March 22 Transcript

Texas Department of Transportation Commission Meeting

STAFF:

MR. WILLIAMSON: Good morning. It's 9:07 a.m and I would like to call this special meeting of the Texas Transportation Commission to order. It's a pleasure to have each of you here this morning. Thank you for taking time out of your day to come and be heard.

Note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of Secretary of State at 4:01 p.m. on March 13, 2007.

Before we begin today's meeting, if you would, please, join with me in taking a moment to pull out your pager, cell phone, Blackberry -- whatever you carry, and put it on a silent or vibrate mode so we won't be interrupted by other important personal business. The reason we ask you to do that is these newer devices, even when they're on the silent mode send signals out that disrupt everybody's business. Thank you.

We called this special meeting of the commission to discuss and receive information from the public and elected officials concerning the latest round of federal rescission of transportation funding.

Although the Federal Highway Administration has not yet issued a final notice -- and now we can say the Federal Highway Administration has issued the final notice because we got it yesterday -- TxDOT has been advised that the state will be required to return approximately -- I have the exact number, I think, don't I, Mike? -- $288 million in federal funds.

This is not the first federal rescission in the current authorization act. In fact, over the past 15 months, the state has been asked to return $305 million in previously ordered rescissions.

When Congress wants to reduce the federal government's portion to the states; it uses rescission as its cancellation method of previous authority to spend federal funds. Congress typically rescinds funds from the states' unobligated balances of federal funds. Unobligated balances accrue in the federal-aid highway program because Congress limits how much of the authorized program apportionment states can obligate in any given year. The authority to spend those funds carries forward until the funds are spent, rescinded, or returned to the Federal Treasury.

To put it another way, the federal government is asking that TxDOT and every other state department of transportation not enter into future funding obligations. As an example, if we planned to add a lane to Interstate 35 from the University of Texas campus north to Parmer Lane -- which many of us this morning wish that lane had been there -- had we made that plan and worked it into the MPO's plan and the Travis County area and into our statewide funding plan, and had we scheduled that, for example, the last year of the current authorization, we would be asked to stop that plan and not incur that obligation, in other words, postpone that construction project.

In another example -- to, I guess, speak of the elephant in the room -- had we planned to issue contracts for bicycle lanes in Harris County through the Enhancement Program for the year 2008, the federal government would ask us to choose not to move forward with that project and obligate them to repay us for the money we spent on the bicycle lanes.

The last rescission resulted in the canceling of a call for transportation enhancement projects. We permitted that decision to be made, as we have permitted many decisions over the years to be made, administratively without having a public hearing, such as the one we're having today, and we were roundly criticized by our policy makers across the street and individuals affected by that decision, the enhancement world, the bicycle world, and we take that criticism seriously and will not do that again.

Thus, the reason we're having this public hearing today is to let everyone have their say about what they think we should and should not be delaying or perhaps canceling by way of transportation department programs.

Let me remind everyone that if you wish to address the commission today, we ask that you complete a yellow card like the one I have in my right hand. You can locate that yellow card on the table in the lobby to your left. And if you would, try to limit yourself to three minutes, unless you're a sitting member of the legislature, in which case you may take as long as you like.

We plan to call speakers up in the order in which they signed, and we will make every effort to make sure members of the legislature's testimony that might be offered in writing is introduced into the record at the appropriate time.

It's the intention of the commission to listen to all who have something to say until 4:30 p.m. We all have obligations with the legislature after 4:30 that we have to keep. We welcome written comments as well as oral testimony and they will be entered into the record as well.

Before I begin with testimony, as I typically do in a commission meeting, I would ask each of the commissioners to take the opportunity to welcome you individually and place whatever remarks they care to place on the record. We'll start with Mr. Underwood.

MR. UNDERWOOD: Good morning. This is a first for me to be involved in a rescission, as they call it. It's a serious effect for us and whatnot, and look forward to hearing the testimony this morning.

MR. HOLMES: Thank you. We appreciate your participation this morning. This is obviously going to be a very difficult decision for the commission. Now, you know, one of the things that I would encourage you to do is that when you offer ideas of what not to cut, that you might identify ones that you approve for cutting. It would give us some additional information and thoughts. Thank you.

MR. HOUGHTON: Good morning. These are the things you don't like to do but you have to take the bad -- it's not all good, and this is one of the things we'll do today. And I echo Commissioner Holmes' remarks regarding not what we have to cut but what are some of the solutions that may be available to you that are on the top of your mind, and we look forward to those. Thank you very much.

MS. ANDRADE: Good morning. I also want to welcome you and thank you for taking the time from your busy schedule to come talk to us. I'm looking forward to hearing this discussion and hoping that we make the right decision at our next meeting, and a difficult one but one that we must do. Thank you.

MR. WILLIAMSON: Thank you, members.

We will begin with remarks from Coby Chase, who is the director of our Government and Business Enterprises section.

And let me say -- I see a lot of new faces -- those who are participants in our regular monthly meetings know that this commission is a very relaxed, first-name basis, and dialogue commission, so it is not unusual for one or more of the commissioners to interrupt you while you're giving your testimony to dialogue and work out a point rather than wait till the end. Those of you who wish to testify, please don't be put off by that. We just find it a better way to communicate, and we'll be respectful.

Coby Chase.

MR. CHASE: Good morning. For the record, my name is Coby Chase, and I'm the director of TxDOT's Government and Business Enterprises Division.

This agenda item is a discussion concerning the funding categories and programs from which funds may be rescinded and returned to the U.S. Treasury in order to comply with a federal rescission of unobligated aid highway funds apportioned to Texas. And as the chairman stated earlier, we had estimated that to be about $290 million. Officially it's $288 million plus some change.

Congress authorizes federal surface transportation programs every six years. The latest authorization, SAFETEA-LU, became law in August 2005. It provides funding for the nation's highways, transit, highway safety and transportation research programs through federal fiscal year 2009 which ends on September 30 of that year.

The congressional authorization statute establishes program policy, structure and funding levels. For the most part, the authorization builds on previously established surface transportation programs and makes changes to program eligibility, implementation and funding. Congress usually also adds new programs with each bill, all of which affect the overall size and reach of the federal surface transportation program and the funds available to support that program.

