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June 17th, 2006:

Selling toll roads: Fear it

Those of you who use Harris County’s toll road system on a regular basis, read this and think about the implications.

The Harris County toll road system could be sold for as much as $20 billion, but only if the county were willing to cede control over toll increases to a private company.

There is “a direct correlation between the rate at which the tolls would be permitted to increase and the value the county would realize from the sale,” the county’s office of management services said in a report.

How much are you willing to pay for that trip on the Sam Houston or Westpark toll roads? More to the point, how much do you think the Harris County Toll Road Authority thinks you’re willing to pay? If they’re serious about going through with this boneheaded idea, you’d better hope they guess correctly.

The county would be more likely to net $5 billion to $12 billion after paying off bonds, concluded JP Morgan and Popular Securities in a study commissioned by the county.

I’m going to ask a question that I asked before when this madness first surfaced: What in the world does Harris County need all that cash for? What could they possibly do with it?

OK, I know that Harris County would not get a lump sum up front for the toll roads, but would instead get paid over time. The thing is, sooner or later those payments would end, meaning that the county would eventually lose a steady source of income, as well as the option of ending the tolls for an asset that’s been fully amortized. I realize that all this may happen many years from now when we’re all dead, but unless you think Harris County will cease to be a functioning entity, or you think we’ll all finally have those flying cars we were promised in 2000, then how is this a responsible thing for the HCTRA to do? Remember, the only way this kind of deal makes sense for the buyer is if they think they’ll get more money back than they pay. So please, someone tell me: In what way does the county benefit from that?

At its annual capital improvements meeting Tuesday, the Commissioners Court will consider whether the toll road system, whose annual revenues have increased steadily, should be sold, leased or continue to be operated by the Harris County Toll Road Authority.

If the county opts for selling or leasing, the court is not expected to make a specific decision for months. It could authorize a more detailed study.

And once again I ask: Do we, the taxpayers of Harris County, get any say in this? As in, do we get to vote on it? If not, why not?

JP Morgan and Popular Securities advised Commissioners Court to determine how much control it needs to exercise over the system before deciding whether it should sell the system to the highest bidder.

The study noted that motorists likely would turn to the county with complaints about tolls or other issues, no matter who owned the system.

The county wants “to avoid having a successful sale and a failed public policy,” the JP Morgan and Popular Securities report said.

Damn right. And if the Commissioners’ Court wants a peek at their future, consider this.

The decision to hand the Indiana Toll Road to an Australian and Spanish team for $3.8 billion at the end of this month has blown up into one of the biggest brawls here in a generation. It has unsettled the state’s politics in the months before the November elections, pitting a governor who was President Bush’s first budget director against the people of northern Indiana, which the highway passes through.

Max Sawicky calls this what it really is:

When a government takes a lump sum in exchange for permitting a private firm to manage a road and levy tolls, it is not only privatizing. It is borrowing, worsening its fiscal position. Most states are looking at growing budget shortfalls in the future, as Medicaid costs in particular continue to grow more rapidly than their revenues.

The Gov could just as easily contract out operations and management, but keep the tolls for itself. The fact that the money is earmarked to new projects — investment — is irrelevant. It’s still borrowing. You could just as easily keep the roads and float a bond — also borrowing — for the new projects. The leasing is not necessary. The political onus against explicit borrowing can warp decisions.

Yes. The question is what are they borrowing all this money for? The example of Indiana in that WaPo article at least makes a decent case why a government might consider doing this. We have no idea at this point what Harris County has in mind. Why is that?

There’s more heavy-duty economics on this at Angry Bear. I really don’t think I can overstate how bad an idea I think this is. I just hope that someone – anyone – expresses skepticism at Tuesday’s Commissioners’ Court meeting.

DeLay lawsuit shifts to federal court

The lawsuit filed by the Texas Democratic Party to block the Republican Party of Texas from replacing Tom DeLay on the November ballot in CD22 has been moved to federal court.

State Republicans filed papers Thursday to move from state to federal court a lawsuit filed last week by the Texas Democratic Party. The Democrats sued to block Republicans from picking a replacement for former U.S. Rep. Tom DeLay on the ballot for the 22nd Congressional District.

A temporary restraining order set last week by a state district judge remains in effect until midnight Thursday. Lawyers for the Democrats are expected to seek an extension of that order before U.S. District Judge Sam Sparks next week.

All of the elected state district judges in Travis County are Democrats. Sparks was appointed by former President George H.W. Bush.

“If Democrat plaintiff trial lawyers want to raise federal issues under the U.S. Constitution, they cannot then seek to have them decided in the liberal state court of their choice,” said GOP Chairwoman Tina Benkiser.


Attorney Chad Dunn of Houston, who represents the Democratic Party, said he is confident that Democrats can win their legal case “in any jurisdiction.”

Dunn said the Texas Election Code prohibits a candidate from withdrawing from a ballot after being elected in the primary. Although DeLay has registered to vote in Virginia, he remains active in the Houston area and his wife still lives in Sugar Land, Dunn said.

Jim Bopp, an Indiana attorney who represents the Republican Party, said DeLay has bought a condo, registered to vote and gotten a driver’s license in Virginia.

He said Democrats have raised federal claims that are appropriate for the federal courts.

“They want the court to determine the inhabitant issue, and that’s a federal claim. They want the court to say that the chairman of the Republican Party cannot declare DeLay ineligible because the (U.S.) Constitution prevents that,” said Bopp.

I’m not a lawyer, so I’m not sure how valid that point is. It sounds reasonable enough, for what it’s worth. I don’t think the judges’ partisan backgrounds will make or would have made any difference. Mark has some legal analysis of all this, as does Greg, who explains why he believes this is about expediency rather than partisan makeup.

What wasn’t clear to me from this story was where the papers were filed and who made the ruling on removal. Mark says that Judge Sparks was the one who did that. Fort Bend Now fills in another blank in an earlier story.

On Thursday, Margaret Wilson of Austin’s Potts & Reilly law firm filed a notice of removal, seeking to have the case moved to U.S. District Court in the Western District of Texas.

“In response to the frivolous lawsuit filed last week by Democrats regarding the Texas Congressional District 22 race, the Republican Party of Texas has removed the case to federal court,” the state GOP said in a prepared statement Thursday evening.


Chad Dunn of Houston’s Riddle & Brazil law firm, who is handling the case for the Texas Democratic Party, said a hearing on the issue has been scheduled for Thursday before U.S. District Judge Sam Sparks.

In the meantime, a temporary restraining order granted by Travis County District Judge Darlene Byrne still is in effect. The order prevents Benkiser from calling a meeting of the so-called District Executive Committee or taking other measures to replace DeLay as the Republican Party nominee for CD-22.

So the RPT is still enjoined from taking official action to replace DeLay on the ballot. I’d guess the temporary restraining order will be extended beyond the current June 22 deadline. What happens after that, I have no idea. Stay tuned.

Garnet Coleman profile

There’s a nice profile of State Rep. Garnet Coleman in the Progressive States Network. Coleman’s one of the real good guys, so it’s always a pleasure to see him get a little attention. Check it out.