East Texas area. And so I think it would be more classified as a higher speed corridor. But that gives you a little bit of a sense of some of the high speed rail corridors that are out there.
MR. UNDERWOOD: Phil, question for you.
MR. RUSSELL: Yes, sir.
MR. UNDERWOOD: $8 billion, that's for the whole United States?
MR. RUSSELL: Yes, sir.
MR. UNDERWOOD: That's not going to go very far.
MR. RUSSELL: No, sir, but it's a start.
MR. UNDERWOOD: The next question is on the rail proposals that you showed on the previous slide, the Shreveport-Meridian, basically that's following I-10.
MR. RUSSELL: Yes, sir, pretty close.
MR. UNDERWOOD: Is that part of the plan was to use the interstate system to be parallel with it.
MR. RUSSELL: Jim can correct me or Amadeo can correct me, I don't think that was necessarily the notion. I think that alignment was utilizing probably an existing track and the idea of getting up to a higher speed track, and again, trying to connect between Meridian to the Dallas-Fort Worth area.
MR. UNDERWOOD: But the existing track is not carrying people, is it? Are you saying existing Amtrak track, or existing track track?
MR. RUSSELL: Jim, whose track is that?
MR. RANDALL: That's UP track.
MR. RUSSELL: It's a UP track.
MR. UNDERWOOD: So you're basically using commercial freight-hauling track and all of a sudden now you're going to put people on it and go real fast?
MR. SAENZ: Commissioner, the intent of that group, I think, was really to use the existing corridor where the existing track is and you would double track so that you would have a separation but you would probably follow as much of the existing alignment that was there so you don't have to worry about having to go acquire more land, but you would expand and double track where you needed to double track so that you could have a separation between the passenger and the freight.
MR. UNDERWOOD: And so who would do this, who would own this particular road, this particular passenger road, or whatnot?
MR. RUSSELL: Commissioner Underwood, these are great questions. To answer your question, I think it would stay with UP, BNSF, KCS, whoever the Class 1 railroad is.
MR. UNDERWOOD: All of a sudden they're going to be people haulers instead of freight haulers.
MR. RUSSELL: No. What we actually see -- that essentially is how Amtrak operates, they have an ability -- and I know Dennis Kerns is in the back of the room and Dennis may correct me -- but Amtrak has an ability, a right to utilize those existing Class 1 rail lines, assuming there is sufficient capacity on the line to do so. So when we look at the Amtrak lines, the Sunset Limited, the Heartland Flyer, they're utilizing existing Class 1 tracks.
MR. UNDERWOOD: So basically there's $8 billion for the whole United States and we know that will be a drop in the bucket for the cost, so basically what funds are they going to come up with to be able to actually do this?
MR. RUSSELL: Well, I think they're looking at this as probably the first slug of funding, there's also some discussion of a billion dollars a year, I think through the next five years, so I think it represents the Obama Administration's idea of getting serious about high speed or higher speed rail and trying to begin to move forward on these projects. There's a lot of chatter out there in the industry, I'll hear a lot of the folks that will say -- $8 billion is not a lot, Commissioner Underwood -- so instead of just spreading $8 billion across all the various projects, perhaps you should pick two or three and really do some good on those projects. Ultimately, I don't know how this is going to end up. It's going to be a competitive process for projects that are selected, and I think we can take advantage of some of these funds, at least to do some of the things that we need to do.
The other thing, Commissioner Underwood, that I'll mention that I personally find very intriguing, I get a lot of folks that are coming in talking to me about rail, and what I'm seeing is that there are many different needs for rail, not just in Texas but across the country. There is absolutely a niche for high speed rail, and to answer Commissioner Holmes's question, not an existing track, not an existing roadway, obviously if it's truly high speed, it's got to be brand new track, probably pretty expensive but brand new track.
There's also a niche out there for practical rail and utilizing some Class 1 freight rail lines and being the kind of Amtrak type business model. It may be that there are some things that we can do to kind of upgrade that from, say, 79 miles per hour to 110 miles per hour and do so safely. That may be grade crossings, that may be signalization, there are a lot of little areas in the rail industry that I think can improve the velocity and the speed of that railroad. So a lot of folks are looking at a lot of different options for high speed rail, higher speed, practical rail, and I think we probably need all of those things.
Obviously, high speed rail is no longer high speed if it stops at every single community. In my limited experience, I haven't seen a community yet that said that they didn't want a high speed rail stop or an Amtrak stop. So I think what we're going to have to see is a plan, a true rail plan that incorporates all of these elements, high speed rail, commuter rail, light rail, so that we operate truly in a multimodal fashion.
MR. UNDERWOOD: I just hope that when they do this that they also have the proper way of coordinating all of that, because you can have the fastest car on the lot but if you can't figure out how to get it to start and stop in the proper manner, you've got nothing.
MR. UNDERWOOD: And Commissioner, that's a perfect segue. Ultimately, I think where we're going here is we do need to have a transportation plan, a rail plan of how all these elements fit together.
MR. UNDERWOOD: And also, I'm talking about the people that actually run it be able to do it in a timely manner and whatnot. I just know that sometimes in my line of work, we have to order a railcar 30 days in advance. I don't think that's going to work for something like this.
MR. RUSSELL: It makes you really want to plan your trips ahead to Dallas if it takes 30 days.
MR. UNDERWOOD: I'm not talking about planning trips, I'm talking about moving commodities and whatnot, and now we're about to move people that have to be there in a timely manner, so I think that's going to be critical when they're making their plans. But anyway, thank you. I didn't mean to drag this out.
MR. RUSSELL: No, I think this is an excellent line of discussion and an excellent line of questions, and these are all the issues that you in your business certainly experience, and I think really Texans, in general, have these issues. Whether it's freight issues, whether it's UP and BNSF crossing at Tower 55 in Tarrant County, or whether it's a passenger rail issue, I think dependability -- for us to truly have a good functioning rail system, we're going to have to have dependability on that system.
MR. UNDERWOOD: I think that needs to be part of the financing package and whatnot, that yes, we're going to help build this fancier road, but by the way, you need to be able to be more organized in how you move the product up and down it. Don't mind helping them, I'd just like to make sure that we get our bang for the buck for the taxpayers' dollars.
MR. RUSSELL: Absolutely.
MR. UNDERWOOD: Thank you.
MR. RUSSELL: Let me jump on to the next slide, and this is at least our attempt to try to show some correlation between these various federal rail programs. It's very complex, and again, we just started seeing the proposed rules last week so we're trying to digest those, but I think my sense is last year 2095 passed and it provided essentially the programs of how to fund passenger rail and high speed rail in the United States but it didn't really offer many dollars. Well, of course, now with the $8 billion we have the funds, and at least what we're able to glean from the FRA is the intent is to move those $8 billion from the stimulus package, to move those dollars through the various programs that were created last year under 2095.
So if you look at this, and the way this table should work is when you look at Section 301, 302 and 501 at the top, those were all programs that were created under the 2095 legislation last year. Now, as we understand the $8 billion, the funding tracks -- and I look at those as kind of funding programs, but they call them tracks, Track 1, 2, 3 and 4 -- and so they've created kind of a matrix where you start looking at how to fund your particular project. So Track 1, if you look at the information that we got last week, they are looking for shovel-ready rail projects ready to go right now, intercity higher speed rail projects. And there's a couple of different programs, based on that legislation last year, that it could fit under: it could be a corridor capital assistance, Section 301, or it could be a congestion grant, Section 302.
And Commissioner Underwood, that's where I think we would start looking at funding if we can improve rail service through whatever means, whether it's increasing the grade crossings or the signalization, whatever we can do to bring more efficiency and higher speed, that might be an area that we would seek funding for that project.
MR. UNDERWOOD: And also seek advice from somebody like Disney World because they can move a lot of people through a project really fast and keep them happy.
MR. RUSSELL: On time and dependably, I agree.
And again, as we get more information, we'll be providing that level of detail to you. But Track 2 is for projects that aren't quite shovel-ready but they have a defined schedule. Track 3 and Track 4 are actually, it appears, not even funded out of the $8 billion but they're going to be funded out of an '09 appropriation of $90 million. The Track 3, I think, again, Commissioner Underwood as you mentioned, it's not a lot of money but I think that's an area where we can probably get some dollars to help us sort out and do some of the planning for rail planning in general, whether it's high speed or higher speed rail.
But anyway, we're going to be working on this table but this, I think, gives you at least a sense for how we think the two federal programs are going to mesh together, from the funding side, the $8 billion stimulus program and how it's going to be channeled through the program that was created last year.
I guess let me back up one. One other thing, again, the complexity of it, Mr. Saenz I think had a sense probably a month or so ago of how complex this situation was going to be and he wanted to make sure we were positioned to take advantage of these funds, and so about a month or so ago he instructed us to work with UT's Center for Transportation Research through an interagency agreement. And so we're going to be working with Dr. Mike Walton -- and you remember Dr. Walton, he chaired our 2030 Committee -- and Dr. Walton has brought on board Cambridge Systematics who is Allan Rutter -- Allan, of course, was a former FRA administrator -- and so Dr. Walton, Allan Rutter and their team are going to be helping us really try to bring some method to the madness here of the very complex federal programs, both from a passenger side, a freight side, and knowing that we have to upgrade our transportation plan again so that we can be positioned to move forward.
The guidelines, again, we received last week. It looks like the first project pre-applications are going to be due like mid July, so we're not going to have much time at all to start putting together some projects and try to submit those projects. But again, I think you're going to see some projects that always rise to the top, whether it's a Tower 55 or whatever, there should be those sorts of projects that everybody will look at and say of course, we expected you to submit those projects.
Just very quickly on the state and local funding side --
MR. SAENZ: Phil, before you go on, on the high speed rail, the rules and the guidelines came out, we have an open comment period for comments on the guidelines, but also on July 10 is when some pre-application submittal is required for wanting to submit something for this $8 billion. Correct?
MR. RUSSELL: Yes, sir.
MR. SAENZ: And that's kind of just to get your foot in the door and let the FRA know what may be coming, and then, of course, there will be some time to refine the application and the proposal to submit forward.
MR. RUSSELL: Yes, sir.
MR. SAENZ: During the legislative session, commissioners, we also had a bill on high speed rail and the formation of a high speed rail corporation. That can be done under the powers that you have, you can set up a transportation corporation to look at that, and that's something that we're going to be studying to see how we can commingle it to try to do some of this and try to apply for some of this money, should it become feasible.
Texas really is behind everybody else in that we've not done -- because we didn't have the resources or the funding to do the feasibility study, the marketability study to determine whether high speed rail is feasible along these two corridors. That federal bill that was passed last year that talked about the high speed corridors and starting to initiate funding also had a requirement that said you need to look at how you connect your two corridors, and no one has done that study. We submitted to FRA and U.S. DOT a request that we would do the study if they wanted us to or could provide assistance, and I think they told us: Thank you very much, you can help us.
So I guess that being said, as we're moving forward we see that there's a lot of focus on rail at the state level, there are focuses on rail at the federal level, and that's why I'd asked to look into moving forward, do we focus our efforts in the rail areas, ourselves within the department, so that we can have more resources put towards that effort, and that's what Phil is presenting.
But I've got a meeting on Friday, there is a high speed rail corporation formed under local government codes with people from Dallas, from Temple, from Bryan, from Houston, and we're going to meet to kind of strategize how we could work together to try to apply for some of these funds, and I'll give you a white paper report next week on that.
MR. UNDERWOOD: Now, you're talking about public rail. Right?
MR. SAENZ: Yes, sir.
MR. UNDERWOOD: Not moving goods but moving people.
MR. SAENZ: Moving people, yes, sir.
MR. UNDERWOOD: Okay.
MR. RUSSELL: And Mr. Saenz, you're exactly right, the pre-application, again, is July 10 and that's the deadline and we've got to get some projects in. We always get a little criticism about you didn't ask which projects need to be submitted, but the reality is we just got the guidance last week, the guidance says clearly to get your foot in the door, the pre-applications are due July 10. And Mr. Saenz is right, of those four tracks, the application deadline for the actual projects are August 24 on Tracks 1, 3 and 4, and October 2 on Track 2. So we don't really have a whole lot of time when we start talking about putting these projects together.
Of course, when I first looked at that, my thought was so they're going to utilize $8 billion -- that's not a lot of money -- so they're going to spend that entire $8 billion selecting those projects, and as I read through more of the information, I don't think that's the case at all. This is probably the first program call, probably followed by another program call a year after and maybe the year after. So this is just getting the first foot in the door, and we'll need to scramble, we'll need to push it to get those pre-application packets in on July 10, and then the applications themselves in August, but I think we'll still be okay.
MR. HOLMES: Yes, may we follow up? Amadeo, you said that there was a high speed rail corporation?
MR. SAENZ: Here's a corporation that was formed under local government codes where the counties or the cities under the local government code, and they have formed, I think it's called the South Central High Speed Rail Corporation. People from Dallas --
MR. HOLMES: Who are some of the members of that, do you know?
MR. SAENZ: Some of the Dallas commissioners -- I'll get more information Friday when we meet -- Houston, former Judge Eckels is on that, and then, of course, there's people from --
MR. RUSSELL: The mayor of College Station.
MR. SAENZ: The mayor of College Station, the mayor of Temple. This has kind of been the group that's been working informally over the last year or year and a half on the Texas T-bone high speed rail work. So they're coming in on Friday and we're going to sit down, and David Dean is kind of leading their charge.
MR. MEADOWS: Just following up on a couple of things that have been said, I hesitated only momentarily to venture into an area that I know nothing about, but then I realized that's never prevented me before, so let's talk about rail for a second. I mean, the one thing that I hear that's come out of this that really summarizes where it is that we are, as Amadeo said a moment ago. If we paid attention, Amadeo said, We are behind -- I think that's how I would quote that -- and I think what that has resulted in, honestly, is some of these efforts, well-intentioned, good people that are promoting/advocating rail initiatives, those efforts are probably because we are behind.
And my concern has been from the outset, as we talked -- and Ned, I'm sure you've had the opportunity to talk with some of those smart people that are well-intentioned and are involved in the high speed rail corp effort -- the problem you could have with this is it could lead to fragmentation, and I think it will very quickly if we don't take a leadership position and take a leadership role in a definitive, affirmative fashion, and I know this is a challenge and there's a lot of information out here that we don't know.
In fact, Fred is raising some great points. If you really want to look at available resources, the fact is that why even bother if the money isn't there. Well, the fact is we do need to bother because I think we all know that the future of connecting the urban centers in this state -- in this country, but in this state, more importantly -- is going to be rail- driven, it's going to be a huge component. And I would really hope -- I think Phil said it a moment ago, we don't have a plan, I think that's what you said.
MR. RUSSELL: We've got a plan from '05.
MR. MEADOWS: But we don't have a comprehensive plan.
MR. RUSSELL: Sure.