Congressional authorization also includes the formulas or discretionary mechanisms by which the funds in each federal surface transportation program are distributed among the states or among eligible projects. Formula programs which account for approximately 90 percent of the authorized federal highway, highway safety and transportation research programs and approximately 50 percent of the authorized transit programs distribute the program's funding among the states. States implement those programs according to the program's policy requirements set in statute.

Congress also creates many discretionary programs which either target designated funds to a specific state or project, or authorize the United States Department of Transportation to distribute the program funds to states and localities through a competitive application process.

The authorization act provides the total federal funding available for all states. Formula highway and highway safety program funds are apportioned to the states on an annual basis and states have four years to obligate those formula funds. For example, states have until the end of federal fiscal year 2009 to obligate -- and that means commit to a project -- federal formula funds apportioned in federal fiscal year 2006. Congress designates some programs, especially many targeted to particular projects, as available for obligation without any time limits.

MR. WILLIAMSON: Since we posted the public hearing, we've had several people contact us, either through the media or by telephone or email, indicating some concern that we were not properly planning; we weren't going to spend those federal funds. Therefore, this is really a management problem and not a problem of identifying where to cut.

Those questions indicate an absence of understanding of how the system works, and you just kind of zipped through it. All of us can understand what you said, but in order to be sure that those who are listening to the proceedings today completely understand how the system works, I'm going to try to describe it simply and you tell me if it's accurate.

The federal government says to all the states: Here's the amount of money that you may be reimbursed over the next four or six years. You spend your money and then give us the invoice and here's the reimbursement schedule; we'll reimburse your invoice. Is that an accurate description?

MR. CHASE: Yes.

MR. WILLIAMSON: So taking the Interstate 35 lane expansion as an example, we would notify the Federal Highway Administration through the environmental hearing process, the NEPA process, that this project was being looked at, we would gain their approval, we would issue contracts under their guidelines, we would spend the money to add the lane, and as we spent the money, we would turn invoices in. The Federal Highway Administration would look at the invoice and be sure it matched federal law and comported with the act and reimburse us a portion of that invoice.

MR. CHASE: Right.

MR. WILLIAMSON: So when you talk about obligated funds in the not-normal world of government, for the normal world of outside of government, that means reimbursements. No?

MR. CHASE: No, not exactly.

MR. WILLIAMSON: Explain the difference.

MR. CHASE: If I may, by way of a different example. The highway programs and transportation programs in general -- transit being an exception, I guess -- don't typically follow what most people understand the way the government funds things, and it's for a good reason. Most people generally assume that we receive money once a year and that's it and we have to keep waiting for the next year. That's not true.

What Congress does is they set -- and it's generally six years; in this case it's four but that doesn't really matter -- they set out a six-year program, House Transportation and Infrastructure and Senate Environment and Public Works, and it's a very large piece of legislation that says: Texas and all 49 other states, this is the amount of money we plan to allocate to you over this six-year period. And states start planning against that, and up until recently, that was a very reliable amount of money to plan against.

And one of the reasons is transportation projects, especially the kind that a state department of transportation engages in. You can't turn them on and off every year; you have to plan on large amounts over a period of time so you had a very high level of comfort and stability in federal funding knowing that it would come. So you'd plan on a six-year horizon, and once you obligated the funds to a project, you have four years to spend them, generally, so if you committed it on the last day of the bill, you have till four years later to finish out the project with those funds.

Now, however, annually the appropriators say --

MR. WILLIAMSON: Who are the appropriators?

MR. CHASE: The appropriations committee.

MR. WILLIAMSON: Of what body?

MR. CHASE: House and Senate.

MR. WILLIAMSON: Of the Texas Legislature?

MR. CHASE: No, sir, of the United States Congress.

MR. WILLIAMSON: United States Congress.

MR. CHASE: I will tell you if I shift to the legislature.

They set an annual amount that can actually be authorized or you can enter into obligations -- I think it's called contract authority at that point -- the set limits each year about how much money can go out. So even though the authorization bill says it's $100, the appropriators will say, Well, wait a minute, we've got to have enough to balance the budget, it's only going to be $80 this year.

It isn't that you won't eventually be able to enter into an obligation, it's just they're slowing it down so they can balance the federal budget. They look at everything all at once, they don't look at just transportation, they look at a bunch of programs, and if things start to get out of whack, sometimes they shove transportation funding in there to help balance the budget,

Now, I've read a couple of places and received some of the same emails that you have that says because the term "unobligated" implies to some people that we didn't obligate the money. No. What they're asking is that do not make any more future obligations or at least $288 million in future obligations that we haven't been able to obligate yet. In the large legislation they've been planning for it, we have and the regions have been planning for it.

Well, in this case they're saying: Well hold on, why don't you not plan for $288- of this in the future, it's not tied to a specific project, it's just don't enter into any obligations for $288 million, you choose where not to make those obligations.

MR. WILLIAMSON: Okay. So going back to my example, you would withdraw the entire project from your future planning document.

MR. CHASE: Right, or slow down a group of projects.

MR. WILLIAMSON: In the example of enhancements, the decision we made administratively a year ago where we just decided not to move forward with that program because we, in our view, wouldn't be able to obligate the funds anyway. Putting it on a highway reconstruction basis or a rail relocation basis, if we had the same plan three years from now to start that lane on Interstate 35 or move that rail in San Antonio, we just wouldn't plan it, we would just remove it from our plan.

Okay, continue.

MR. CHASE: Yes, sir.

Transit programs are subject to annual appropriations so they do not carry authorization for spending from year to year. For this reason, the transit program does not normally accumulate unobligated balances.

Although the authorization act distributes apportioned program funds to the states each year, Congress usually limits how much of those funds the states may use in any given year. This is because Congress wants to control how much federal money is being spent each year in an effort to control overall federal budget spending. Therefore, Congress establishes a limit in each year's appropriations act on how much states can obligate across the various federal surface transportation programs.

Finally, when the Congress wants to cut back on the federal government's commitment to the states, it uses a mechanism called a rescission. A rescission is a cancellation of previous authority to spend federal funds. Congress typically rescinds funds from the states' unobligated balances of federal funds. Unobligated balances accrue in the federal-aid highway program because Congress limits how much of the authorized program apportionment states can obligate in a given year. This is what I just walked through.

