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For TxDOT, a $2 Billion "Perception Problem"

The Texas Department of Transportation announced this year that it had an extra $2 billion in funding. And that could hurt the agency's attempts at getting extra funding next session.

Traffic along US 77 between Driscoll and Kingsville, Texas.  A 10-mile stretch of this road  from Kingsville to Driscoll is right now a simple state highway with cross-traffic and stop lights. About $50 million is going to be used to upgrade it to interstate highway standards.  6/4/12

The Texas Department of Transportation, which often argues that it lacks the money to properly maintain its network of roads, surprised many state leaders in March when it announced it had an extra $2 billion.

In a state with a population growing faster than its transportation system, extra cash for transportation projects was welcome news.

But for some lawmakers, the announcement also reignited an old frustration over accounting at TxDOT. State Rep. Joe Pickett, D-El Paso, described it as a "perception problem."

"We’re out of money, but the public is going to hear that y’all found $2 billion," Pickett said at a House committee hearing.

The extra financing stems from a mix of good fiscal management and factors out of the agency’s control, TxDOT officials said. For transportation advocates, the situation is a textbook example of how difficult it is to explain to the public how its government pays for new roads.

The largest portion — $750 million — is federal money, a revenue source that normally makes up a third of the state’s transportation budget but has been fluid in recent years amid Congressional gridlock. James Bass, TxDOT’s chief financial officer, said the agency had planned conservatively in case Congress followed through on calls by some members to drastically cut financing.

"The ability to forecast what Congress is going to do is not really a science," Bass said. "It makes it difficult to lay out a plan when we don’t know what that funding partner is going to decide."

Another $650 million is a result of bills for current transportation projects coming in cheaper than expected, Bass said. Refinancing the department’s debt at lower interest rates freed up another $600 million in borrowing.

The $2 billion will be spent on projects around the state, most of them aimed at reducing congestion in urban areas or providing rural communities better access to the rest of the state.

TxDOT’s windfall reminded state Rep. David Simpson, R-Longview, of the $1.1 billion the agency inadvertently double-counted in 2007, prompting the agency to abruptly pull some projects. Bass said the agency then reorganized departments to ensure that such an error would never occur again.

"An agency that can miss a billion dollars and then find a billion dollars has got some problems," Simpson said.

State lawmakers increased TxDOT’s 2012-13 budget by nearly $3 billion to $19.8 billion last year, though most of the boost came from borrowed money. In order to maintain the current transportation system, the state needs to invest billions of dollars more per year in transportation, according to a recent report by a state committee set up at Gov. Rick Perry's request.

"Two billion dollars is a lot of money," Bass said. "When put into the context of the overall transportation needs of the state, it’s not as large as one might think."

When the Legislature convenes in January, various groups hope to see lawmakers approve a reliable source of new revenue for TxDOT.

Pickett can already predict one of the arguments that will be made against giving TxDOT more money.

"Maybe if they shake a few more trees, they’ll find another $2 billion," Pickett said."That’s what I’m going to hear."

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Transportation Texas Department Of Transportation