MR. MEADOWS: And I think that's really where this ends up. You distill all this down, if we want to be successful, if we want to avoid fragmentation, if we want to advance rail as a way to move people around this state, connecting the urban centers, we need to be serious about the planning effort. And I'm hearing that happening but I really do think we need to say it, and I think we need to direct our staff to come back to us with an outline, this is the way we intend to proceed, and coordinate in a collaborative fashion with those that are the natural allies: Judge Eckels -- I mean, I can go down the list.
But what I hate to see is the different advocacy groups, well-intentioned folks, running down this trail, we're running here, and at the end of the day, we run into each other. I mean, that's not the way we get someplace.
MR. RUSSELL: Or worse, we run past each other.
MR. MEADOWS: Well, let's see, do we want to vote on that.
MR. MEADOWS: Anyway, I really don't know what I'm talking about -- which is clear -- but I would say that I do sense this is the direction we need to be going.
MR. UNDERWOOD: But to follow up on that, Phil, what I'd hate to see is that we have this huge plan and nothing gets done. That's what you're saying.
MR. MEADOWS: Right.
MR. UNDERWOOD: But I worry the fact, Phil, that we don't prioritize different parts of the project that we can actually afford. I'd hate to sit there and say let's buy tires for everybody's car, that's great but we don't even have a car, but we've got a heck of a lot of tires.
MR. RUSSELL: I think that's a pretty good analogy.
MR. UNDERWOOD: So I'd like to make sure that we buy a vehicle at a time, so to speak, with everything we need on it to be part of that plan.
MR. MEADOWS: You know, what I find interesting about this is you never know when resources are going to just fall on the table and why good planning is absolutely essential. If you go back and look at the stimulus process -- which none of us anticipated would have been a reality even twelve months ago, ten months ago -- fortunately what we had in place at the MPO level was a solid plan that enabled us to build a solid program of delivery utilizing those funds. So without a plan, we'd better have a plan, and you never know.
MR. RUSSELL: And Commissioner, I think you and Commissioner Underwood again hit the nail on the head because that's exactly how I think this plan needs to be unveiled. As these guys come in and talk to me, the high speed rail, the practical rail, the high speed rail has lots of pizzazz to it, a lot of interest. The guys that develop it like Texas as an area because it's pretty flat terrain and that sort of thing, but the reality is -- and Commissioner Underwood, you touched on it -- it's going to take a lot of money, regardless, it's going to take a lot of money because you're not utilizing existing highway corridors or anything else. It's more like it's brand new corridors, it's going to cost a lot of money to develop.
And so again, what we'll need to develop is that strategy, more of a practical rail strategy, of utilizing some existing lines. And the Austin-San Antonio Corridor Council has been working on that for 15 years trying to build a connector; Rail North Texas is trying to do the same thing. So I think what you're seeing is the elements coming together of a staged plan that we can actually implement.
MR. UNDERWOOD: Let's make sure when we make our plans that we not only have all the counties, communities and leadership involved, but also if we're going to be using, whether it be the UP or whatever, that they're at the table from the get-go.
MR. RUSSELL: Absolutely.
MR. UNDERWOOD: I'd sure hate to bring them in at the last inning and they go: Oh, no, that won't work, or we don't want to go down that road.
MR. RUSSELL: Because it is their rail line, it is their business model. You're exactly right.
MR. UNDERWOOD: That's my point. So we want to make sure they're at the table and that we're all on the same page.
MR. RUSSELL: And the governor signed some MOUs, I think, Mr. Saenz, with all three Class 1 railroads, probably five, six, seven years ago, essentially that we agree to work together cooperatively, and again, I think we have a good relationship with those guys.
Let me quickly move on through here, again, just a little sense of the state and local funding. Although the federal funding is complex and there's lots of opportunity, on the state and local side, it's probably a lot less complex because there's just not many opportunities there. The Texas Rail Relocation Improvement Fund actually was funded this legislative session. There is a little financial check in there -- that James Bass is going to be talking about in a little greater detail -- that may or may not allow the utilization of those funds.
Some specific appropriations, I think we got in the order of about $10- or $11 million of GR this session to take care of some rail issues. The TERP issue, again, kind of an emissions reduction program -- I don't know that it's really beneficial from a rail standpoint. Technically it's feasible, I don't know that in practicality it's useful. CDAs, we do have independent CDA authority on rail and that may actually be the kind of pearl in the rough that we can utilize to kind of springboard and to actually build some of these.
Lastly, let me finish up with this -- and again, Mr. Saenz kind of mentioned it, it was kind of his idea, his venture here a year or two ago -- that we're a little fragmented. Not only do we have all these multitude of different rail plans and rail ideas and funding plans, we're a little fractured inside the department, and so Mr. Saenz has talked about for some time that we need to look at combining those either as a section or as a division. Sunset clearly requested -- or suggested that we have a separate rail division. My sense, my advice to the boss is that we move forward very rapidly creating a rail division. I think we need to bring that director on board as soon as possible.
And again, those are the four major areas that I mentioned earlier, but we probably need to get some outside groups as well as an internal group, if we decide to go forward with a division, to kind of help us shape how that might work efficiently, look at the models that other states are utilizing, but we move forward with some sort of rail division as soon as possible, and that's going to help us start bringing a real focus on rail functions here in the state.
MR. HOLMES: Phil, do you envision this division having primarily a rail operation kind of responsibility or oversight, or do you view it as much broader, having freight responsibility as well as passenger?
MR. RUSSELL: Well, I think it's broader than that, and again, it's those four areas. We have some operations capabilities now and I think we need to continue in that area. Safety inspections and railroad crossings are functions that we have right now, we need to continue that, particularly the FRA aspect of that, that's a requirement, we've been empowered from FRA, we need to move forward. And just the project development aspect, I think as we get more and more into the rail planning, we're going to have to take a more active role in helping make sure everybody is on the same page and we're moving forward in the same direction.
The other aspect of it that I've kicked around, Commissioner, for some time is California. It has kind of a logistics group that works inside there to kind of help the dependability issue, Commissioner Underwood, but they help, my understanding, in both the freight and the passenger rail side. That might be something, as we get input from outsiders, maybe that's a section that somehow needs to kind of help the state as far as that dependability factor from a freight or a passenger side, either. So this thing could morph into a lot of different areas if we want to move forward with a rail division.
MR. HOLMES: Well, Commissioner Meadows' comment earlier that if we don't take a leadership role, that it's going to be fragmented.
MR. RUSSELL: Yes, sir.
MR. HOLMES: And so my sense is that it would be a wise move to develop a proper rail division; otherwise, it's going to be hit and miss around the state and we'll be sitting on the sidelines, there won't be much direction.
MR. RUSSELL: I think Senator Carona a couple of times asked me that question in the last session, expressed some concern, you know, various groups are wanting to opt out of this and do their own thing, and that's all fine and dandy, but I think Chairman Carona expressed some concerns that if everybody goes and does their own thing, then all of a sudden knows who's on first, who's on second. So I think it does make sense that at the end of the day somebody has to be kind of in charge and try to coordinate all those activities.
Commissioner Meadows, did you have another question teed up?
MR. MEADOWS: Probably.
MR. RUSSELL: Dare I ask.
MR. MEADOWS: I don't know what it is yet.
MR. RUSSELL: Mr. Saenz, anything else?
MR. SAENZ: We've been looking at the rail division, we looked at it when we picked up the rail safety functions from the Railroad Commission a few years ago. I think as we've gotten more into that rail has been coming more and more to the forefront, I think it's time that maybe we do have a focus area in rail. It would fall under our assistant executive director for Planning.
And I think the other thing, as we have the opportunity as we bring on board this management consultant -- that we'll bring tomorrow to you as a recommendation -- they can help us kind of look at the structure and see that we're moving forward in that direction also. In the meantime, I think we already have been working on determining the director level and we'll be working on that also. I think it's something to move forward.
MR. UNDERWOOD: Amadeo, when you do this -- and I don't mean this as disparagement towards engineers -- he really needs to understand rail as well as being an engineer, the actual movement of product, not just the building of track.
MR. SAENZ: Yes, sir. I don't foresee that this director will be required to be an engineer.
MR. SAENZ: Commissioner Underwood, actually, in anticipation that we might go this direction, the guys behind me and Mario Medina have been working towards that area, they've already got it configured of what that person might look like. And you're right, it doesn't require them to be an engineer, it does require them to have some rail experience, but the idea is we want to cast a pretty broad net to bring somebody in with some rail experience and solid management experience, so we've already kind of got that thing configured if ultimately we move forward with a rail division.
MR. UNDERWOOD: Right, but remember we're talking about moving product and people, not just product.
MR. RUSSELL: Absolutely.
MR. UNDERWOOD: Because there's not that many folks out there. That's why my Disney World mentality came out, you know.
MR. SAENZ: Thank you, Phil. Ed.
MR. SERNA: Good afternoon. For the record, my name is Ed Serna, I'm the assistant executive director for Support Operations, and I want to brief you on a new agency that's being created in the state.
House Bill 3097 passed both chambers of the legislature and was sent to the governor on May 27 and the governor signed it on June 19 of this year. That bill takes three TxDOT divisions in whole and a portion of a fourth division and creates the Department of Motor Vehicles. The divisions that are affected are Vehicle Titles and Registration, all of that division, all of our Motor Vehicle Division, all of our Automobile Burglary and Theft Prevention Division, and a portion of our Motor Carrier Division, and it's that portion that credentials and licenses the motor carriers. The part of Motor Carrier Division that permits oversize/overweight loads will stay in TxDOT, so that function remains in TxDOT with that staff and that operation.
All the staff, the equipment, liabilities, assets, everything from these affected areas are transferred to the DMV. Roughly the impact from an FTE perspective to TxDOT is about 697 FTEs. The legislature allocated four additional FTES, four new FTEs for the DMV, one for an executive director, a couple of executive assistants or administrative staff, and an auditor, but the lion's share clearly is coming from TxDOT's FTEs. In addition to the program areas, the statute, as well as the contingency rider in the appropriations bill also outlines the requirement to transfer 75 FTEs for support of the support operations in the new DMV, so that makes up some of the 697.
One of the things that will occur shortly after the bill becomes effective -- and let me talk a little bit about some key dates: the first key date is September 1, that's when the bill becomes effective; the second key date is October 1 and that's the deadline for the governor to appoint the new nine-member board, it's an independent board; and also by October 1, TxDOT has to present a transition plan along with recommendations to the new board, to the governor, the lieutenant governor, the speaker, and the chairs of both Senate Transportation and House Transportation, so that's got to occur by October 1; and then November 1 is the date that the DMV actually stands up as an agency. On that date, the authority and the responsibilities associated with those operations are transferred from the Transportation Commission to the new Department of Motor Vehicles Board.
The other thing that happens as soon as practicable after the effective date of the legislation is the state auditor will come in and audit the operations, they'll conduct a financial audit and establish a financial benchmark for these divisions and for this operation.
The board of the new DMV is composed of, as I mentioned earlier, nine members: three of them have to be licensed automobile dealers -- or dealers, I should say, licensed by TxDOT -- two of them being franchise dealers and one of them being an independent; there's one individual on the board that will represent an automobile manufacturer or distributor; one member on the board will represent the tax assessor-collectors; one member of the board will represent law enforcement; and there will be a member on the board representing the motor carrier industry; and then two members of the public, so basically two members at large.
MR. UNDERWOOD: Ed, quick question. You said three must be licensed by TxDOT?
MR. SERNA: Yes, sir.
MR. UNDERWOOD: There won't be this TxDOT licensing anybody anymore.
MR. SERNA: Well, one of the things that happens is all the licenses, all the obligations, the rulings, et cetera, that were in effect on October 31 carry over to the DMV November 1 so that there's a smooth transition. There's not a need for everybody to get re-licensed, re-certified.
MR. UNDERWOOD: I understand that, but my point is that after that, then it will be the new organization that will decide the three. Isn't that correct?
MR. SERNA: Yes, sir.
MR. UNDERWOOD: Okay.
MR. SERNA: For replacements. At the time that the governor appoints these individuals, they'll hold a license issued by TxDOT; reappointment or replacement of those individuals, they'll hold a license issued by the DMV. Absolutely right.
Activity to date, we started planning -- we, the staff, myself, the four affected division directors, as well as all the division directors from the Support Operations in TxDOT, so General Services Division, Human Resources Division, Finance, Legal, our Facilities Division -- we started meeting back in early May to begin transition planning. We didn't know whether the bill would pass or not, we felt relatively confident, though, that we were not going to have very much time if a bill did pass -- and there were six of them out there that would have created a DMV, the two TxDOT Sunset bills and then four independent bills -- so we started the planning process in early May. We've been meeting formally every two weeks at the director level, plus there are work groups -- a finance work group, an HR work group, a purchasing work group, an IT work group -- there are work groups composed of staff and management that are focusing on the very specific issues that need to be addressed.
Our overall goal and the instruction that Mr. Saenz presented to me -- and I'm heading up the transition team -- the instruction that Mr. Saenz presented to me is that we wanted an absolute seamless and smooth transition for our employees and for our customers: the TxDOT customers, soon to be DMV customers; TxDOT employees, soon to be DMV employees. The only difference that our customers and our employees should experience is that on October 31 they'll be answering the phone: Texas Department of Transportation, how can I help you; and on November 1 they'll be answering the phone: Department of Motor Vehicles, how can I help you. But beyond that, it should be a transparent transition for our customers and our employees.
One thing to note or another thing to note is we're also working on an interagency contract between the DMV and TxDOT. Now, there's nobody to execute that right now, the DMV doesn't stand up until November 1, but we're still preparing an interagency contract that will outline the support that TxDOT will provide until the DMV can take over functions. So for example, TxDOT will be providing human resources support, helping to get people hired, posting jobs, et cetera, until the new agency has an HR department and it can do it. TxDOT will be providing financial support, accounting support, payroll support until the new agency can stand up these functions.
MR. UNDERWOOD: Also legal too. Correct?
MR. SERNA: Yes, sir. One of the things that we're going to do -- and we've talked to Bob Jackson -- Bob's staff has already contacted the Office of Attorney General to see if the OAG can be in a position to represent the Department of Motor Vehicles so that there's not a conflict, but we will provide and we are currently providing as much legal support as we can for that department.
MR. HOLMES: Ed, what's the budget for this new department?
MR. SERNA: Right now and in the future, we're estimating about $180 million a year. Currently we're spending a little bit less than that amount to support the affected operations. So our goal is to have it be kind of a net wash. The fiscal note on the bill indicated that only four new FTEs at a cost of about $600,000 would be needed. Our numbers are, of course, higher but that's because the fiscal note focused on new activity that is going to be out there.
MR. HOLMES: And where does that budget money come from?
MR. SERNA: With the exception of Automobile Burglary and Theft Prevention, all the funding comes from Fund 6. The Automobile Burglary and Theft Prevention which is about $16 million a year comes from General Revenue, but everything else comes from Fund 6, it's coming from Fund 6 right now.