The authority to spend those unobligated funds carries forward until the funds are spent or rescinded, subject to the four-year time limit mentioned above. Transit programs do not accrue unobligated balances so they are typically not subject to rescissions, and I don't believe they are this time either.

MR. WILLIAMSON: What are not subject to rescissions?

MR. CHASE: Transit.

MR. WILLIAMSON: Are there other things not subject to rescission, or are you going to get to that in a moment?

MR. CHASE: I am one page away from a graphic, yes, sir.

Let's talk a little bit about the national gas tax dollar and how it gets spent. The primary source of federal surface transportation program funding is the federal motor fuels tax and related user fees deposited in the Highway Trust Fund. The fund has two accounts: the highway account and the transit account. Transit programs also receive funding from the General Fund so they get supplemented with other money.

The federal motor fuels tax is set at 18.4 cents per gallon.

MR. WILLIAMSON: Should we be looking at this?

MR. CHASE: Sure. The federal motor fuels tax is set at 18.4 cents per gallon. The states collect the tax from motor fuel distributors and the IRS estimates how much each state contributes to the Highway Trust Fund each year. Of the 18.4 cents per gallon collected in motor fuels tax, .1 cent per gallon goes to the Leaking Underground Storage Tank Fund -- which is one of my favorite federal acronyms, LUST -- 2.8 cents per gallon, or 15.5 percent, goes to the transit account, and the remaining 15.44 cents per gallon, or 83 percent of all the money, goes to the highway account.

And the graphic that's up there now is a dollar paid by anybody in any state in federal gas tax. That's Rhode Island, Connecticut, Texas, California, they all pay the same dollar in to Washington, and this is what happens to it if you look at it.

I'm sorry, it doesn't come across well on the television. We also have handouts if you want them too, if you're that interested in it.

Over on the brown side, my left -- stage right, I guess -- those go to non-highway purposes, this money does not come back to the Texas Department of Transportation to be spent. Some of it goes to our transit providers around the state but it does not come back to the Texas Department of Transportation. So of your first dollar in federal gas tax, 16 cents goes to other purposes: Leaking Underground Storage Tank Fund cleaning up sites that need that; and then transit, 15.5 percent of it goes to transit.

Set-asides and discretionary. Well, the entire dollar is reflected through SAFETEA-LU, the authorizing legislation. What happens next is 1.8 cents goes to the United States Department of Transportation so they can keep the lights on and work with us in the states in our various programs; 1 cent, in theory, anyway, goes to US DOT discretionary which means they get to decide which projects get picked.

But in recent years, Congress decided to pick those projects for them before they sent them a penny, so sometimes that penny goes to US DOT, sometimes it does not each year in an annual appropriations process; 8.2 cents of that dollar is congressional earmarks.

MR. WILLIAMSON: What's a congressional earmark?

MR. CHASE: It's when a member of Congress decides to take some of the money and apply it to a specific project.

MR. WILLIAMSON: I think we all up here understand what that is and I want to be sure the reader understands what that is. That's 8.2 cents out of the dollar Texans pay that gets pulled out of the authorization money -- or I'm sorry -- the money that would be apportioned to the State of Texas and set up -- no?

MR. CHASE: This is a national dollar I'm talking about.

MR. WILLIAMSON: This is every member of Congress.

MR. CHASE: Everybody right now.

MR. WILLIAMSON: Okay, not an individual congress.

MR. CHASE: Yes, sir. We're going to show a Texas dollar in a minute that explains how it affects Texas. The Texas dollar is divided a little differently.

MR. HOLMES: Mr. Chairman, can I ask one question?

MR. WILLIAMSON: Oh, please.

MR. HOLMES: The congressional earmarks can vary by state and by year. Is that correct? It's not 8.2 cents every year. Is that right, or not?

MR. CHASE: Well, this is the dollar that goes essentially into a six-year fund, so over the life of that six years, yes, it would be 8.2 cents over the life of that bill.

MR. HOLMES: You don't know what earmarks are going to come in year two or three of the bill.

MR. CHASE: Yes, and this is an important distinction to make. This is the authorization act which is fairly predictable for six years, you see everything in front of you for six years, including earmarks -- and they got a lot of headlines this time -- and formula programs and so forth and so on.

Where it changes year to year is appropriators have a certain amount of that money that they can spend every year, and that's where new earmarks pop up on an annual basis. For instance, they've over time chosen to take the U.S. discretionary .1 cent -- although it doesn't sound like much, it's a lot of money on a national level -- and spend it annually and not let the United States Department of Transportation decide where the money gets spent. That's where you see things happen annually that are different or new, or sometimes anticipated, sometimes not.

MR. HOLMES: Thank you.

MR. CHASE: They take 73 cents of the dollar, 73.1 cents, and put it to what we call the formula programs, and that's where we get into the rather animated discussion every six years about what you put in the formula program and what's your rate of return on the formula program.

In a perfect world, you'd stretch the program to cover every single dollar, at least from the blue and the green, because you're guaranteed a rate of return in the beginning of the bill -- and you've heard this before -- 90.5 cents on the dollar, and over time, it goes up to 92 cents in the legislation. That's the money you get back through formulas. We prefer formulas because it's predictable.

And what happens when 11 cents falls off or 8 cents or whatever, you want a rate of return and it can sometimes be kind of hard to do that in some of those respects. So the formula program, they slice off 73 cents and put it into the formula program and that comes back to us at a rate of return of 90.5 cents over six years, assuming they have the money.

And there are the safety, Safe Routes to Schools, miscellaneous funding, rail, highway crossings, things like that, interstate maintenance, national highway system, surface transportation programs, CMAQ which is congestion mitigation air quality, the bridge program. Equity bonus is what they had to add in at the end to make donor states whole.

When all the other programs don't really add up to the right rate of return, it's called equity bonus and that's spread among programs. Appalachian development highways, that's not really us, recreational trails, border infrastructure and transportation research. Well, not all of those are formula, I made a mistake. 73.1 cents of the money is pushed through that.

Let's go to the next slide and I can express it as dollar amounts. In SAFETEA-LU, highway formula programs, national funding, that's how much money you'll find in the bill for the four-year period. SAFETEA-LU is a four-year bill; they're usually six years but they took so long to pass it, it's a four-year bill. What Texas is banking on from that bill through its apportionments is on the far side under Texas Funding, and like I said, we don't receive any Appalachian development highway system funding, interestingly, and maybe that's a good thing, when you think about it, in the long run.

