Ah, TxDOT. What would we do without them?
The Texas Department of Transportation made a billion-dollar error, officials of the agency admitted Tuesday under stern questioning from legislators, a mistake they said contributed significantly to TxDOT's sudden cash crunch.
TxDOT officials say agency planners inadvertently counted $1.1 billion of revenue twice, a mistake that caused them to commit to more road projects than the agency could handle.
But lawmakers, always skeptical, were often openly hostile during a lengthy Senate committee hearing that amounted to a thorough wood-shedding of TxDOT. They let department officials know that they remain suspicious about the legitimacy of the fiscal crisis.
Texas Transportation Commission members, said state Sen. Kirk Watson, D-Austin, "have an agenda. And that's to privatize the second-largest (highway) system in the world. And you are hell-bent-for-leather to do that."
State Sen. Tommy Williams, R-The Woodlands, pushed for a third party to look at TxDOT's books.
"It's important to me that we get the state auditor's office in there as quickly as possible," said Williams, who carried legislation last year that substantially curtailed TxDOT's authority to agree to long-term leases with private companies to build and run tollways.
TxDOT officials first announced a money shortage in November, ascribing it to a number of factors: inflation, reduced federal transportation grants, increased road maintenance needs and, most tellingly to legislators, the loss of revenue from those private toll road leases. Until Tuesday, top TxDOT officials had said nothing publicly about having made a serious bureaucratic error.
According to [TxDOT's executive director, Amadeo Saenz, and TxDOT Chief Financial Officer James Bass], the $1.1 billion that was counted twice was money borrowed through selling bonds. As a consequence, top agency officials told TxDOT's various divisions and districts that they had $4.2 billion to spend this fiscal year.
"As soon as I heard that number," Bass said, "I knew it was an overestimate."
Soon after, with so-called "lettings" for 2008 trimmed to $3.1 billion, TxDOT officials announced huge cuts in spending on right of way and project design, as well as a freeze on the start of many road projects that were ready to go. That sudden halt to projects got legislators' attention -- and their goat. The Legislature and voters last year gave the agency authorization to borrow an additional $8 billion -- though $5 billion of that will require further legislative action in 2009 -- and so legislators don't like that crucial road projects are suddenly up on blocks.
It didn't take long after the freeze announcement for the idea to take hold that TxDOT was manufacturing a crisis to coerce legislators into backing away from the limits on private toll road contracts.
Tuesday's alternative explanation may have been only partially helpful to the agency.
"So, what you're saying is, it's not a political effort on your part," Watson said. "It's a lack of competence."
Seeing the state auditor being invoked reminded me of this Chron story from July of 2005, which I blogged about here, in which said auditor chided TxDOT for not taking care of its money better, once again having to do with the Katy Freeway expansion.
The cost of expanding the Katy Freeway has gone up almost another $300 million, according to a state audit that faults the Texas Department of Transportation for failing to "take the necessary and appropriate steps to estimate total project costs."
Auditor John Keel's report notes TxDOT's latest cost estimate is $2.67 billion, up 78 percent from the October 2001 estimate of $1.5 billion. The last estimate released by TxDOT was $2.4 billion.
Keel criticizes TxDOT for basing the 2001 Katy expansion estimate on preliminary engineering work and failing to update the projection as further design work revealed substantially higher costs. He cites about $100 million added after the department determined it would need to rebuild the Beltway 8 interchange to accommodate the four High Occupancy Toll lanes being built in the center of the freeway.
According to the report, the highway department did not originally include $56 million for moving Houston water and sewer lines, failed to include the project's administrative costs of more than $100 million, didn't adjust costs for inflation or include contingencies to cover rising materials prices.
The auditor identifies another $121 million in unanticipated cost increases for land needed to widen the freeway, and suggests transportation officials raced to get the bulldozers out there before having the necessary right of way.
"TxDOT did not follow its standard practice of purchasing the majority of right of way before letting contracts," the report states. "TxDOT made a decision to forgo acquiring right of way in advance in order to manage the project on an accelerated construction schedule."