There are some additional costs that were not identified in the fiscal note by the legislature. I know our staff had identified them but didn't make it into the final fiscal note. As an example, at TxDOT, with regard to workers' compensation, we're self-insured. TxDOT takes care of all that, and that includes for these four divisions, and a new agency and other agencies, they use the State Office of Risk Management, and that agency, the State Office of Risk Management, charges agencies through an interagency contract for workers' compensation.
Office of Attorney General, we use Bob Jackson's crew right now and they provide a whole lot of support for these divisions. That's all in our budget. A new agency, unless they hire a general counsel and legal staff, the new agency using the Office of Attorney General will do so through a charge-back mechanism. So there's the potential that there are costs that were not identified in the fiscal note that will come up and that's why I believe the legislature requested that the Auditor's Office conduct a financial benchmark.
The other reason is we raised the issue, when asked during the legislative session, about the impact to the department, and one of the things that I think was a consistent message that we presented was our concern is that there would be a significant draw on Fund 6 above and beyond what it currently takes to operate these divisions, and that's the other reason I think the legislature said, okay, we'll have the auditor kind of do a financial benchmark at the very beginning before this agency gets started to kind of help check that.
MR. UNDERWOOD: But I was under the impression that under Fund 6, Amadeo, it was just going to be $100 million, not $180-.
MR. SAENZ: I think at one time we had an estimate of about $100 million and it did not include some of the other functions, and when they ran the numbers, it says it runs up to about $180-.
MR. HOLMES: Is there a limit on that?
MR. SERNA: No, sir, there's not.
The other thing to kind of note about these divisions is --
MS. DELISI: Hold on. The limit is the appropriation by the legislature. It's not like they continually get to draw out of Fund 6, it's what the legislature appropriates to them. So the legislature would have to agree to some massive increase out of Fund 6 to the agency going forward.
MR. UNDERWOOD: But my fear is the legislature says okay, you've got a billion dollars to work with, and by the way, we're going to take $250 million of that billion dollars and then put it over here to DMV.
MS. DELISI: Yes, and we already deal with that and we spend a lot of time dealing with that.
MR. UNDERWOOD: Exactly.
MS. DELISI: Which will be, I'm sure, talked about in James's presentation. But yes, there is a check, but we have to remain constantly vigilant on that check.
MR. UNDERWOOD: Exactly. But my fear is, Chair, that they tell us we're taking this division out because we want you to concentrate on building roads, and by the way, we're going to take the money that you need to build the roads and put it over here. That's the frustration that I'm feeling.
MS. DELISI: Right.
MR. UNDERWOOD: We want you to go out and save these people, and by the way, we're not going to give you the medicine and tools you need. Thank you.
MR. SERNA: One thing along that same line, part of our discussions, the transition team's discussion -- and we've got James Bass's staff, the Finance Division involved -- is to clearly identify the amount of money that's necessary to operate the department and not set up a Taj Mahal, at the same time, not short that organization.
It's kind of key for us, and one of the things that we kind of keep in the back of our mind is these divisions that are being transferred out are TxDOT's revenue-generating divisions. Vehicle Titles and Registrations generates approximately $4 billion a year to the state and local budgets, Motor Vehicle Division operates in the black, generating money that goes into General Revenue. Motor Carrier Division operates in the black, generating money that goes into General Revenue and Fund 6. Automobile Burglary and Theft Prevention has a fund dedicated to support its operations and it's now funded from General Revenue but it has a source of funds, $1 on every insurance policy dedicated to support its source of operations.
So as we move forward, establishing the transition plan and the memorandum of understanding, while we will attempt to be as frugal as possible, we also don't want to sort of short our revenue-generating; because they will continue to generate revenue for the department, we don't want to short our revenue-generating operations, just as we didn't want to short them when they were here in the department.
MR. UNDERWOOD: I understand that, Ed, but my fear is, like you said, the Taj Mahal, that you build so much infrastructure that you suck up a lot of that money that you're generating.
MR. SERNA: Yes, sir, I understand. And right now when I look at the numbers that are allocated, both the financial numbers as well as the FTEs, that infrastructure is pretty tight. I mean, 75 FTEs to support an operation, 75 support FTEs, and that includes accounting, HR, IT and right now, of that 75 approximately 33 are existing employees that support the Vehicle Titles and Registration existing system, so clearly half are already going to a dedicated purpose.
MR. UNDERWOOD: I understand, sir, but the most fun is going to be four years from now when we look at the payroll and see is there an error on it after another legislative session.
MS. DELISI: In the bill was there a Sunset date set up for this new agency?
MR. SERNA: Yes, ma'am, there is a sunset date. I want to say that they received a ten-year Sunset.
Again, working on the interagency contract, our goal is to have everything done and ready to present to both the new DMV board as well as the governor, lieutenant governor and speaker, and the two chairs and this commission by our deadline.
Any other questions or comments?
MR. SERNA: Thank you very much for your time.
MR. SAENZ: Ed, thank you. I know that you've been working real close with this thing and appreciate all you're doing on it.
MR. BASS: Good afternoon. For the record, I'm James Bass, chief financial officer at TxDOT. My discussions today I'm going to talk about our recent legislative appropriations, the impact to some of our department bond programs, and then other issues that affect the financial outlook for the department.
To start off with the legislative appropriations and start off with some of the structure, looking at some of the transparency in the operations of the department, there were changes made to the budget structure of TxDOT and we believe it will make it more transparent and easier for people to follow. An example of that would be just simply looking at our budget for contractor payments for construction. If we look at the current biennium for 2008-2009, all of the payments, whether that was for a preexisting contract or for a new awarded one, was in the same strategy. The debt service associated with projects that may have been delivered two or three years ago was included in that one strategy. Money that was coming from the receipt of funds from State Highway 121 and could only be utilized in the Dallas area, that was all in one bucket.
As we move into 2010-2011 it's broken those into different pieces, and so debt service has been pulled out of construction and put into a different line item. Projects to be funded by the 121 funds or from State Highway 130 have been pulled out into a separate account, a separate strategy because those aren't available for statewide purposes. And then there's been a split between payments anticipated for already awarded projects and then the funding that would be available for newly awarded projects as we go into the biennium. And so we think and hope that will make it easier for the casual observer to follow and be able to see where a great deal of our funding goes and how it's being utilized.
The second big issue I bring up -- and it's been touched upon earlier today -- is the issue of diversions, and I see the white screen is very white, and so I don't know if I can use Elmo right now or not, but I believe in your packet, hopefully, that you've had provided to you there's an analysis that shows where we are in the, quote/unquote, diversion of state highway funds. And there was significant movement on that issue, in that the appropriation of State Highway funds to other agencies and/or programs other than highway programs within TxDOT was reduced. Overall it was reduced in the neighborhood of $365 million for the two-year period.
The major portions of those reductions is that the Texas Education Agency no longer receives $100 million for school bus operations, the Health and Human Services Commission no longer receives that $74 million or so for the medical transportation program. There are some reductions even within TxDOT's budget that dealt with auto theft prevention you heard about earlier, it has that $1 fee that goes into General Revenue. For the past four or five years, that had been funded out of Fund 6. Going into 2010 it will be moved back to General Revenue, making those Fund 6 dollars available for kind of some of the core programs. And then in addition, the department of Public Safety, the appropriations to DPS out of the State Highway Fund were reduced by just over $100 million for the biennium, for that two-year period.
The $365 million figure will sound familiar to some of you in that when we looked at Proposition 14 -- and I'll get into Prop 14 a little bit later in our discussion -- Prop 14 has a statutory cap of $6 billion, we have already issued $3.1-, so there was a remaining question of moving forward with that remaining $2.9 billion. The debt service projected and requested for 2010-2011 for that $2.9 billion was $365 million.
Diversions were indeed reduced by $365 million but not all of that was made available to the department. If you look a little bit farther at the uses of reduced diversions, it basically breaks it out into $290 million and $75 million. How on earth do I know where that money went? The reason I know or I hold this viewpoint is because the diversions happened in multiple steps throughout the process. In the introduced bill early in the process, late January/early February, diversions were reduced $290 million. I've assumed that that $290 million became available to the department to pay for debt service, and then in addition to that, we had $15 million of General Revenue.
Very late in the process, the last week or so of the budget process, additional diversions were reduced, but when those other diversions were reduced, there was no increase to TxDOT's budget, so I think it's safe to assume that we didn't get that $75 million. Where that $75 million went was to offset an over-appropriation of Fund 6. What happens at the beginning of each session, same as what happens with General Revenue, the Comptroller's Office does a revenue estimate for the State Highway Fund and shows what revenue is expected to come in for 2010-2011. Late in the budgeting process, the appropriations bill had more money coming out of the State Highway Fund than what was projected to go into it. There in that last week they worked to reconcile those two figures and one of the pieces to do that was this reduction of $75 million to other agencies, so again, I don't think that $75 million is available to TxDOT to pay debt service. And again, we'll probably talk about this a little bit more later in the discussion when we focus on Prop 14.
The other issue somewhat related is appropriation of General Revenue funds to TxDOT. For 2008-2009 we had just over $300 million, $307-, and $300 million of that was for debt service on Prop 14. As we sit here today, we have $65 million of General Revenue appropriated to TxDOT with another $100 million waiting in the wings, if you will, associated with debt service on the Proposition 12 bonds that was contingent and we await to see what may happen on a called session.
Continuing on with the discussion, I would point out in the General Revenue appropriation there, of that $65 million we have the switch of the Auto Theft Prevention Authority moving back to GR and that's roughly $32 million a year, so it's about half of that $65-. In addition, for really the first time I can recall, we received appropriation from General Revenue for some rail functions. Included in that $65 million there's $3 million in there for track improvements to the South Orient Rail and there's another $8.7- for development work, feasibility studies, environmental on the Austin-San Antonio Corridor. It did not include any additional funding for an expanded rail division or rail functions within the department.
Next if we look at just a comparison of the TxDOT biennial budget, and I'll point out here, because you can add numbers or look at them multiple different ways. I believe from an appropriators' standpoint -- and it doesn't show up on this chart, I apologize, for 2010-2011 -- but if you looked at what was in the bill, what they expected to be in the bill with Proposition 12 and stimulus money, the grand total I think they had in their mind for TxDOT was $18.7 billion for 2010-2011, and what we had in 2008-2009 was $18.1-.
Now when you start to peel away the layers of that and say what's that money going for, what's it going to be used to deliver, if we look at Article 7 which is kind of our home in the Appropriations Act -- and I've backed out the Prop 12 since it was contingent and hadn't passed -- that's where we come up with the roughly $17-1/2 billion in 2008-2009 and the roughly $15 billion in 2010-2011, so we're $2-1/2 billion off there. Well, then you look at what is that $15 billion going towards: is that going all for project and program delivery on a statewide basis? And the answer is no. Much of that $15 billion, you see that first line there, over a billion of it is only available in the Dallas area because it's being funded by the 121 toll revenue. There's another smaller piece, $7 million that's coming from State Highway 130, Colonia road bonds. And the point is on those top three is those are not available for statewide programs, they're very geographically centered in certain areas.
The bottom three, debt service for Prop 14 and for the Mobility Fund, much needed that's part of the bottom line total, but they're not being used to deliver any additional programs or projects this biennium, it's just a cost of doing business and projects we delivered earlier. So if we kind of back those out to try and get at, well, what do you have available to deliver new stuff today, that's where we get the $15.3- compared to $12.3- so we're roughly $3 billion less than where we were.
Obviously another part of the equation is we have federal stimulus dollars too, and the reason I've pulled them out here separately is because they're in a separate article in the Appropriations Act, and you see there that in 2010-2011 we expect to spend, on a cash basis, roughly $1.6 billion from stimulus dollars which is a large increase from the current biennium, and then the two large contingent pieces of Proposition 12, both the proceeds and then the $100 million for debt service, and once we bring those all in, we roughly the same, actually $100 million ahead. So the point of this is that we would, I guess, as envisioned, the appropriations bill would have kind of kept us moving forward on a somewhat level basis, but that was depending upon federal stimulus program and Prop 12, generally speaking, kind of one-time funding sources to help us kind of hold the line on our overall budget.
MR. UNDERWOOD: Let me ask a quick question on this. Basically what you're saying is there's really no change in the next two years as to how much money we have available. The legislature, in their infinite wisdom, felt like they added $2-1/2 billion to us but actually we really didn't have it because we were already committed on the back side.
MR. BASS: Your first statement that we're about the same, I would say that's true but it also assumes that the unresolved issue of $2 billion of Proposition 12 gets resolved.
MR. MEADOWS: And how it's utilized.
MR. UNDERWOOD: Right.
MR. BASS: And how it's utilized.
The other question, what I would say is we've had some beneficial programs provided by the legislature, whether that be the Texas Mobility Fund and/or Prop 14 over time that have been kind of utilized -- and again, we'll talk later about Prop 14 and how much additional we want to move forward with. Whereas, the Mobility Fund has been committed and those projects are wrapping up, I think the Proposition 12 was kind of coming in to replace or take the part in our building blocks of the Mobility Fund going forward. Unfortunately, that's currently unresolved.
MR. UNDERWOOD: But I guess what I'm getting at is we've got about a billion dollars of, quote, Mobility Fund that's regionally allocated that we really can't use all over the state, basically, 121 and 130.
MR. BASS: Correct. The reason I was hesitating when you said Mobility Fund, I was wanting to make sure we weren't talking Texas Mobility Fund.
MR. UNDERWOOD: Correct. So that is really region-specific.
MR. BASS: Right. And again going back to my kind of initial comments on the budget structure, those 121 dollars which used to be commingled with everything else that was available statewide, in the TxDOT budget they've now been pulled out and are on a separate line item which I think then when you look at the construction line, you can see what's truly available for the statewide delivery, and then 121 is separated out, so I think that's going to be beneficial as we go forward.
MR. UNDERWOOD: Thank you.
MR. BASS: Briefly, there were a number of riders that impacted the department, and in your packet there's a listing of the differences. I'm not going to go through all of those but I would call your attention to a couple of them -- or a few of them, I should say. The Sunset contingency rider which is TxDOT Rider 53, it's on page 8 of Exhibit C, what it basically says is in 2010, in addition to our normal -- well, our 2010 appropriations could be used to wind down the operations if we find ourselves in that position, and that the 2011 appropriations are contingent upon extension of the department.
And so another contingency rider -- and I apologize, these aren't in numeric order but I tried to group them together what at the time seemed logically -- on page 12 of your Exhibit C, there's a TxDOT Rider 60 and it is the contingency rider for Senate Bill 263 which was the Proposition 12 and Senate Bill 1350 which was the revolver. And there's lots of moving parts and pieces to that. Of course, none of it's been enacted right now, but to tell you where the legislature was at at that point, they were going to appropriate $2 billion to be spent over the next two years. One billion of that was for deposit into the transportation revolver, and it said, If Prop 12 passes and the revolver doesn't, then you can put the billion into the State Infrastructure Bank, so a billion was going to go to some type of revolving program.