But I'd like to point out one little thing and brag on the delegation just a little bit. Down towards the bottom, border infrastructure program, $833 million, we now, through a formula, receive 25 percent of that money.

That was to the credit of Senator Hutchison and Congressman Burgess and Congresswoman Eddie Bernice Johnson, turning that from a previously discretionary program where it all got chopped up by appropriators and US DOT, to a formula program where we are guaranteed a 25 percent rate of return in that one category. So that was actually one of our kind of shining things in the bill.

But it all adds up over the four-year life of the bill to $13.7 billion. The national funding was the dollar you just saw and the Texas funding is there.

There's something interesting I'm going to have to point out here in the interest of keeping us all honest, so to speak -- at least intellectually honest. The last number $13.792 billion, that does not reflect rescissions that have been made. We've been subjected, as the chairman noted, to $305 million in rescissions in the last 14-15 months. That's just what the bill says we're getting.

And those rescissions were not planned for; nobody anticipated them. Congress decided they needed to balance the budget and this is one of the places they went. However, in the bill, the last year of the bill, there is a rescission that applies to everybody, it is an $8.5 billion rescission that is coming down the pike, unless Congress changes it and somehow adds $8.5 billion to the program. That will be a guaranteed hit, if nothing changes, to Texas of about $600 million in the last year of the bill.

So everybody knew that was coming. The kind of betting line was Congress would fix it. When Congress passed the bill, it was done with the anticipation that that would be fixed in the last year, and we haven't seen that that's going to occur yet. So in 2009 we might have a very painful $600 million cut that we'll have to deal with, just like you're dealing with today.

MR. WILLIAMSON: $609 million?

MR. CHASE: $600 million.

MR. WILLIAMSON: To the state?

MR. CHASE: Just us. $8.5- nationally.

MR. WILLIAMSON: Mike, are we planning for that?

MR. HOUGHTON: Wouldn't it be prudent, Coby, to start reserving or planning for that?

MR. BEHRENS: Of course, we have been making adjustments with the previous rescissions, of course, we're having to make adjustments now with the current one we just got this week, and we will be planning for that $600 million. Of course, we hope it doesn't happen, but we will have to start making adjustments here pretty quickly in our planning and laying out of our projects and letting people know that some of these projects may not come to pass.

MR. WILLIAMSON: Coby and members, we have striven mightily on this rescission to approach this in a businesslike manner and hopefully not let anyone even think that this is scare time, that this is just a normal, and had we done it as we had done in the past, we would actually have made this decision administratively and just moved on down the road, so to speak.

But I must confess, if I was aware of the $609 million, I've forgotten it -- and at my age, that's easy to do -- but that is a significant amount of money. I mean, the $288- we're talking about today is bad enough, but that is a lot of money.

MR. HOUGHTON: Total rescissions over the life would estimate, if my math is right, about $1.2 billion over those four years?

MR. CHASE: If this last rescission comes to pass, and that's not to mention anything else that might happen between now and then anyway that we're not anticipating. But when this legislation was passed in 2005, it was well documented that there was more money in the program than there was in the Highway Trust Fund, and there was a certain group of members who were advocating a gas tax increase and other things to get there, and they felt that at the end of this piece of legislation, this would force the issue. You would have 50 states having to deal with $8.5 billion in cuts at that point.

MR. HOUGHTON: Well, Coby, going back to your first page on the formula that we get 73 cents back, you cut $1.2 billion, potentially?

MR. CHASE: Potentially.

MR. HOUGHTON: What would the effect then be on percentages over the life of the bill? My math is not good this morning.

MR. CHASE: That's almost 10 percent.

MR. HOUGHTON: About 10 percent?

MR. CHASE: Yes, about 10 percent.

MR. HOUGHTON: Close to 10 percent of your authorization.

MR. CHASE: It's 8.7 percent. I consulted with an engineer, it's 8.7.

But if I may, having been in this business for a number of years and watching it -- and Tonia Ramirez and Chris Lippincott, who are behind me, who have as all -- this isn't necessarily a new situation but it was never ever of this magnitude in previous bills and Congress would tend to find the money. But again, recent history shows, last few years shows it's impossible to find that money now. All of sudden, $600 million is starting to feel like it's going to be a real cut.

MR. HOUGHTON: It's a looming issue.

MR. CHASE: And the highway program for many, many years, since the birth of the interstate system, it's been very predictable, very stable, these things were kind of hiccups that you knew you could be over, that's why we've talked and you've talked in particular a lot about the Highway Trust Fund going bankrupt. Nobody is kidding at this point.

MR. HOUGHTON: I still don't think they're getting it. I still don't think the public gets it.

MR. CHASE: It's tough.

MR. HOUGHTON: Not just the public, the appropriators.

MR. WILLIAMSON: Well, maybe they do get it, maybe they're ahead of us, maybe the public does understand. What I'm saying, Ted, is maybe normal Texas understands better than not normal Texas.

MR. HOUGHTON: What would be not normal? Do you want to go there today?

MR. WILLIAMSON: Absolutely not.

MR. CHASE: I'd be willing to be the not normal Texan, if that helps at all.

(General laughter.)

MR. WILLIAMSON: It's not negative, but I mean, you must admit that what we do every day, 99 percent of the state doesn't do every day. They're going to work in free enterprise and they're raising their children and they're trying to get to church and they're trying to keep their parents in a good rest home and they're doing all of the normal things that people do.

MR. HOUGHTON: Can you get personal with it, when you talk about $1.2 billion and you look at all the funding categories what you can cut?

MR. CHASE: We will.

MR. HOUGHTON: When you get personal and you apply it to a region, you apply it to San Antonio; they got first this time.

MR. CHASE: Don't underestimate her.

(General laughter.)

MR. HOUGHTON: I think when you talk about regions in our state and how $1.2 billion potentially affects mobility and construction of projects.

MR. CHASE: And a little bit in Congress's defense -- a little bit -- when this bill was being drafted, there were different assumptions at that time, but a lot of the world changed very rapidly once this legislation was passed and we had a hurricane, we've had a war on two fronts to sustain, and transportation alone isn't taking the hit.