Then it said there's another billion that can be used to payout, make payouts on contracts, $150- of that can go for engineering and right of way -- I think it was $90 million for right of way and $60 million for engineering -- and then another $850- to make progress payments on projects, but the legislature in that language says we understand and we're comfortable with you committing and awarding $1.85 billion of projects, knowing that you're only going to pay $850- out in 2010-2011, and when you come back in 2012-2013, you're going to ask for additional Prop 12 bond proceeds to complete those projects. Because as we award projects, as you will recall, it generally takes, on average, three or four years for those to pay out. And again, in there was $100 million of debt service for general revenue and that $100 million is available in 2011. And so many people thought, and the way that rider was initially worded, we didn't have access to any of the Prop 12 proceeds until 2011.
Through discussions throughout the process, we were able to talk with the appropriators and then the final version allowed us access to some of those Prop 12 proceeds in 2010, knowing that if we waited and started awarding some of those projects and had the bond proceeds in 2010, since we pay our debt service only twice a year, we could schedule around those dates in 2010 so we would have no debt service in 2010 and still be able to have everything fit within the $100 million of GR in 2011. So as passed, we would have been coming to the commission and asking to move forward on some level of projects to be awarded and be funded by Proposition 12 starting probably as early as February of 2010 to start awarding and committing those projects as we go forward.
Another one I'd call your attention to is TxDOT Rider 55 which is on page 9 of your exhibit, and it makes our appropriations contingent and it's contingent upon a number of reporting requirements, some more burdensome than others. One of the things -- just an update, as you heard earlier from Mr. Simmons, an update on the status of implementing some of the Sunset Advisory Committee recommendations.
The other part is that we will, before each fiscal year, provide to the LBB and governor a detailed plan for the use of these funds -- which is Prop 12 and State Highway Fund -- and how we're going to use and each construction projects enhancement of the state's economy, traffic, safety and connectivity, a detailed account of the level of traffic congestion. And you can see there that a number of projects, that is a lot of data to gather together and get submitted.
We will certainly do that, but we have to have the LBB and the Governor's Office approval prior to being able to use any of those funds. So even though the money has been appropriated, there's an additional reporting, another test, if you will, for us to pass in order for us to truly get access to those funds.
Along those same lines, on page 10 of your packet, TxDOT Rider 56 refers to posting on our website the top 100 most congested road segments on the website with a plan as to how we're going to address that and then quarterly updates on those mitigation plans. And Mr. Barton has already begun discussions with the Texas Transportation Institute on how best to identify those 100 and get those top 100 congested points posted on our website prior to September 1 so we can get access to the funds that have been appropriated.
On page 17 -- and Mr. Serna spoke about this earlier -- this is where the Department of Motor Vehicles contingency rider comes in and attempts, at least, to answer some of the questions you had earlier. Again, it's page 17 and it's Article 9, Section 17.30. And one thing I'll point out -- again, a technicality hopefully -- at this point, this reads that TxDOT would transfer its appropriations to the DMV, yet our appropriation is contingent upon something that hasn't happened yet, so in 2011 it appears that the DMV may currently have not appropriation until we ourselves get extended to then allow us to transfer those funds to them.
The numbers in there -- and Mr. Serna spoke about there's four different groups of the department or divisions that are being transferred over -- from an appropriation standpoint and from a legislature standpoint, part of your earlier discussion that the legislature would control how much Fund 6 goes to these functions. In the budget it's three strategies in their entirety that are moving, so how much money is moving to the DMV for those direct programs? In my mind, it's fairly simply, we look at those three lines items in the appropriations bill and say this is what the legislature appropriated for those functions, it's just going to move from A to B.
Those direct functions, although the rider here has a number of $103.7 million per year, the number that's in the budget is closer to $140 million per year. Now, that $140- includes the $15- to $16 per year from General Revenue for auto theft prevention, so it would be roughly $125 million per year from the State Highway Fund.
Now, in addition to that there are the support functions of human resources, accounting, purchasing and all the other things that go along with that, that as of right now, those are all kind of blended together as one TxDOT. So the rider and the working group transition team is working on identifying how much of those indirect support, HR, accounting, needs to be unplugged from TxDOT and plugged into the new DMV and that will help finalize the numbers of both FTEs and dollar amounts that eventually get transferred over to the DMV.
Jumping all the way back to page 1, there's a Rider Number 3 that deals with the flexibility and authority of the department to transfer dollars between different appropriation items, and we have always kind of referred to all of our different budgets and strategies as being either inside the box or outside the box, and that used to make a difference as to what we could do. Inside the box was the big money, right of way, contracted construction, contracted engineering, contracted maintenance, and we had limited flexibility on how we could transfer dollars inside the box. We couldn't take money inside and move it out.
However, outside the box we had, relatively speaking, pretty good flexibility and it allowed districts and divisions, if they were under running -- say, in the engineering department they had salary funds that were going to be unspent because of their vacancies, they were allowed to transfer those over to the routine maintenance area and acquire more roadway materials to put those to use. We were able to make that transfer and we had an internal department process that we went through that and worked with Mr. Simmons to approve transfers such as that.
In 2010-2011, even that operational transfer that I just described cannot happen without the approval of the Legislative Budget Board, and so these somewhat routine operational transfers that the department has been utilizing in years past will have an additional step that will need to go through the LBB in order to get those approved.
Just a couple more riders. One of them is on page 6, TxDOT Rider 31, and this is the one that deals with the Parks and Wildlife Department and the amount of funding in the MOU the department has with them. Focusing just on Parks and Wildlife, you will recall that in the current 2008-2009 the rider says no more than $5 million each fiscal year to construct and maintain park roads. In our appropriation request we had asked for that to be amended to no more than $15 million per year. What passed in the final bill was $10 million per year.
In addition to making that change for Parks and Wildlife, you can see some of the subparagraphs went away. The department being responsible for construction and maintaining and repairing roads to Camp Mabry -- which is here in the Austin area -- that has been removed, as well as money going to UT Permian Basin has been removed. But I wanted to point out the Parks and Wildlife since there had been interest in that during the request stage.
Now, the last rider, and it's been much discussed in the press -- Mr. Russell, I think, spoke about it earlier -- it's an allocation for a Rail Relocation and Improvement Fund, and you can find that on page 16 of your Exhibit C. And it does talk about and discusses $91 million each year being moved and transferred from the State Highway Fund over to the Rail Relocation and Improvement Fund for a total of $182 million. However, what seems to be missed in some of the articles that I've read is the first part of that subparagraph B in there that says before this money can be moved over, there's a financial test that must be met and the comptroller must say that this test has been met.
The test looks at three different areas and the total of those three areas must equal at least $182 million. The three areas are the net impact of any enacted legislation from the 81st Legislature that would impact the non-dedicated portion of Fund 6, as a gain, any reduction in appropriations made from the Highway Fund to agencies other than TxDOT, and then as a loss, any reduction in GR made to TxDOT. After going through all of that, we're somewhere in the neighborhood today, the way we see the math and doing a strict reading, of in the neighborhood of $40 million. The test must be at least $182-, current calculation is in the neighborhood of $40-.
If $100 million at some point gets appropriated to us out of General Revenue for Prop 12 debt service, that would obviously move us up to $140-, a big jump but still below the $182-. So as we read the rider currently, we do not think the test has been met, so therefore, we do not think there will be any transfer of $91 million from the State Highway Fund over to the Rail Relocation and Improvement Fund -- even though media reports may have led you to believe otherwise.
A couple of things I'll point out on our capital budget. You recall from some of our earlier discussions, working with the Comptroller's Office on an enterprise resource planning project, an ERP project, we were appropriated $26 million to move forward on that project to update our automation systems. The Comptroller's Office will serve as the statewide manager for that, and we, along with the Health and Human Service agencies, Department of Insurance and a couple of other agencies will work under the guidance and direction of the Comptroller's Office to implement this ERP project.
As we've talked before, we believe or have a concern that a lot of our automation needs may fall outside of the scope of this kind of statewide ERP system, whether that's our planning system where we work with the MPOs, whether or not that will be able to be fully integrated under the project managed by the Comptroller's Office or if it will have to be a separate initiative is uncertain at this point, and we refer to that as our management information systems, the MIS updates. We received $26 million in appropriation for that MIS update. So we think we are well-positioned over the next two years to make a lot of progress on updating the automated information systems within the department and hopefully be able to expand those out to additional use by some of our partners, primarily the MPOs.
Next I was going to move on to some of our department bond programs and where we're at on that. Obviously, Proposition 12, spoke about the general obligation bonds, the appropriation of that was contingent upon legislation that did not pass. I told you where those proceeds were going to be directed. Proposition 14, we spoke about earlier and that the debt service of $365 million had been requested for the full $2.9 billion remaining in bond issuance, however, I can't tell you that all $365- of that has been made available to TxDOT, it's probably more in the neighborhood of $305-.
The other issue, because of the timing and limitations on how we can issue that debt, was that in 2010-2011 that debt service was going to be $365 million but in 2012-2013 it would grow to $480 million for the two-year period. So where the department currently finds itself is that the commission has gone through and selected more than $1.5 billion, selected a number of projects with the assumption that $2.9 billion was going to be available. I guess the department is wanting to kind of check the commission staff and make sure if we're supposed to continue to move forward with the expectation and build our program around issuing the additional $2.9 billion or something less that would be able to be funded by roughly $300 million over the biennium and assuming that would go forward.
If we assume there's $305 million and that's going to continue into future biennia, that would pay the debt service on the neighborhood of $1.5- to $1.8 billion out of the $2.9-. And so at some point department staff is hoping to get clear direction from the commission to either stay on the same path, continue with that $2.9-, or we need to scale it back to some lower number that would be able to fit within the $300- or $305 million available. Don't know if that needs to be today or if anyone wants to comment on that.
MR. UNDERWOOD: I'll make a comment on that, James. These are commitments we made throughout the state. Isn't that correct?
MR. BASS: Yes, sir.
MR. UNDERWOOD: And now the money is not there.
MR. BASS: Yes.
MR. UNDERWOOD: Well, the money could be there.
MR. BASS: The money could be there and the way that we would -- the background, as I understand it, the commission had been hesitant to move forward with the full $2.9- because looking out into the future, in order to free up future Fund 6 dollars to pay the debt service on that additional $2.9- was likely going to mean reducing allocation of future dollars for maintenance and other high priority department programs. So the commission had hoped that through other mechanisms -- reduced diversions, primarily, and/or additional appropriations to GR, to TxDOT -- that debt service on the additional $2.9 billion would be funded without harming or reducing other TxDOT programs.
Where we're at right now, if we go forward with the full $2.9 billion, we will have to reduce other TxDOT programs in order to free up enough money to make the debt service payments.
MR. UNDERWOOD: Not initially, you're saying down the line maybe a year or two years from now.
MR. BASS: A year or two years from now. I think we'd be okay in 2010, even within this current biennium, 2011, we would have to make some, and then depending upon what a future legislature might do for 2012-2013, there might have to be additional -- well, there likely would have to be additional movement one way or the other, but I can't say what.
MR. UNDERWOOD: But basically, there are some people out there, there are instances where there are projects that have been started that now will have to be stopped if we don't honor some of these commitments. Isn't that correct?
MR. BASS: I don't know that the projects have been started. One of the things that happened was the commission allocated project-specific, the $2.9 billion, some of it went to right of way, some of it went to engineering, some of it was project-specific, these projects are going to be awarded, they're going to move to construction and this is how they're going to be funded.
What happened when this situation became apparent to us, we were not comfortable continuing to award those projects as they became ready. What I mean by that is not knowing if the commission might say: You know what, we're more comfortable stopping at $1.5 billion so which projects can we move forward with out of this $2.9-. Oh, well, we've already let all the $1.5-. Well, were those the highest priority projects? No, they were the ones that were ready first.
So we didn't want to find ourselves in that position and so what we've done on Prop 14 for the time-being, those projects that were scheduled to be awarded over the next two or three months, we have not put those on the letting schedule until we've gotten clear direction either to continue the path we're on or to go forward. Any project that has been awarded, we believe that we'll move forward. But I think we're saying the same thing, just differently: there are projects that people thought were going to be awarded in June, for example, that were going to be funded by Prop 14 and they are not on the June schedule.
MR. UNDERWOOD: My point of this is that you're building a bridge and you've got four different parts to it and you've got three projects and they're about to bid the fourth project and now you've stopped. You make it sound like a project is, okay, I'm going to build a house and that's my project. Actually, you've built a bedroom, you didn't finish the house.
MR. BASS: Right, and out of a network -- I think we would complete a bridge, but on a network of roads in an area that would provide full interconnectivity, there are last pieces, missing pieces that were scheduled to be funded by Prop 14, they still could be, but we didn't want to make that decision.
MR. UNDERWOOD: I understand, but you've held off for the fact that basically if we do this, we're going to actually run out of money sometime in 2011.
MR. BASS: Correct. We didn't want to move forward with kind of a blind assumption that the commission was still comfortable going forward with $2.9 billion to then find out later that no, we want to do something less than that. And if we had just kind of continued to award projects as they became ready, in effect, we're making priority decisions if the commission wanted to lower that dollar amount. That is a decision that the commission should make.
MR. UNDERWOOD: I understand, but basically we're building the house and we've decided, okay, we still have got these other rooms, but don't worry, we're not going to build the bathroom or the kitchen but you can enjoy sleeping here.
MR. BASS: Correct, there are some situations that that last piece of a network --
MR. UNDERWOOD: Which would be critical to the use of that home.
MR. BASS: Yes.
MR. UNDERWOOD: Okay, thank you.
MR. HOLMES: James, the $2.9 billion was based on the amount of available Prop 14 bonds left to issue, and encouragement by leadership to go forward. Right?
MR. BASS: Yes, sir.
MR. HOLMES: And you said there's enough money to pay debt service, assuming we issue a portion of those bonds in '10 but we'd be a bit short in '11. Is that what I understood you to say?
MR. BASS: Correct. Out of the needed $365-, I believe we have about $305- that's been provided from outside the department.
MR. HOLMES: And so couldn't we pace the issuance of those bonds to where we still issued all $2.9- but stayed within the $305 million available for debt service?
MR. BASS: Yes, very similar to how we would structure around the $100 million for the Prop 12, we could structure around the $305- but we wanted to make sure the commission would then know you said this was going to be covered one way, we asked for $365-, we got $305-, and in 2012-2013, once we've awarded it, there's no way to structure around the $480-.
MR. HOLMES: But we don't know what's going to be appropriated in 2012-2013 anyway.
MS. DELISI: Right.
MR. BASS: Correct.
MR. HOLMES: And so we've been encouraged to go forward, we have developed project lists, we have talked publicly about the project list, and we don't know whether we're going to have $305- or $425- or $150-.
MR. BASS: Exactly. I think the point is that department staff -- I, for one, and others -- were uncomfortable continuing on that path without updating the commission on what happened, and then making sure that all were aware that in 2012-2013 this is going to go up, and yes, we can structure around 2010-2011, there's not a whole lot we can do in 2012-2013 once the debt is out there.
MS. DELISI: And I think it's important to note that, number one, I think we went above and beyond on the agency level, talking to the budget writers and leadership about what the situation was, they knew full well, and they know full well what the situation is going forward, and at the end of the day, I guess my position -- I'll just lay it out there -- is I think we should go forward, I think we should structure around it. Because at the end of the day, we have no authority to write our own budget -- I wish we did but we don't -- but the legislature gives us the tools, they give us the tools with eyes wide open and we should use them, it's our charge as a commission, and then ultimately it's up to the legislature to fund those programs -- as long as we are constantly and consistently giving the legislature the best information about where we see what the ultimate long term impact of this is going to be.
MR. UNDERWOOD: What you're saying is that we've made these commitments to the communities, to follow through with those commitments even though we might not have been helped on the back side by the legislature.
MS. DELISI: Right. We made a commitment based off a commitment that wasn't 100 percent met, but that doesn't change the fact that the legislature originally gave us the Prop 14 and then extended it -- I guess it's technically two sessions ago now -- they recognized that we don't have enough money to fund its debt service and everything else, and they are comfortable with us going forward nonetheless. And that's the message that has been delivered.
MR. UNDERWOOD: I agree with you. We've given a message to these communities that we're going to do this. The fact that we're going to have to start moving money around at the tail end if we don't get help from the legislature is another story.
MS. DELISI: Right.
MR. UNDERWOOD: Thank you.
MR. BASS: Message received, we got it. Wayne, if you're listening, we can add projects to June and July.
Texas Mobility Fund bonds, we've spoken in the past of earlier revenue projections and we've gone to the Bond Review Board and others and we've received approval to issue $6.4 billion of Texas Mobility Fund bonds. We've started work of $6.4 billion of Texas Mobility Fund bonds, but we only issued the bonds on a cash flow basis as we needed so we had issued roughly $5.1-, leaving $1.3- to final out those projects.
What we find ourselves in because of the downturn in the overall economy, when the Comptroller's Office came out with updated revenue projections, they were lower than what they had been 18 months ago, such that this new revenue stream may not support that full $6.4 billion. So what we're doing internally is going to all the districts who have projects out there, and whether it's engineering or it's right of way, making sure that our obligations in our system are cleaned up and true. So if a project is finished out but it's still showing it's got $10 million of obligation remaining on the project, we're visiting with the district so we can kind of take that obligation off.
So we started at $6.4 billion of work, we're just trying to see how much we can lower that because we've gone through a couple of years and get updated estimates on that. We're getting an updated revenue estimate from the Comptroller's Office to try and see if we can't shrink or completely eliminate the delta between the amount of work we've started and what the new revenue forecast can project.
We may be in the neighborhood of $200 million short -- not saying we will be, hopefully it will all go away and it will be solved, but it could be $200 million short, and what that would mean is we have these active existing projects that we were going to fund with bond proceeds, now we can't get access to all of those bond proceeds, we would need to find some other revenue, some other cash to redirect to those projects to finish them out. And don't have a definitive dollar amount, we're continuing to work with the districts and awaiting a final formal revenue projection from the Comptroller's Office, but we're hopeful we'll be able to close that gap completely but just wanted to make sure that the commission was aware of that possibility.
Moving on to some of the other issues affecting the department -- and I apologize, this next one is not in your packet -- but we talk each month on our gas tax receipts, and if you look, not surprising, the trend has not really changed too much. I took off some of the other years but these are net deposits to the State Highway Fund, and for September through June, we're 2.6 percent lower than where we were at the same time a year ago. We had been projecting in part of our cash flow model that we were going to be 1-1/2 percent ahead of where we were, we're now 2.6 behind.
As part of that, that kind of feeds into our commercial paper program, that's our short term borrowing program to help us manage cash flow, we currently have the ability to have $500 million on our TxDOT VISA card, well, we now have $264 million outstanding. That was 346 weeks ago so it's coming down. An issue I wanted to highlight with that $246-, with a total of $500- available, and it was mentioned earlier that we're seeing projections of the Federal Highway Trust Fund running short of cash flow such that when states send in their invoices to get reimbursed from the Federal Highway Department, they may not be able to pay those dollar for dollar, they may have to get in a position of only paying us 50 cents on the dollar.
For those of you following along, we were here twelve months ago and what happened, we went into that point, the feds were going to potentially be delayed on reimbursing us, we utilized this short term borrowing program to carry us through that point until Congress moved $8 billion over last year to infuse and carry forward the Federal Highway Trust Fund. Our expectation is we may have to do that again here in the next couple of months because of the situation with the Federal Highway Trust Fund in that remaining capacity is not as large, obviously, as we would like it to be.
So working to move that down, we're not quite there, and it's just to really bring your attention to how much we have outstanding and that we may be utilizing that more in just the next couple of months to help deal with and address any issues we may have on the federal side.
MR. MEADOWS: The stimulus program is a reimbursable program as well, but that's not affected.
MR. BASS: Correct. That's outside of the Federal Highway Trust Fund so it's not affected by this.
One other thing -- this is just a general aside -- in order to do this program, we have to have a letter of credit with a bank behind us, and that's getting ready to come up for renewal in August. The current charge that we pay for that is 7-3/4 basis points, so less than 1 percent -- 7-3/4 ten thousandths. The market now -- because when we signed that it was a few years ago -- the market now for that same service is 110 to 120, so it's going to be more expensive to have this safety net program as we go forward, but it's been invaluable for, as I mentioned one case, the Federal Highway Trust Fund, and then also the uncertainty of even our own gas tax revenues.
MR. UNDERWOOD: Question, James. What you're saying bottom line is we need to increase the line on our credit card. Here's my point: how do you do that when you go out of existence September 1 anyway?
MR. BASS: Well, one of the issues is this renewal in August that we would need to renew, you're exactly correct, absent something changing between now and then, we would only be able to extend for twelve months, and whether or not that would be the best pricing or not --
MR. UNDERWOOD: You're saying they'll give you an extension when we go out of existence September 1? I don't think so.
MR. BASS: We go out of existence September 1 but we have twelve months to wind down our operations.
MR. UNDERWOOD: That's just to move operations somewhere else.
MR. BASS: And part of the winding down the operations would likely be paying off this commercial paper. And so we think, after visiting, that given the current condition, we could only enter into an agreement to extend this twelve months. We may want to only do it twelve months because of the current pricing, we may want to do it longer because we might look at it and go, you know, prices might be worse twelve months from now, we're not sure, but that definitely will be a limitation, given the current situation, current condition, if left unchanged when we go to extend this contract.
MR. UNDERWOOD: But even then, say in the case of the legislature, they extend the Sunset for two years, that in itself, I would think, as a lending institution might look at it a little nervous.
MR. BASS: Right.
MR. UNDERWOOD: That would justify a higher interest rate because you don't know whether or not that organization is going to be in existence.
MR. BASS: Correct. It's another story, another thing to tell the market, and if somebody has got to explain themself to me for five minutes and somebody else needs no explanation, the market may be more comfortable with the more explanation or charge you for that five minutes.
The last item I had was projected letting by our method of finance, and this should be the last page of the packet you had, Exhibit D. I think from our earlier conversation I can ignore the top part of that page which was an assumed -- it looks something like this -- so we can, I think, ignore the top part of the page which was an assumed $1.5 billion of Prop 14 and now here's $2.9 of Prop 14 and it goes through by revenue source.
And so if you look at it, we can see where we're at in 2008-2009, and then it shows where we currently project 2010-2011 would be on a statewide basis and showing the different source of funds as we move forward. One thing I will point out is the impact in the allocation of obligation for the CDAs, the North Tarrant Expressway, the LBJ and the DFW Connector, are not reflected on this page. So for example, in 2009 the number you've heard me say over and over again was $2.53 billion from the State Highway Fund, on this page right here you see $1.945-. The difference between that $2.53- and the $1.945- is a charge for the CDAs that we've put against this obligation cap. Since those payments are going to happen on the CDAs over a five-year period, we've spread the charge for those three CDAs over 2009, 2010 and 2011, so those have already been addressed kind of off this page.
What that leaves for continuing regular letting and change orders is $1.6 billion from the State Highway Fund. As we've talked about the Texas Mobility Fund has already been fully utilized. With an additional $2.9 billion of Prop 14, depending upon the timing, we may finish out 2009 with $400 million coming from Prop 14 and then $1.6- in 2010. IF we can get some of those projects sooner, those projects may just slide from one column to the next. And then the stimulus dollars available you can see would be $4.3 billion in 2010, and that's what we currently have, again, statewide available. If you then jump to 2011 there's not a lot of Prop 14 left, not much change in the State Highway Fund, and we're done with stimulus, so we're down to $1.75-.
If Prop 12 -- and the reason it has an asterisk there is because of the contingent nature of those funds -- the $1.85-, this is just for planning purposes and assumptions because we have not gotten any direction on specific projects or type of projects the commission might want to move forward with, we just split that in half: $925- in 2010 and another $925- in 2011. So that would bring our statewide totals up to maybe $5.2 billion in 2010 but then drop back down to about $2.7- in 2011.
Just to show the full picture, these geographically specific funding sources, State Highway 121 and State Highway 130, are going to be doing additional projects as well but they're not statewide, so I wanted to include them in there because it's obviously something the department is working on and allocating resources to, but what might or might not be available statewide is really shown higher up on this chart.
The one thing to focus in a little bit on the $1.6 billion, if we look there in 2010, if you'll recall from our UTP discussions, some of the money has minimum -- some of our twelve categories have minimum allocations that must go to them, one of them being Category 11 which is district discretionary. There's a rider in the appropriations bill that says each district must get $2-1/2 million, so we know that category has got to be at least $62-1/2 million each year. So if we back that off and then we go, well, the feds give us money for congestion mitigation/air quality and STPMM that are generally minimums, we have money for bridges that are minimums, safety minimums, enhancement minimums, we start going through that and what we're left with we then try and balance between maintenance and mobility.
After we back out all of those minimums off the $1.6-, the minimums take up almost $1.1 billion of that $1.6- that you see there. That then leaves $500 million for maintenance, the Category 1 projects, which is far less than what we've had in recent years and far less than what's needed. And again, there would be no money from that funding source for Categories 2, 3 or 4, the mobility funding sources.
Now, the mobility projects and issues could be addressed through the Prop 14 or the stimulus dollars which they are to some extent, and even Prop 12, but from that kind of historic continuing funding source of Prop 14, there's not a whole lot of money in there for maintenance and there's no money in there for mobility projects, and the primary reason for 2010-2011, the money that was there for mobility projects has already been allocated to those NTE, LBJ and DFW Connector for 2009, 2010 and 2011. Those are using up all of the available funds in those years.
So this is a snapshot of what we currently see and what we think is going to be available as we go forward. That is the end of my prepared comments. I'm happy to take any questions or to turn it back over to Mr. Saenz at this point.
MR. SAENZ: Thank you, James.
Are there any questions, commissioners, on any of the items? This is the first of our workshops, we had stopped doing them because of the legislative session and so this one is a little bit longer and we're covering a lot of information, but we're going to continue to work on workshops.
So if there are no questions, we'll proceed to the next item. Item number 2 is a continuing update from Coby Chase on our federal legislation, so Coby.
MR. CHASE: Again for the record, my name is Coby Chase. I was requested to take some time to go over the status of major federal activities as they relate to the department's work. Let me make sure I gave my presentation to you this afternoon. Do each of you have this up there? Okay.
Here's what I'll cover: will there be another stimulus package that includes transportation; fiscal 2010 appropriations; rescissions; the solvency of the Highway Trust Fund; and the next surface transportation bill. And of course, please feel free to stop and ask me questions along the way.
First with the stimulus, will there be a second stimulus as it relates to transportation. It doesn't look like it. I think the thinking right now is guided by kind of three orbiting questions that follow that around. With the current stimulus, is the money being spent? They're actually trying to figure that out, but in Texas, I am happy to report, we're doing a great job, we're meeting all of our targets.
Was it effective? Everyone is still measuring and there is some concern on the side of states that we might be sliding into never-ending data requests but there's no need to hit the panic button on that yet. They're still trying to decide what's relevant, and we report what seems like almost hourly to the House Transportation Committee in D.C., but so far, so good, but that is still an open question.
And is it better to simply send checks directly to taxpayers in the future? That's actually guiding the discussion if there's going to be a second stimulus. Interesting but true. And infrastructure, it seems, isn't being seriously considered because of the pending surface transportation legislation and the idea is to address it there.
In terms of fiscal year 2010 appropriations, a drama played out a little earlier this year when the president proposed his budget. It has since been solved but that's how we started appropriations this time around. To recap, the administration's budget recognized the depletion of cash in the highway account of the trust fund, and as a placeholder, they proposed that $36 billion be made available in discretionary budget authority, not contract authority, which is a fundamental change in the budget structure. That would bring the total budget for highways to $41.5 billion which is the same level as fiscal 2009.
Sounds good but there is a landmine inside all of that that essentially eliminated contract authority. Taking that to a logical conclusion, it could result in the highway and transit programs becoming subject to the annual appropriations process. Also, if that were the case, fire walls and funding guarantees would likely be eliminated. You just don't build infrastructure that way. Fortunately, Congress has shown absolutely no appetite for doing this.
As of today, no action has occurred on the appropriations level in the House and the Senate, other than the House has scheduled the bill to be taken up in subcommittee on July 15, and full committee about a week later, and then on the House floor at the end of the month if they keep their schedule. It appears there is a consensus that there will be no rescission this time -- keep your fingers crossed -- and they may add in some general funds to cover the FY 2009 rescission. So again, keep your fingers crossed. As best we can tell, there appear to be no other curve balls but those are sometimes thrown in the dark and we don't see them coming.
It's important to note that all rescissions to this point that we've been talking about over the past few years have been in annual appropriations bills. The biggest rescission still looms later this year, and let me talk about that. There is another rescission due this year that was built into SAFETEA-LU. So far, through the appropriations process, the State of Texas has returned $1.2 billion in planning authority. Those were all surprises because they appeared in annual appropriations bills, though I have to admit we really don't find them so much surprising any longer, we're more surprised when they're not in there -- and let's hope we're pleasantly surprised this time.
Remember that we usually operate on a six-year authorization bill, and until recent history, the annual appropriations process generally validated that six-year plan financially, meaning there wasn't a huge disconnect between the authorizing legislation and what was appropriated. I painted that statement with very, very broad brush strokes. There are some variances in there but generally that's how it was.
In SAFETEA-LU there is a built-in rescission that is effective this year. Nationwide it totals about $14.5 billion, $1.2 billion of which will come off of the Texas planning books. And if you're wondering why there was a rescission built in at the end of the bill, this was the Don Young era, he wanted a ginormous SAFETEA-LU bill too and he couldn't get it, he couldn't get the gas tax raised, he couldn't get any more money put into it. Got a bridge to nowhere but other than that. And the thought was that making a rescission of such huge proportions at the end of the bill would cause Congress to raise gas taxes or find new money to put in there. That hasn't panned out yet and I don't think it's going to pan out by the end of this year.