MR. HOUGHTON: We're going to have more hurricanes, we know that it's just inevitable that they're going to come.

MR. CHASE: So it is a symptom of a number of several budget issues, to be honest with you.

The federal transit formula programs authorized under SAFETEA-LU are funded primarily by the transit account revenues in the Highway Trust Fund, however, since these funds are not directly affected by the rescissions, we did not provide program details here.

Now, this is for every dollar Texas sends to Washington, I'm taking that same dollar and how does it come back to Texas. That national dollar looks a little different than what a Texan sends and what a Texan gets back.

Over on that side, funds that never come to Texas for highway purposes, some of that money does come in transit via DART, Cap Metro, et cetera, all around the state. And it's also blended with some general revenue funds. What's kind of interesting is that that's still something like a 50-cent-on-the-dollar rate of return.

MR. WILLIAMSON: You kind of poked me about not normal Texas and I was trying to figure out how to answer the question. What you just said is a good example of a not normal Texan thing. You just zipped through what we believe is one of the most significant discrepancies in the distribution, and the normal Texan watching this tape would not have picked up on what you just said. We picked up on it because we're used to this lingo. So go back and explain carefully what you just said.

MR. CHASE: The brown portion of the dollar on my left, 30 cents.

MR. WILLIAMSON: Thirty cents of the dollar that was a federal gas tax dollar was paid when I went up to the pump in Brenham, Texas, and bought a gallon of gas and paid my federal taxes, 30 percent of that goes where?

MR. CHASE: To the Leaking Underground Storage Tank Fund, to transit, and to other states.

MR. WILLIAMSON: For transit.

MR. CHASE: No. Forget LUST for a second -- as fun as it is to say that word -- transit, that 15.5 cents in transit, that's nationwide.

MS. ANDRADE: But not just for transit.

MR. CHASE: Correct. And what they do is they take that 15 cents -- and that's Texas's share of that transit dollar that goes into the transit fund.

MR. WILLIAMSON: This is the point I was trying to get at. When you said Texas's share, most people would think Texas's share, 15-1/2 cents comes to Texas, but that's not what you said. You said 15-1/2 cents gets pulled out of the Texas dollar.

MR. CHASE: Right, and goes into a common pool.

MR. WILLIAMSON: And it goes into a common pool for all states.

MR. CHASE: Correct.

MR. WILLIAMSON: Now, what percentage of that 15-1/2 cents makes its way back to Texas public transportation providers?

MR. CHASE: About 50 percent.

MR. WILLIAMSON: Fifty percent. So when people ask us -- because we uniformly are challenged about this -- one group of not normal participants says the rate of return is 90 percent, another group of not normal participants, us, say it's 74 percent, and so it creates this argument over who's right and who's wrong which is a convenient place to go instead of confronting the problem. It's better to argue over who's right and who's wrong than it is to argue over the problem.

And I want to be sure we're clear for those who will testify before us today and for those who may be watching us, a Texan pays a dollar in federal gasoline taxes, 15-1/2 percent of that dollar gets lifted and placed in a common pool for the transit of all states in the nation, and of that 15.5 percent, or in the case of the dollar, 15.5 cents, 7.25 cents comes back to one of six public transportation providers in the state or public transit providers in the state.

MR. CHASE: We see a little bit of it for the rural transit, very little, a very tiny sliver of that, but it does not come back for highway purposes.

The K on the brown dollar is what we give to other states, it never comes back to Texas. That is where we become a donor state. That is every time you go to the pump, you're building a very nice bridge in Connecticut, that's that money there. That's what makes us a donor state.

MR. HOUGHTON: Well, you'd have to add in half of the transit into other states.

MR. CHASE: Right. But here's a little bit of my challenge in representing this, we don't control that transit dollar. I try to talk in terms of what the Texas Department of Transportation is receiving in this case. At best, we see 50 cents on that transit dollar, so to speak, the amount that accumulates at a 50 percent rate of return. Since there's many permutations to this, and in an effort to keep it as kind of straightforward as possible, I try to limit as much of the discussion as possible to what the Texas Transportation Commission actually controls and has some say over, what we spend.

MR. WILLIAMSON: What we are responsible for.

MR. CHASE: Yes, sir. What we are responsible for. Not that you're not raising very good issues, but I'm trying to keep the conversation to this and my slides reflect that is what I'm saying.

But that second brown slug is what is lost forever in the donor state fight, at least for four to six years in the highway program, not the transit program, the highway program.

Highway funds for multiple purposes. And again, since federal funding is complex and there's inter-marriaging and cross-pollination, it can be difficult to do everything down to a tenth of a percent but we got very close.

The blue section of the dollar, that's what comes back to Texas, the Texas dollar, so you're getting 40 cents back to the Texas Department of Transportation for programs that are under our responsibility, and also that green part of the dollar, and I'll explain why the green part of the dollar is what it is.

The blue part of the dollar -- and this is not every single program, we had to kind of lump things, there's no way to completely divide that dollar up to where you can even see it anymore, so we took a little bit of license in kind of putting things together -- 2.6 cents of it is federally funded safety programs, though there is a little other money in other parts of the blue and green dollars that go there.

Demonstration projects -- this goes back to Commissioner Holmes question, and this goes to Chairman Williamson's question earlier about subdividing up what was already coming to Texas -- demonstration projects is where you find congressional earmarks where members of Congress take money that's already guaranteed to come to Texas and divide it up among projects within Texas, and we see those for a four-year period. And that's what received a lot of headlines after SAFETEA-LU was passed, the bridge to nowhere was part of those headlines, things like that.

Transportation enhancement programs, 1.6 cents of the highway funds that come back are dedicated to transportation enhancement programs. Remember, this is all before any rescissions, this is must -- what we're planning against. And then our maintenance 11.5; congestion mitigation air quality improvement program 2.9 cents; border infrastructure eight-tenths of a cent, recreational trails one-tenth of a cent; bridge replacement and rehab, keep our bridges functional so school buses can go across them; metropolitan planning, money goes out to the MPOs for their use; environmental and planning.

And I have to explain this, those are necessary for construction, you have to do environmental studies and planning, and also you have to do right of way acquisition, but they're what is traditionally considered construction, and that's why I separated out construction money in green.