The commission, working with Senator Watson, put together an MPO work group to advise the agency on rescissions when Congress didn't predetermine where the cuts would come from. The commission took action on their advice at the April meeting, that last $270 million rescission. This group will be called back together to advise the agency on the next round of rescissions when it's time to do that at the end of SAFETEA-LU.
Now moving on to the Highway Trust Fund, according to U.S. DOT, the trust fund is estimated to have insufficient cash by August of this year. To make good on prior commitments, and additional $5- to $7 billion will be needed to keep the fund solvent through the end of fiscal year 2009. In addition, the U.S. DOT has further estimated that an additional $8- to $10 billion will be needed to pay immediate cash needs if the overall program is to be maintained at current levels through the end of fiscal year 2010. So that's a $13- to $17 billion problem, and I'll talk about that a little more in this 18-month extension discussion.
It's an important matter but we're already familiar with the plot line: gas tax receipts aren't hitting their marks. Last year during an identical funding crisis, almost exactly a year ago, the Federal Highway Administration moved from daily reimbursements to states to weekly or biweekly reimbursements. That is how you slow down paying back states while you figure out how to fix the hole in the Highway Trust Fund. But eventually and quickly, if you don't fix it, you hit rock bottom and payments stopped. Last time TxDOT used short term borrowing to cover its obligations so that no project went unfunded, and much to James Bass's credit, we earned $25,000 doing it. We don't know how we did it but maybe we should do this more often -- maybe not, just kidding. But good job, James. I think James did mention in his presentation that we would have a hard time doing something similar like that based on our current cash flow.
It is anticipated that this will occur again sometime during the summer -- well, it's not anticipated, it will occur -- if Congress doesn't infuse the trust fund with cash before its August recess. Like every other state department of transportation, TxDOT is entering the height of construction season and will be working with the FHWA over the coming weeks to determine the prudent course of action to handle this shortfall should it occur. Mr. Saenz has alerted the Texas delegation and state legislative leadership that we will keep them current with all actions related to the shortfall.
Now building on all of that good news, let me move to the next surface transportation bill. I think we all know that House Transportation and Infrastructure Chairman James Oberstar and ranking member John Mica unveiled a bill of sorts last week and it forced two basic questions: what are the chances this year of it passing or anything passing; and more importantly, how will it be paid for.
The bill is 775 pages long right now and technically hasn't been introduced, but regardless, it is missing many critical elements. And today in the Highway Subcommittee of House Transportation, they are doing a markup of a bill that doesn't exist today, but Chairman Oberstar has asked please, no amendments. Okay, we'll see what happens at the end of the day. By the time they go to full committee, hopefully the bill will be introduced, will have a bill number and actually exist.
There are no dollar amounts -- like I said, it's missing many critical elements -- there are no dollar amounts of specific authorizations, no budget authority, no obligation ceilings, no apportionment formulas, no allocations, and no takedown percentages. It is filled with financial holes, but it doesn't say how anything will be paid for either. While it has been advertised as a $450 billion bill over six fiscal years, the taxes generated under current law will only support something about half that size. This is a similar story to six years ago but it's playing out again.
The bill has no earmarks right now, but as we all know, those are waiting in the wings. Though I think there is one in there we found, a set-aside for the America's Byways Resource Center in Duluth, Minnesota -- of all places. Don't know what it is but we know where it is.
While being a donor state won't be the sole defining characteristic of Texas this time, the bill doesn't address the equity issue yet because the formulas aren't filled in. There are other equally important things in the bill that we keep an eye on, these are things like program consolidation, performance-based measurements, intermodalism -- that is the ability to blend modes and resources for an outcome, and flexibility in funding.
Regarding program consolidation, it most certainly departs from today's 108 programs and it looks like the thinking was broadly based on the 1909 Commission's recommendations. It doesn't go quite as far as that commission recommended but it wades into it about waist, maybe chest deep. The draft released last week consolidates 108 programs found at the Federal Highway Administration, Transit Administration, Motor Carrier Safety Administration, Highway Traffic Safety Administration, and the Federal Rail Administration into ten programs. That sounds good.
However, when you look at it through the funding flexibility lens, it doesn't seem to quite get there. Although there is more flexibility to move money between highways and transit -- which already exists to a large degree -- the programs embedded in all those other agencies I mentioned are still held separate from the Federal Highway Administration and remain relatively unchanged. And kind of the litmus test -- at least in my mind -- for Texas is that means moving money into rail relocation is ineligible. That's kind of the first thing we look for when we talk about flexibility. Flexibility seems to be interpreted as it always has: moving it into transit.
In terms of performance-based measurements, the word performance is used quite a bit in the draft bill -- I think we counted 250 times, 249 times, to be precise -- and sets out some measurements and targets. For the freight program it measures speed and reliability; safety programs it's reducing crashes and fatalities; for maintenance it's a reduction in the number and square footage of deficient bridges and a reduction in lane miles related as fair or poor; and for the metropolitan mobility program it wants quantifiable reductions in the annual hours of delay and overall travel time. These are all good things. The bill is generally silent on what happens if targets aren't met, but at least they're acknowledging something needs to be measured.
The bill creates a new undersecretary of Transportation for intermodalism with the authority to run the Metropolitan Mobility and Access and the Projects of National Significance programs. That last one comes with $75 billion of funding for projects of national significance and the decisions are made by an intra-DOT council that gives the administrator of the St. Lawrence Seaway the same voting weight as the secretary of Transportation. I kind of suspect there will be some changes in that. It will be interesting to see if it survives; it's based on that 1909 Commission idea to have a group of people decide on projects of national significance around the country and fund them possibly through a national infrastructure bank. We'll see how long the entire thing survives, but it's not necessarily a bad idea, it's just going to be the devil in the details.
The bill also emphasizes transit and livability, and livability in this bill surrounds itself with words like sustainability and reducing greenhouse emissions. It also creates an Office of Livability -- which sounds like it should come with its own magazine -- within FHWA that would oversee the Enhancements Program, Safe Routes to School, Recreational Trails, the Scenic Byways Program, and a new U.S. Bicycle Route Program.
In terms of the transit emphasis -- and we need to pay attention here -- it raises the percentage of highway funds that goes to transit from 18.3 percent to 22.2 percent. The important thing in what I just said is that it comes from the Highway Trust Fund, that means straight out of roadways, and Texas, in my opinion, doesn't see a healthy rate of return in transit funding in the first place. This should be cause for concern, because you're taking dollars from a program, you're getting a substandard rate of return anyway and putting it into a program that unless something is changed, we'll get a worse rate of return. So we're going to have to keep an eye on that. It has nothing to do with liking or disliking buses, it has to do with where the money goes and how it comes out, and it will require further analysis. This might set us up to at least lose money on the mobility side.
The bill also restricts the use of private investment capital and concession-based public-private partnerships, approaches that many believe could be a partial source of new revenue, at least a very substantial one. It also establishes a new Office of Public Benefit inside the Federal Highway Administration to review and approve or reject state plans for toll roads and to oversee new federal requirements for public-private partnership agreements. First pass analysis indicates that this bill erects new barriers to discourage private investors from investing in the nation's infrastructure. That doesn't seem to bode well for those types of programs.
The draft that was introduced also ratchets up the percentage of surface transportation funds that bypass the state and go directly to metropolitan planning organizations. Right now, 62.5 percent of those funds go straight to MPOs, the House bill takes that up to 80 percent. And back to the question of how to pay for it, the House Ways and Means Committee will start that discussion on Thursday.
Let me be more precise about that. The legislation that was introduced, I would say in my characterization, reflects the leadership of the House Transportation Infrastructure Committee. There was never any sense that that bill was drafted in anyplace other than those offices. It does not reflect the administration, it does not reflect the U.S. Senate.
The last thing I will touch on is an 18-month extension recently proposed by the administration. While very short on details, U.S. DOT Secretary Ray LaHood announced last week that the White House would prefer to bailout the trust fund, make substantial but undefined policy changes, fund programs at current levels, and then create and bridge an 18-month gap by extending the time it takes to reauthorize the legislation.
This announcement took everyone outside of the administration by surprise, so the reasons have been left to speculation. They haven't mentioned what the policy changes would be but it was met with flat-out rejection by Chairman Oberstar, of course, embraced by Senate Environment and Public Works Chairman Barbara Boxer, and then met halfway, I believe, by the Senate Finance Committee.
My estimation is that the Administration and Congress have too many things on their collective plate and the breathing room will be welcomed by Congressional leadership. While I have no direct evidence this will be the case, I estimate that the 18-month extension of current programs with a bailout of the trust fund will be the two items that prevail. Yesterday, Secretary LaHood did say out loud that they bundled up bailing out the Highway Trust Fund which has a price tag between $13- and $17 billion and said they're looking at $20 billion in new money that they need -- this is a huge struggle to find $20 billion new dollars though you can find a trillion dollars for a stimulus program, this keeps them up at night -- and that will get you through this 18-month period.
My opinion, for what it's worth, probably right now is in the absence of anything dramatic go for the extension -- and that's simply my opinion -- because no one else has figured out how to pay for the large bill that's in front of us and possibly a large bill that comes out of the Senate, and the introduced version of the House bill at this point certainly needs a whole lot of work.
And that concludes my remarks. Thank you.
MR. SAENZ: Thank you, Coby.
Agenda item number 3 is a report led by David Casteel and some of our district engineers and our Maintenance Division on pavement performance and pavement conditions. David.
MR. CASTEEL: Thank you, Mr. Saenz. For the record, my name is David Casteel and I work for you as the assistant executive director for District Operations, and I'll introduce these gentlemen in a moment.
During the past six months we've heard presentations from Dr. Walton and the 2030 Committee concerning needs, and Dan Kessler and the Texas Association of MPOs concerning reasonable expectations of funding. Last month, Mr. Kessler and Mary Meyland of Mr. Saenz's staff engaged in a very good discussion here at the commission on funding and performance measures. This conversation was in the context of developing long range plans for MPOs and for the state overall. That discussion really reduced down to a simple equation that we need to more fully develop, that equation being: once we determine how much funds are available with discretion, then we need to subtract how much we'll spend on maintenance with the result being the funds available for mobility. The purpose of this presentation is to help further define the maintenance parameter in that equation.
We have a huge system and we spend much of our time, efforts and funds on maintenance. I've asked five experts in the field of maintenance to join us today in the discussion:
Toribio Garza, on the end, is the director of our Maintenance Division and he's been helping districts with emergencies, prioritizations and better methods. Toribio has been with the department for 24 years.
David Hohmann is the director of our Bridge Division and he's been helping prioritize and assess bridge needs. David has been with us for 27 years.
Mario Jorge is the district engineer in our Valley district in Pharr and he's been leading the other district engineers through an analysis of pavement quality with our anticipated funding levels. Mario is in his 26th year with the department.
Walter McCullough is our San Angelo District engineer and he's been leading a group of district engineers and division personnel through a strategic assessment of our routine maintenance staffing and funding needs. Walter is in his 38th year with the department and his 21st as district engineer.
Lynn Passmore is our Brownwood District engineer and he's been leading a team of district and division executive engineers through PEER assessments of the various districts, looking at their maintenance planning, implementation, strategies, and he's been with the department 37 years.
These gentlemen are maintenance experts and are available during or after this very short PowerPoint presentation to discuss any maintenance topic.
Aside from any measure of quality, the underlying issue with maintenance is that we have a huge system. We tend to measure our system in terms of lane miles. A lane mile is one mile of road one lane wide, or 5,280 feet by about 12 feet. In Texas we have enough pavement on the ground today to build a two-lane road around the world almost four times. In Texas there are more than 50,000 bridges; all together that's more than enough bridge deck to build a two-lane bridge with shoulders all the way from Orange to El Paso and another all the way from Brownsville to Amarillo.
Texas is a very big place with lots of roads and lots of bridges to maintain. Besides asphalt and concrete we have to maintain the roadside, the stripes, the signals and the signs. There are enough miles of stripe on our highways in Texas to paint a solid line 150 feet wide from Gainesville to Laredo. I'd also like to add that we have enough sign square footage, if laid side by side, that would completely cover the University of Texas campus and have more than 100 acres of signs left over. Again, Texas is a very big place and maintenance is a very big job.
For the discussion today, we'd like to break the general term "maintenance" down into four parts: routine maintenance, preventative maintenance, rehabilitation, and bridge. Each part is important but generally serves a different purpose in maintaining the huge system that we have in Texas.
We usually refer to things like emergency response to hurricane and ice and snow and floods and wildfires as part of our routine maintenance program, along with all the other roadway and roadside work that we do that doesn't change the pavement character much but just holds things together. Words like pothole repair and ditch maintenance and mowing are examples of routine maintenance work. In general, about 50 percent of our routine maintenance work is done with our forces and about 50 percent is done with contract forces.
Preventative maintenance, or PM, is usually the term used to refer to a larger treatment than just routine maintenance that puts on a new surface on a road but really doesn't add much in the way of strength. PM work is usually done to seal out water and make the ride better by filling ruts or improving the skid resistance to help with braking. Most PM work is outsourced to private firms.
Rehabilitation is the term generally used to discuss rebuilding of pavement or adding a thick topping that adds strength to it. A rehabilitation project might add shoulders or a turn lane but doesn't add any capacity to improve mobility. Essentially all rehab work is outsourced to private companies.
Bridges require routine PM and rehabilitation work just as pavements do. Rehabilitation and replacement of bridges are generally very expensive as oftentimes detours and extensive channel work and environmental mitigation is also needed.
Working with Mr. Bass, we are anticipating having about $1.6 billion available for maintenance in 2010: about $900 million of that is directed to routine maintenance work in the districts, about $500 million will be used for PM and a small amount of rehabilitation, and about $230 million will be used to repair and replace bridges.
How much we spend on our pavements and bridges will indeed influence the quality of each. The general measure of quality is the percentage rank that's good or better. Our general measure is that we say a percentage of our roads score above 70 on a 1 to 100 scale for ride, cracks and ruts. Currently about 86 percent of our road mileage scores above a 70 meaning that about 14 percent of Texas lane mileage scores below a 70 or are in fair or poor condition. With more than 193,000 lane miles, 14 percent represents more than 27,000 lane miles, or the equivalent of a four-lane road from Austin to New York to Los Angeles in below good condition. Each percent decrease in quality below good represents another 966 miles of two-lane roads falling out of the good range. That is the distance from Houston to Dallas and back twice.
Last year the commission discussed the next eleven years of anticipated funding with Mr. Bass. As he stated earlier, at that time we thought we'd be able to put about $1.1 billion into PM and rehab, but as discussed earlier today, that probably was optimistic. But after that discussion last year, Mario Jorge worked with each district engineer and lined out four years worth of projects based on those anticipated funding amounts, and then worked with the Center for Transportation Research at the University of Texas to assess the quality impacts of that investment. The investment levels we thought we might have would result in a decline in pavement quality in the next four years, based on the UT researchers, with about 20 percent of our mileage being below the good category by the year 2013. And again, it appears that those assumptions of funding available were optimistic.
The 2030 Committee, and the University of Texas in particular, studied pavements and bridge investments very thoroughly this past year. They recommended over a $3 billion per year investment in pavements. Higher performance levels would, they suggest, require a greater investment.
Walter McCullough's group which has been working for the past six to eight months analyzing routine maintenance activities, indicates that a $1.2 billion investment is needed to perform the work that must be done on a routine basis.
David Hohmann examined the 2030 report on bridges and says that we need about $600 million each year in bridges to keep 80 percent in good condition. A higher quality would require a greater investment.
It appears that we will be able to invest around $1.6 billion in 2010 which, again, is considerably less than what the 2030 committee, the University researchers and our experts say would be needed to meet the performance measures indicated.
We have many good engineers in TxDOT who do not want their legacy to be the ones who were in charge when things got worse, so we're looking under every rock to find pennies to move to the pavements and bridges. Lynn Passmore and his group are intensely reviewing the districts that do not have a good maintenance history and we are helping those district engineers find better ways to do things.
In the last two years we were down to around 1,250 in the districts and through better operations have cut other operational costs. Each district engineer is also analyzing design and maintenance approaches and trying to find ways to cut out frills and nice-to-haves as they design and maintain the system. We're not perfect but we're trying and we're getting better each day.
Again, Texas is a big place with lots of roads and bridges, and the gentlemen here with me are part of a huge effort to maintain that, and we'd welcome any discussion of these items with you.
MR. HOLMES: David, does the $1.6- include stimulus money?
MR. CASTEEL: No, sir. This is 2010 forward. Most of the rehab projects and maintenance projects for the stimulus have already gone to contract, and tomorrow John Barton will be presenting a minute order to take those underruns from those projects for other projects and we can have those into contract by July or August.
MR. HOLMES: So that $500 million?
MR. CASTEEL: That's FY 2010 that I'm talking about here. That $500 million will already have gone to contract.
MR. HOLMES: Already have gone.
MR. CASTEEL: Yes, sir, and that's a good point in that we were anticipating around $1.1 billion in 2010 so we were hoping in a bump from the stimulus on our pavement quality, but now that it looks like cash flow will support about $500 million, the $500 million that we get from stimulus is just about even to where we thought we would in 2010 at a $1.1 billion spending.
I made them come to town, you have to ask them a question.
MR. MEADOWS: I'm really curious than anything else, I'm just learning. 27,000 miles, roughly, of the fair to poor numbers you were talking about, how many of those miles would fall into regions where climate is a real impact, relatively speaking, to where it's not? Because I know it varies based on temperature and moisture.
MR. CASTEEL: I think we'll let probably Mario Jorge or Toribio Garza answer that question. They've been driving around the state, along with Mr. Passmore, looking at each district and they're intimately familiar with each road. Mario, do you want to take a shot at that to start with?
MR. JORGE: For the record, Mario Jorge, Pharr District engineer.
Commissioner, what we looked at in terms of those pavement condition scores, the metro districts, specifically Houston, Fort Worth, Dallas, will have a significant percentage of their lane miles in worse than good condition, fair or poor. A lot of that is attributed to the concrete pavement that is in those locations, ride scores are pretty bad, and even those repairs are extremely expensive to maintain. So that's what we see.
There is a significant trend I think that we've seen over the past three years in the PEER reviews that we've done on asphalt pavements in the rural areas, because of significant trucking that has kind of popped up over the last few years, so those asphalt pavements are exhibiting a lot more distress than we had anticipated. And some districts, Fort Worth, Dallas specifically, and even some of the eastern coastal districts are experiencing significant problems. We can see those scores dropping significantly I think in the next four years.
Just to give you some quick numbers, Dallas, Houston and Fort Worth will be all in the 60 percent range, between 60 to 65 percent in terms of good or better condition, so that means almost 35 percent of their pavements will be below the standard. That's very significant, and so we're hoping that those numbers can be worked on with these PEER reviews and some of the things that we're finding out and recommending to the districts I think will hopefully help some of it.
MR. UNDERWOOD: Question -- excuse me, Bill.
MR. MEADOWS: I was just going to follow up on one thing and that is my next question really was about what I'd describe as the extraordinary usage, where you're really talking about high, high impact of commercial vehicles in specific geographic areas that are related to one industrial or commercial function. I know that's a factor because we've done some research specifically with regard to the counties that would overly the Barnett Shale, and experience that very specific thing.
I know that some of the counties that are directly impacted have been able to negotiate special arrangements with those carriers that are specifically impacting in, we'll just say, a definable fashion, pre-agreed upon definable fashion. They're entering into agreements with counties, and Johnson County being a good example whereby Johnson County is actually receiving revenue to address these. And I wonder have we researched in those sort of extraordinary circumstances those sort of opportunities. Does anybody know that?
MR. JORGE: I know that in our district where we had significant pavement deterioration coming from an attributable source, we've entered into some agreements, some bond type program where the company that's generating some of the distress has taken out, I guess for all practical purposes, insurance on the road and has participated in those repairs. It's very unique and you have to be able to pinpoint the damages to that particular operation, but we have done that where we've entered into a bond issuance by the private company.
MR. UNDERWOOD: I notice that you are sharing a microphone. Walter won't share with you? Just want to make sure you're involved in the conversation.
MR. UNDERWOOD: To me, with the wind generation issues or whatnot, to me that would be real easy to find out who's damaging the pavement because it actually looks like a piece of bacon after they take that, if I remember correctly, I'd call it the crane or whatnot that actually lifts that equipment. Isn't that correct, the crane is the one that's going to do the most damage? Isn't that right, Walter? It's about a 400-ton operation.
MR. McCULLOUGH: We have a wind farm that's going in in the central part of our district and it's about 200 windmills, and I see it every day because they drive down the road right in front of my house, and they're hauling the towers in about three sections and the blades on about two trucks and the generator on a separate truck, and there's probably seven or eight heavy loads per each tower, and those are in excess of 200,000 pounds, in that range.
MR. UNDERWOOD: But what about the crane? That's the one that really to me is the biggest one.
MR. McCULLOUGH: The crane, I'm not sure about how much it weighs, Commissioner.
MR. UNDERWOOD: I believe it weighs the most of them or whatnot.
I want to dovetail into Bill's comments and whatnot, you talk about that the scores in the Dallas-Fort Worth area, as an example, are 60, going down to 50 or whatnot. It's a two-point question. One is at what point all of a sudden do we have to rehabilitate? And I want to make sure the audience understands rehabilitate does not mean two weeks at the fat farm, I mean spending a lot of money to rebuild and construct a brand new road, you just don't have environmental involved. It's all yours. Oh, he's going to share with you, good.
MR. JORGE: I'll share with Walter this time.
From experience, a good preventive maintenance program needs to be instituted when the road is no worse than in fair condition. That's when you do your crack pouring, that's when you do your seal coats, strip seals and what-have-you. Once you get into a poor condition where you have significant base failures, then preventive maintenance will no longer do the job and you're going to have to go in there and do significant rehabilitation. It could be spot rehabilitation or it could be for significant length.
But those ratings do mean quite a bit and the poor condition is when you start with a PM and it will no longer really do the job. You can cover it up and it will look good for maybe a year or so, but those base failures will continue.
MR. UNDERWOOD: It's just basically putting makeup on zits, you've still got an underneath problem.
MR. JORGE: Yes, sir. So that number, that poor percentage is really the one we've got to be careful with because you can really delay a lot of those major costs if you can address it at the fair condition.
MR. UNDERWOOD: What you don't want to do, my point is, is to get to the point of rehabilitating because then you're going to spend $6 to $1. Isn't that correct?
One last question. Road use, to me, the rural areas -- I'm asking, I'm not stating fact, the rural areas, their roads are in better shape than the city areas, to me, because the cities have taken some of their maintenance money and had to use it in new construction. Is that correct? Jump in there.
MR. PASSMORE: In some places that would be true. Of course, they have a higher volume of traffic and so that's a big player in it also. But some of them have had to, over the years, address some mobility problems, some of them have moved some of those dollars into the mobility arena.
MR. UNDERWOOD: To me, in the rural areas they don't have problem of sitting there we've got to build a new road here, a bridge here, whatnot, we've just got to maintain what we have.
MR. PASSMORE: Most of the rural areas, their program is a maintenance program. Off and on there's a little bit of mobility, so their primary concern has been maintenance, I believe.
MR. UNDERWOOD: Okay, thank you.
MR. JORGE: If I can just real quick, Commissioner, add to a little bit of what Lynn said. One of the things that we've noticed in our PEER reviews that Lynn, Toribio, myself, Dennis and Lonnie have done is that some of the rural areas in the northeast where you have the wet and the freeze cycles are actually not in very good shape and we've seen significant distress in those areas. So the urban areas, to our surprise -- we drove around a lot of miles in Dallas, Fort Worth, and about to do it in Houston -- to our surprise, those urban pavements were actually in pretty decent shape, they've done a real good job of keeping up with them. We have to because of the traffic volumes.
MR. UNDERWOOD: But that's also because of the stability of the soil too, though, isn't it?
MR. JORGE: Correct.
MR. UNDERWOOD: There's a lot of difference between building a road on quicksand and building a road on granite.
MR. JORGE: That is correct. So you compound the issues with the soils, the traffic, the heavy trucks, oilfield trucks in the rural areas and that wet-freeze cycle, so it's a number of things.
MR. HOLMES: I think maybe I misheard earlier. I thought you said that the paving conditions in Dallas, Fort Worth, Houston, and maybe there was another metropolitan area, were headed below 70 at 60, and are you now saying that there are rural paving conditions that are in districts that are worse than that, they're lower than 60, and if so, where would those be?
MR. JORGE: The worst pavement scores are in Dallas, Houston and Fort Worth, but their urban pavements are not in as bad a shape as we thought. When you get out of the metro area and start looking at the rural pavements, you see a lot of distress because, again, the urbanization of those areas and the traffic just pounding on those thinner sections. So those districts have significant challenges in handling the urban traffic -- and they're doing a very good job of that, doing a lot of contracting and taking care of those pavements in the urban area -- the pavements just when you get out of the urban area and you start hitting those rural sections are significantly being distressed. So it's a combination of things.
I guess the comment I made is that the urban pavements were not as bad as we had anticipated when we went out and really took a good look at them. I think the perception that a lot of people have is that the metro areas with all the traffic that those pavements are falling apart, and they're really not.
MR. CASTEEL: I guess, Mario, one way to say that is those districts like Fort Worth, Dallas and Houston, they're throwing everything they have at their expressway system, trying to keep it in decent shape because it has such a high volume of traffic that then those roads in the counties like Johnson County and Wise County that are the new urbanization areas where the roads were designed for farm traffic are now servicing subdivisions and factories, those are the ones that are deteriorating at the fastest rate.
MR. JORGE: Yes.
MR. HOLMES: We're kind of saying two different things. Actually, what we're saying is there's not enough maintenance money, there's not enough new capacity money, and the entire system is in a process of degradation. Is that basically the line?
MR. JORGE: Yes, that's the first statement.
MR. HOLMES: And I think, Mario, what I heard you say was the worst paving scores in the state were in Dallas, Fort Worth and Houston but they're better than you thought they were going to be. Is that what you said?
MR. JORGE: Yes, in a nutshell, that's exactly right.
MR. HOLMES: And the ones in the areas that are urbanizing are deteriorating at a great rate as well.
MR. JORGE: That's correct.
MR. HOLMES: And so the bottom line is we don't have enough money for maintenance, we don't have enough money for new capacity.
MR. SAENZ: And we're losing ground.
MR. HOLMES: And we're losing ground.
MR. UNDERWOOD: And if we wait too late on the maintenance, we get the thrill of replacing it.
MR. HOLMES: Right. Now, help me a little bit with when we have really unusual events, whether it's a hurricane, whether it's an ice storm, how does that impact the maintenance budgets, or do you have separate budgets for that?
MR. CASTEEL: Toribio is our emergency coordinator expert, and he and I and some others spent a lot of time down in your area during Hurricane Ike. So Toribio, do you want to kind of talk about Hurricane Ike as an example?
MR. GARZA: Toribio Garza, director of Maintenance, for the record.
Yes, sir, as you've mentioned, Commissioner, we're out there maintaining roads, our folks do a great job of doing that, but in the middle of the day-to-day operations we get Hurricane Ikes and we get these events, over the past eight years we have historically spent about $35 million in emergencies on an average. Man hours, that equates to over 200 employees working full-time every year just dealing with some kind of emergency statewide, and our folks do a great job of doing that.
This Hurricane Ike, for example, we're up to like $57 million that we have spent so far, and the man hours for just that one event has tied up 500 employees for three straight months if you equate the amount of time we have spent -- and we're still out there addressing and dealing with debris issues and so forth.
So all of those things tie into and affect how and when we maintain our roads, but in spite of that, our folks do a tremendous job of addressing and maintaining pavements.
MR. CASTEEL: Toribio, for Hurricane Ike, I believe, if I remember right, we pulled employees out of 19 different districts and sent them to the coastal areas to help out.
MR. SAENZ: I think, Commissioner, with respect to the costs that are associated with those emergency events, a majority of those costs are then reimbursed either through FEMA or Federal Highway Administration.
MR. CASTEEL: For an event like that.
MR. SAENZ: For an event like that where you do have a federal disaster declared. I think the issue that Toribio is trying to make is, because we're having to spend so much time using our own manpower to address those emergencies, that's less people that we have taking care of the normal maintenance.
MR. HOLMES: Are we reimbursed for our manpower? For instance, if they pull manpower out of Lubbock and send it down to Galveston or wherever they go, is Lubbock reimbursed for that?
MR. GARZA: FEMA, Commissioner, reimburses us for the effects of the storm, like the initial debris removal, first pass, if you will. There are some guidelines that they have about reimbursing for additional cycles. So some costs are, to answer your question, and some are not. We work through FEMA to try and get that covered.
MR. UNDERWOOD: But basically, though, they just pay you to remove the debris, not to replace the road that was torn up.
MR. GARZA: Well, again, it has to do with the type of debris, where the debris.
MR. UNDERWOOD: But you don't replace the road, is my point, you just are allowed to move the debris off the road, but if that road is torn up, that comes back to the state to fix.
MR. SAENZ: Commissioner, really it's like a two-phase. In the initial phase we go in and either we move debris or remove debris and that's reimbursed, and then there are assessments that are done with respect to damage by the storm, you had a washout of the road of this many miles or that. If we can attribute that that damage was due to the storm, we can get federal reimbursement of that from Federal Highway.
I guess going to back to your question, if we send Lubbock folks to help on the coast, Lubbock gets shorthanded of people, the State of Texas does get reimbursed for the damage that happened along the coast, I don't know if we're sending the money back to Lubbock or not.
MR. HOLMES: You also mentioned that we were reimbursed by FEMA for the first pass of debris removal. I know in Galveston that the first pass took all the debris that that particular road would hold, and as soon as it was removed, it was backfilled by debris, and as soon as that was removed, it was backfilled by debris. And so is that a correct statement, we're only reimbursed for the first pass?