What that is is when a community used to come before the commission, now before their MPO asking for funds, they don't tend to ask for anything in the blue category -- I can't recall one specific request for anything in the blue -- it's always for new construction which is generally thought of as added capacity. That's a primary way to relieve congestion with this dollar.

So that's how the money come back to us in broad categories.

MR. HOUGHTON: Of the demonstration projects, Coby, how many of them get fully funded and how many of them come to fruition?

MR. CHASE: I don't know that I can answer the last question, but I would say almost all of them come to fruition.

MR. HOUGHTON: Over what period of time?

MR. CHASE: Federal earmarks demonstration projects have something unique attached to them meaning the money never expires once the money is obligated or has been obligated for it. There's still a handful of demonstration projects -- and Mike or Steve or Amadeo, nod your head -- that date back to ISTEA in 1991.

MR. HOUGHTON: I think somebody in this room made a comment one day that a congressman who put an earmark has expired before the project has expired.

MR. CHASE: Oh, sure. I believe, if I remember correctly, there are at least a couple of earmarks from members who are no longer in Congress.

MR. HOUGHTON: And they still sit there as federal earmarks.

MR. CHASE: Yes, sir. I don't know that it is a huge sum of money, but yes, sir, they do exist.

MR. HOLMES: Coby, may I ask a question, please? In the blue section, the way that's sliced and diced among those different categories, is that mandated by the federal government, or do we allocate that between those programs?

MR. CHASE: It's mandated by the federal government. Sometimes we kind of stand alone. DOTs don't tend to stand alone, but when we're kind of having discussions with some of our Texas partners when we're in Washington about what we would ask for fewer categories, maybe block grant is too big of a term here, but say establish goals.

There's no penalty if we don't relieve congestion in Texas, unlike if the air gets dirty there's a clear penalty, everybody knows exactly what happens, but if you want us to relieve congestion, tell us to relieve congestion and we'll go relieve congestion. If you want us to make sure the air is clean, tell us to do that and we'll do it. But what happens is all these funds start to get over-prescribed.

And we had a very difficult challenge when SAFETEA-LU was not yet SAFETEA-LU, between TEA-21, the last surface transportation bill, and the current one, and we were driving people a little crazy because some people were advocating new safety programs.

Let's take this money and start putting it into safety, it might have been Safe Routes to School or something, one of these programs, and we sound absolutely monstrous when we say we don't think that's a good idea. Tell us to reduce traffic incidents or increase safety around school zones and we'll go do it, set a target for us and we'll exceed it, we promise you that. But if you start stripping away the money and don't guarantee us a guaranteed rate of return of that money, how on earth does that make a Texan safer? I mean, we put a dollar into this new safety pot and maybe get back 74 cents.

And people who get involved in these kind of programs are very dedicated and very caring and they want to make sure I get home safely every night, but the idea is we'll just create a new program with the same amount of dollars and keep dividing it and dividing it -- and I'm getting a little bit on a soapbox here. But those come down in federally prescribed categories that we don't have much choice but to spend them in those ways.

Sorry to take so long with that, Commissioner, I apologize.

MR. WILLIAMSON: Well, we appreciate you answering that question, but I want to get back to the question I asked 30 minutes ago: Earmarks is a federal set aside. Right?

MR. CHASE: Yes.

MR. WILLIAMSON: It's a set-aside by a member of Congress for a specific project. Does that project have to be in the state's transportation improvement plan?

MR. CHASE: No.

MR. WILLIAMSON: Does that project have to be in the MPO's regional transportation improvement program?

MR. CHASE: No.

MR. WILLIAMSON: Does it have to be in anybody's planning program, or can it be just what that person thought needed to be done?

MR. CHASE: It is the latter.

MR. WILLIAMSON: And does it have to fully fund the cost of the project of what that person thinks ought to be done?

MR. CHASE: No.

MR. WILLIAMSON: So $2 million can be pulled out of what otherwise would have been a planning process done collaboratively by 5,000 participants across the state and set aside for a specific project that no one has asked for, no one wants, and no one can pay the bill for.

MR. CHASE: Yes, sir.

MR. WILLIAMSON: Is that how I would look at it?

MR. CHASE: That is true.

MR. WILLIAMSON: Thank you.

MR. CHASE: I'm going to talk a little bit about the rescission process and then show another Texas dollar and where the cuts can be made.

A federal rescission of funds reduces the amount of federal funds provided by an appropriations or authorization act that has already become law. Similar to an appropriation authorization act, a rescission must be passed by both chambers of the United States Congress and signed into law by the president. In most instances, a rescission is used to provide funding for a new or emergency legislative priority without increasing federal spending government-wide or by a particular agency.

Another common scenario is to accommodate for budget shortfalls caused by federal revenue predictions that are discovered to be too high after a spending bill is passed into law. Rescissions are generally targeted at unobligated funds allowing federal agencies and states to have some flexibility in how to meet the requirements of a rescission.

Congress only recently began using rescission to control spending in federal transportation programs. Our records indicate that the first rescission TxDOT had to deal with was in fiscal year 2002. Federal rescissions of highway contract authority balances have taken place in each fiscal year from 2002 through 2005.

Congress distributed the fiscal year 2002 rescission proportionately within the five core programs: interstate maintenance, national highway system, surface transportation program, bridge, and congestion mitigation air quality. So they did it for us.

Congress also set the total rescission amount for subsequent annual rescissions in fiscal year 2003 through 2005 but the rescission orders allowed each state to identify the amounts to be rescinded among the core highway formula programs.

The following is a summary of the rescission amounts for Texas. In 2002 it was $24.6 million; in 2003 it was $19.67 million; in 2004 it was $16.39 million; in 2005 it was $102.65 million. The total of these four years of rescissions is $163.29 million in lost contract authority.

Next slide, please. The recent 2006 rescissions have indeed cut deeper. Over the last 15 months, Congress has enacted a series of three additional and larger rescissions affecting selected programs in the federal transportation program. The rescissions usually make certain safety programs exempt from rescission impact, the Rail Highway Crossing Program, the Surface Transportation Program safety set-aside, highway safety improvement program, and safety incentives to prevent operation of motor vehicles by intoxicated persons. You see a key word that continues to pop up there to be safety.

States must identify the unobligated balances they will reduce to meet each state's share of the rescission order. The states' core highway apportionment programs, such as interstate maintenance, national highway system, bridge, surface transportation program, congestion mitigation air quality and equity bonus funds are affected.

Only programs with unobligated balances can be used to satisfy the rescission order -- and you've heard me say this a number of times -- therefore, transit programs which do not carry unobligated balances are not affected by rescissions in general. However, the transit program was affected by a 1 percent across the board cut ordered in fiscal year 2006, United States Department of Defense appropriations act.

MR. HOUGHTON: You made a statement the only places you can cut are with account balances.

MR. CHASE: That have account balances into the future.

Now, what we currently have before us -- I took the Texas dollar and I got rid of all the things that don't come to us that we are responsible for, the transit dollars and the stuff that goes to other states and the Leaking Underground Storage Tank, I just lopped those off the end so not to cause any visual clutter up there.

On that end, federal funded safety and the congressional demonstration projects are exempt from rescission, cannot return any of that money. I said I oversimplified construction funds just for sake of clarity up there, but there's some safety set-aside money in there as well, and then there's a surface transportation program sub-allocation to areas which means there's a certain amount of money that goes straight to the MPOs and regions of the state for their discretion and how they apply them to the programs they're responsible for. Those are exempt from rescission.

Now the next slide, please. Subject to rescission, everything in red. And the reason I call out transportation enhancements is simply because it's been discussed quite a bit. I want to show people where it is.

Really, it technically falls under the surface transportation program so it would have been hidden, but I imagine a number of people in the audience are very interested in the transportation enhancement program and I want to make sure that they saw that it existed up there and wouldn't leave anyone to believe that it's not possible to share the pain, so to speak -- not that they haven't already.

So those are the programs that will be subject to rescission, that's where the rescissions would be made when the department decides to make the decision to rescind.

I'm not going to go through the long history of rescissions but just talk about the effect of them on transportation planning on page 15 of my comments.

When Congress enacts a multi-year surface transportation authorization act, such as SAFETEA-LU in 2005, state departments of transportation usually authorize funding levels identified in the legislation to devise plans for their highways, transit, highway safety and transportation research programs over the term of that authorization act.

For SAFETEA-LU, the one we're currently operating under, TxDOT developed its ten-year transportation improvement program based on that $13.6 billion I showed you earlier apportioned to us for 2005 through 2009. When Congress authorizes annual apportionments in legislation such as SAFETEA-LU, the annual apportionments serve as a commitment by the Congress to make these funds available to the state within four years of that year, subject to annual obligation limits.

Rescissions disrupt the plan developed based on the authorized funding levels in SAFETEA-LU and previous authorization acts. This causes states and their local planning partners to revise their transportation plans to delay scheduled projects because the anticipated funds are no longer available and planned. That affects not only near-term projects but also those projects farther back in the planning schedule that cannot move forward toward construction now that other projects are being delayed due to the lack of anticipated funding.

To date, the largest impact on these rescission orders has been on the highway program. Thus far, the agency has chosen, after serious deliberation and consideration, to make the required cuts in the federal highway programs with the least direct relationship to the agency's goals of reduce congestion, improve safety, clean air, enhance economic opportunity and those that increase the value of our transportation assets.

Primarily, the transportation enhancement activities program authorized within the surface transportation program has seen its balance reduced to minimize the negative impact on the rest of the programs under the department's jurisdiction.

The president recently signed the fiscal year 2007 continuing resolution which includes language authorizing another rescission of the federal highway apportionment program, and that's why we're here today. It's $3.5 billion nationwide, it affects every state proportionally, no state is singled out percentage-wise than any other state.

And ours is $288 million in Texas highway program funds, the things you'll find in the red area on the dollar bill up there. This public hearing is helping to lay the groundwork to prepare for the upcoming rescission order.

How should TxDOT proceed with the next and any future rescission decision? Should TxDOT reach its own decision about where to make the cuts without public input? I think we've already answered that. We are having public input today. Should TxDOT cut funds proportionally in each eligible and available program and apply this reduction across the board in each of the state's 25 districts? That's a choice. Should TxDOT cut unobligated funds from specific eligible categories in order to meet the rescission order?

The next and last slide. Taking that dollar bill -- those are the dollar amounts as I left them last week -- and I'd have to call on Steve or Amadeo at some point to nod their head and say if they're not exact, they're within a few dollars -- of the eligible programs and the dollar amounts that are available for rescission.

MR. HOUGHTON: Have we already taken into account the previous rescissions in these balances?

MR. CHASE: Yes.

MR. HOUGHTON: We have?

MR. CHASE: Yes.

MR. HOUGHTON: So what we have left over is the $288- and potentially $600-, correct, so it's $888 million.

MR. CHASE: Potentially, yes, sir.

MR. HOUGHTON: Almost a billion dollars.

MR. CHASE: But as the bill moves forward in time, if future rescissions are required, money will be added to these categories, and there's two more years of the bill. This is just what's eligible right now, so they will grow. I'm sorry. It's federal math. It's kind of hard to follow.

MR. HOUGHTON: Well, regardless, there's a balance somewhere.

MR. CHASE: Right.

MR. UNDERWOOD: Coby, I want to step back a minute, please, sir. If I understand correctly, of the cuts of the dollar that we receive, that Texas gets, basically about 54 cents are the only ones that's really available out of that dollar that can be cut, if I added that up right. If I added that up correctly, it's about 54 cents.

MR. CHASE: The red area?

MR. UNDERWOOD: Right. That's available. It's not the whole dollar is my point.

MR. CHASE: Yes, sir.

This concludes my presentation on the federal surface transportation funding structure and the effect of rescission orders on our transportation plans. If you have any further questions, I'll be happy to take them.

MS. ANDRADE: Members, any questions?

MR. UNDERWOOD: In other words, we've got almost $300 million we have to cut out of the, quote, dollar we receive, but can only cut out of the 54 cents of that dollar.

MR. CHASE: Yes, sir.

MR. UNDERWOOD: That makes it even tougher

MR. CHASE: Out of these future balances.

MR. UNDERWOOD: Thank you.

MR. HOUGHTON: One of the things we may want to talk about today is do we take into account the potential $600 million. Mike would you recommend that?

MR. BEHRENS: I'm sorry, sir?

MR. HOUGHTON: Take into account the $600 million looming out there as a potential. Do we take that now or do we wait? Do we let our partners know?