MR. GARZA: It's storm debris, Commissioner, it's storm debris that they will reimburse, and typically that is the first pass. But again, it also has to do with where that debris is. If it's in undeveloped areas, there's some issues that they have.
MR. HOLMES: Well, people were pulling debris out of their yards, stacking it on the street, they filled up the curb, there was no more room. When that was removed, they pulled more debris out and filled up the curb again, and it happened about three or four times.
MR. GARZA: Because after the first pass, that debris is really garbage, it's not storm debris, it's cleanup type of debris now, so they look at it differently. When people start to fix their homes and pull out wet carpets and stuff, they look at that type of debris differently.
MR. HOLMES: It's still storm debris.
MR. CASTEEL: But Toribio, we're still picking it up and we're sending the bill on. Whether we get reimbursed or not is uncertain in some cases, is what you're saying.
MR. SAENZ: Let me go back, and I think the question that Commissioner Meadows asked with respect to that some counties are charging or have worked up agreements with companies that they can, I guess, tie down that they are causing some kind of damage. As far as we, the State, we can't do that. We do have, under statute, the 2060 permits where it's kind of what Mario was talking about, or we have specific statutes that would allow those overweight trucks to run along the corridor, for example, in the Port of Brownsville. In Brownsville, between the international bridge and the port, there is an overweight corridor. They get to issue a permit and that money from that permit is used to maintain that road, but we have to have pretty much specific legislation to be able to do that.
MR. HOLMES: Is the amount of the permit, the cost of the permit controlled by legislation?
MR. SAENZ: The cost of the permit, in this case in the one in Brownsville, they can go up to $80 a trip, I think the port had set it at $30 a trip. They were responsible for maintaining the road; we maintain it, we just charge them for the maintenance and they could raise it up to $80 but they were able to cover it with $30.
MR. HOLMES: That's good.
MR. CASTEEL: The fee for the 2060 permit is set by legislation.
MR. SAENZ: Yes, the fee for the 2060 permit is set by the legislature. And there was a recommendation and a bill filed -- I don't recall what happened to it -- where LBB had made a recommendation that we do some kind of a study or try to implement some kind of a maintenance fee based on damage caused by vehicles. I don't recall, I'll check and find out and we'll send something out.
MR. HOLMES: But clearly, the general impression is that the damage caused by very heavy trucks, whether they're overweight or not, I'm not sure, but that the damage caused by heavy trucks is not reimbursed by the fee that is paid. Do we have a general sense of that? Do you agree with that statement, David?
MR. CASTEEL: I would agree with your statement completely. The cost that they pay for the extra weight doesn't cover the damage that's done. As we've said before, the relationship between weight and damage is a factorial to the power of four where each pound of weight goes to a power of four or more in damage. So clearly the amount that they pay for a 2060 permit to haul the extra 5 percent or whatever doesn't cover the damage that's done. So your statement is correct, yes, sir.
MR. HOLMES: And that fee is set by the legislature?
MR. CASTEEL: Yes, sir.
MR. HOLMES: And do we charge the maximum fee that is set by the legislature?
MR. CASTEEL: Steve is probably the expert on this.
MR. SIMMONS: We charge the fee that the legislature allows.
MR. CASTEEL: We charge whatever fee the legislature allows.
MR. HOLMES: We didn't give a discount off of it.
MR. CASTEEL: No, sir.
MR. SAENZ: It's a set fee. There's a base fee and then depending on the number of counties that the truck is going to operate, it has an escalation.
MR. CASTEEL: Thank you for allowing us to be here to talk about maintenance. I anticipate that Ms. Meyland will be back in a couple of months to talk about setting performance measures as we develop our Texas Transportation Plan, and then we'll relate some of these costs to the performance measures we want to set, and that will help us determine how our Texas Transportation Plan will be developed.
And I really want to thank these gentlemen for their hard work. All of these guys have been traveling all over the state, working with the district engineers to optimize the system, and several of the district engineers from around the state are in here today. They were working here with Mr. Saenz and Mr. Simmons and Mr. Bass and me yesterday on some funding issues for projects. So they're all working really hard and doing the best we can, and I think they're showing great improvement as well.
MR. MEADOWS: Thank you very much.
MR. HOLMES: Appreciate what you're doing.
MR. SAENZ: That bill that I discussed was included in House Bill 300 and it met the same demise.
MR. SIMMONS: Mr. Saenz, if I could add something else to the question about reimbursement for the hurricane stuff. You know, the governor tasked us with doing a lot of off-system debris removal and we've still been trying to get as much reimbursement as we can from FEMA and the Federal Highway Administration, but we have not been successful to date because it falls into exactly what Toribio was talking about is not the immediate debris from the hurricane but the household goods and people bringing it from private property and things of that nature.
We did ask during the session for a supplemental appropriation because it is outside the bounds of our responsibility and there was a supplemental appropriations bill but it did not get put in there. So there will be some un-reimbursable from Federal Highway Administration/FEMA for that debris that we've been picking up.
You're exactly right, we go out there and clean the roadway and people see us picking it up and they immediately bring their stuff to our roadway because they know it will get picked up. We also have those companies that are contracted through an insurance agency to clean up somebody's property and they're getting paid to dispose of it and they see a clear opportunity to dump it on our right of way without having to pay a fee and we end up having to clean it up. So there's a lot of that stuff going on.
MR. HOLMES: Those folks that have had their house flooded and have wet carpet and damaged sheet rock consider that hurricane damage.
MR. SIMMONS: And I agree.
MR. HOLMES: And that's where they put it.
MR. SIMMONS: It just wasn't generated on our right of way.
MR. SAENZ: You've got to put it somewhere, you've got to put it in a clean space, Steve, and we did a good job cleaning our right of way. Thank you.
The last agenda item for today, we have a presentation by Carlos Lopez, our director of Traffic Operations today but soon to be our district engineer in the Austin District. He will now go from the best dressed division director to the best dressed district engineer. He's going to present a presentation on the implementation of a Bus Rapid Transit program in Texas and some of the issues and concerns and the pluses and minuses, I would think. Carlos.
MR. LOPEZ: Thank you, Amadeo. Good afternoon, commissioners. My name is Carlos Lopez, I'm director of the Traffic Operations Division, and I'm pleased to be here to provide this presentation on Bus Rapid Transit. Actually, the idea to do this came from a proposal the San Antonio District got from VIA recently that I'll discuss a little later on in the presentation.
So what is Bus Rapid Transit, or BRT? Simply put, it's an attempt to use buses better then they are normally used. Now, we had a lot of other definitions that we ran across that had a lot of bigger words but we liked this one from Wikipedia the best because it was real simple, and I think it paints the picture of what BRT tries to do.
Some of the elements of Bus Rapid Transit can include, among other things, things like prioritized use of roadways, enhanced transit stations, the use of ITS technologies and branding, just to name a few. Now, prioritized use of roadways means things like dedicated lanes, kind of like they have in Pittsburgh where they built an exclusive busway that gets people from the suburbs into downtown. Shared lanes are kind of what we have here in Texas, our HOV lanes are an example of that that we have in Houston and Dallas. There are also dedicated arterials.
It can also include signal preemption where the buses can make the signal turn green as it's coming up to the intersection, much like the Houston light rail system does that goes from the medical center to downtown, or it could even have a queue jumping feature, like they do in some cities, as they're coming up to a crowded entrance ramp on a freeway and they'll give a bus a lane on the side that they can go through and get in front of that queue so they can get some advantage in travel time.
Now, a lot of these elements can be integrated. For example, the enhanced stations can be aesthetically designed and can incorporate the branding from the transit authority so that it will kind of fit together. Improved fare collection where you have an electronic type of fare collection card can include information on when the next bus is going to come in, kind of like the way the Washington Metro system uses is and tells you when the next Redline is going to be at that station. While you're on the bus, you can have information about when you're going to get to your next destination and answer that very common question: Are we almost there yet?
Now, Bus Rapid Transit has been used in a lot of places throughout the United States and throughout the world. For example, in Boston they use some dedicated tunnels and dedicated lanes as part of the Big Dig project which is going to be one of the higher end cost type of uses, and in that case buses arrive about every five to six minutes.
In Pittsburgh they have that exclusive busway that I mentioned that was actually built as part of an old abandoned railroad right of way, so they found a good transportation use for a previous transportation use, and that system serves about 40,000 riders per week.
In Los Angeles it's the lowest cost form of BRT where they give their buses signal priority as they're coming up to the intersections.
And the research we did, if it's properly implemented, BRT can be very successful. It can increase ridership and definitely provide a travel time savings, and you'll see some of the greater increases in ridership and travel time in those that had an exclusive or dedicated facility for those buses, much like they did in Pittsburgh, Miami and in Boston.
Now, as far as from a capacity standpoint, it's kind of on the lower end of various mass transit types of solutions but it also is one of the lower cost mass transit types of solutions. So we've seen ranges everywhere from 2,000 to 10,000 people moved in the peak hour, and if you think about that, in Texas that might equate to somewhere between four or five freeway lanes in the peak hour, so that can move a lot of people, the same amount as those freeway lanes can move.
On cost, as you might imagine, the one in Boston cost pretty much, about $11 million per mile, and can range as low as in Los Angeles where they did just a signal preemption to $200,000 per mile. Pittsburgh had a different type of exclusive busways and had a wide range of cost, and Miami's was about $7 million per mile.
MR. HOLMES: Pittsburgh went up to $55 million a mile?
MR. LOPEZ: Yes, in some of the cases they had extensive terrain to deal with because Pittsburgh is a very hilly community, and where they built the exclusive busways, that drove up the construction cost. Where they had the abandoned railroad right of way, they already had the land and they just built the road along that to lower the cost.
This particular graph shows a graph of system performance versus investment cost. As you can imagine, on the lower end, the local bus service has a low investment cost but your system performance may not be all that great. On the high end you have heavy rail which you can move a lot of people but it's a higher initial cost. BRT kind of falls right in the middle, and here's different types of BRT: just the kind where you give signal priority that's going to be on the lower end, to the kind where you have an exclusive with signal priority would give a little higher system performance.
Now, here in Texas, the most common form of BRT, as I mentioned earlier, has been our HOV lanes. Our HOV lanes in Texas have been among the best used and best planned in the country because they've been built along corridors that have heavy traffic. Yes, they share them with other high occupancy vehicles but the buses get a guaranteed trip time when they use that HOV lane, so people know they're going to get downtown quick. And they've also built a significant park and ride type of structure around those HOV lanes. In fact, when the lanes in Houston were built, some Federal Transit Authority money was used to build those lanes and they also assist us in maintaining and operating those HOV lanes, DART and Metro do.
Getting to the VIA project that kind of brought this idea to light, this is a proposal that would establish BRT from the medical center to downtown along Fredericksburg Road -- it's kind of the northwest part of San Antonio -- and it has three different types of implementation strategies. Part of it would be the buses would just share the regular lanes like they're doing today and maybe give them some signal priority. Part of it, an actual lane would be added in the part of Fredericksburg Road that's currently two lanes in each direction; that additional lane would be for exclusive BRT. The third part of it would have a section that has three lanes in each direction, one of those lanes would be converted to exclusive bus use.
That's where the commission's role comes in in all this. In order for a lane to be used in that manner, the commission has to approve that use. So what we would want to see from the TxDOT standpoint is as they're going through their environmental process that when that scenario is all worked out, if that's what ultimately comes out of the environmental that no harm is done overall to Fredericksburg Road, if that type of solution is used, especially in the conversion part, as they're going through the environmental process, they have to come up with mitigation type of strategies, we'll look at that, and if this project comes back to us as envisioned today, we'll make a recommendation to you at that point whether the commission ought to approve a conversion or not.
Now, the commission's role could go away if sometime between now and then that road is taken off the state highway system. It's got a very arterial type feel to it, it's a city street, I-10 is right parallel to it, it could easily be taken over by locals, but that's a decision that will have to be made locally, and if it's made before the end, then the commission would not have to have a role in the conversion process.
In closing, there's enough traffic to go around for everybody to share in the glory of trying to ease congestion. TxDOT can't do it alone, the transit authorities can't do it alone, toll authorities can't do it alone, RMAs can't do it alone, but collectively we can all be a part in helping to ease congestion, and BRT, when implemented properly, can be part of that solution.
So with that, I'll close and try to answer any questions you may have, and my good friend, Eric Gleason, is here from the Public Transportation Division is here to help, and so is Julie Brown from the San Antonio District.
MR. HOLMES: Carlos, as you go through the evaluation on the proposal by VIA on Fredericksburg Road, I would note that I've heard frustration expressed in Houston by many different people over the lack of vehicles on the HOVs. They're sitting there stuck in traffic and you have a bus that passes by every two or three minutes. And so I think we need to be very careful in how we evaluate how much traffic they're really going to take off the regular lanes.
MR. LOPEZ: That's a good point, Commissioner, especially since this is an arterial setting which is different than a freeway setting, so yes, something we'd need to look at closely when it's all said and done.
MR. HOLMES: Once I-10 was opened and you had a toll tag opportunity as well as HOV, then it solved that problem on 10.
MR. LOPEZ: Yes.
MS. DELISI: I assume as part of the process there's public involvement, because I think I'm familiar with this road, there's a lot of business on both sides of the road so there may be access issues.
MR. LOPEZ: Yes. That's part of the public involvement is going to involve whether they do this on the outside lane or whether they do it maybe in the center lane and have those transit stations somewhere in a median. All of that will be vetted out in the public involvement process, you're exactly right.
Steve has wisely asked me to point out that as they're going through the environmental process, they don't take the road off the system and they say yes, we want to do BRT, we want to convert this lane, we look at the models of what's going to happen on that roadway, and if it doesn't look good, we could come back here potentially with a recommendation to not do it after they have gone through this process.
So Steve, thanks. I think we needed to probably put that on the record.
MR. SIMMONS: I just think that the discussion item was put on here because it could come to exactly what Carlos was talking about, that conflict between what the environmental came up with and then what the commission would ultimately say could be done to the road, and so that's the conflict that we could get into if we don't really get some direction early on in the development of this BRT. Because the whole issue is that one stretch of the roadway of taking a lane away to just allow buses in it on a facility that's owned by the department, that's the potential conflict.
MR. SAENZ: Thank you, Carlos.
MR. LOPEZ: Thank you all.
MS. DELISI: Thank you. Is there any other business to come before the commission? There being none, I will entertain a motion to adjourn.
MR. HOLMES: So moved.
MS. DELISI: I got a motion. Can I get a second?
MR. MEADOWS: Second.
MS. DELISI: All in favor, say aye.
(A chorus of ayes.)
MS. DELISI: Please note for the record that it is 4:49 p.m., and this meeting stands adjourned.
(Whereupon, at 4:49 p.m., the meeting was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: June 24, 2009
I do hereby certify that the foregoing pages, numbers 1 through 148, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Nancy King before the Texas Department of Transportation.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731