MR. BEHRENS: What we need to do, Commissioner, and we will be doing is to look at how the impact of that amount will affect our planned programs. And of course, as you have changed in the last couple of years where we go to the locals with the identified funding amounts, such as our eight metropolitan MPOs, they will have to be told that there may be some impact in the future, like in 2009.

They will then have to make decisions on their prioritization of projects on which ones they want to do and which ones may come off the table should that rescission occur.

MR. UNDERWOOD: But Mike, have we already told them that you can expect X amount of dollars and now we're going to go back to them and say now that's been changed. They already have their priorities.

MR. BEHRENS: They have their priorities and some may be aware that there would be a future rescission but that's something that we're going to need to do. They're going to have to have that in the back of their mind that it could occur.

MR. UNDERWOOD: Basically we've said, We've promise you X amount of dollars and now, by the way, minus this now.

MR. BEHRENS: That's correct.

MR. CHASE: There's a 30-day clock that has started ticking, at least on the $288 million that Federal Highway Administration does need that.

MR. HOUGHTON: And we send them the information on what we are going to scale back.

MR. CHASE: Yes, sir.

MR. HOUGHTON: Where we make the cuts.

MR. CHASE: Yes, sir.

MR. HOUGHTON: So Steve or Coby, do we take the 8.7 percent across the board? Would that be an accurate way of cutting? Would that be a pro rata?

MR. SIMMONS: Good morning. For the record, Steve Simmons, deputy executive director of TxDOT.

Commissioner, that is an idea that has been floated out in several venues, one of them being across the street, just doing a blanket across-the-board. I was just reminded, Mike, a minute ago, you know, one of the categories we need to be very mindful that is in the area to be cut and that is the congestion mitigation air quality.

Those are funds that the MPOs in the non-attainment areas are relying very heavily on to meet their attainment goals, and if those funds are cut, then there's a possibility that they could not meet their attainment which has even more serious implications. So to say across the board, I think we need to be mindful of some of those programs that are up there.

MS. ANDRADE: Thank you.

Coby, I have a question. Can you refresh my memory on equity bonus?

MR. CHASE: Equity bonus used to be called minimum guarantee, and what that means is when -- I call it a function of math; purists have other names for it -- what it means is when they add up all they decide that each state will receive in SAFETEA-LU in year one, a 90-5 percent rate of return on that set of programs -- not every part of the dollar, just certain parts of the dollar -- and then it ramps up to, I think, 91, 91-1/2, 92 by the end of the bill.

And to get the math to work out, since all these programs have all these different formulas in them, you can't just do it that way; you take a slug of money at the end and put it back in so it gets everybody up to the right rates of return. And it's actually very handy money in the sense that the department puts it among programs. It's flexible in that respect so you can spread it among programs.

MR. HOUGHTON: I meant to ask you a question, Steve. What cities rely on congestion mitigation, CMAQ money?

MR. SIMMONS: The Houston-Galveston Area Council is a non-attainment area, the Dallas-Fort Worth area is non-attainment, and El Paso for particulate matter -- oh, I'm sorry -- and Beaumont. I always lump them in with the Houston-Galveston Area Council.

MS. ANDRADE: Houston-Galveston, El Paso, what other?

MR. SIMMONS: Dallas-Fort Worth and Beaumont.

And I thought about what I said. The category is congestion mitigation air quality, but almost all of those funds are used toward air quality issues.

MS. ANDRADE: Members, are we ready to hear from the public?

MR. BEHRENS: One thing I might add to what Steve said about air quality, we have indications that the EPA may be tightening up their air quality guidelines. If that should happen, then we would have like Austin-San Antonio could become non-attainment, we could have Tyler-Longview, and if my recollection is right, the CMAQ money doesn't increase overall to the state of Texas but then we'd have to divide that money up to those other regions that have become non-attainment. So that's another issue that we're going to have to look at on the horizon.

MR. HOUGHTON: On the CMAQ, is the source of all CMAQ money from SAFETEA-LU, Mike or do they get it elsewhere?

MR. BEHRENS: You're talking about these non-attainment areas? Well, they have local funding also, but this money coming out of the transportation bill is something to help them to meet air quality standards, but there's certain things they also have to do locally.

MR. HOUGHTON: Give me an idea of what they do locally. Houston, Dallas-Fort Worth, El Paso, what do they do?

MR. SIMMONS: Well, to answer the previous question first, every one of these programs have a local match, whether it's state or local or county.

MR. HOUGHTON: To access the money.

MR. SIMMONS: To access the money, yes, sir.

MR. HOUGHTON: Is it 80-20?

MR. SIMMONS: The congestion mitigation air quality is 80-20, so 80 percent federal and 20 percent state or local.

MR. HOUGHTON: Do any of the tolling authorities contribute to CMAQ or do they receive CMAQ funds? Do they contribute to the CMAQ issues in their areas?

MR. SIMMONS: I do not believe so, but we do have Alan Clark from the Houston-Galveston Area Council MPO and Dan Kessler from North Central Texas Council of Governments that could tell you more specifically what some of the projects are in their CMAQ.

MR. HOUGHTON: My question, though, specifically is do any of the tolling authorities in the state contribute to CMAQ mitigation.

MR. SIMMONS: I don't believe so.

MR. HOUGHTON: Thank you.

MR. WILLIAMSON: For members of the audience that see us coming and going, all of us have obligations that we're going to have to meet at the same time as the public hearing is going on. We anticipate the public hearing is going to last quite a long time today, so when you see one or two of us leave or one leave for a while or two of us leave for a while, please don't take that as disrespect. We have meetings during the legislative session that we have to go attend.

We will now begin to take public testimony and we are going to hear from a good friend of TxDOT -- although we don't always agree on everything but he's a good friend of TxDOT, Bill Jones, mayor of Temple.

MAYOR JONES: Mr. Chairman, thank you very much. Good morning, commissioners, Mr. Behrens. Thank you for the opportunity to come before you today. We're very interested in this opportunity to speak.

I just want to tell you we certainly empathize with what you're going through right now. We certainly have the same thing in our cities, and as a mayor we have a lot less zeroes to deal with, but we deal with the same kind of issues that you deal with relative to the public's perception of how government works.

And as it relates directly to transportation, being the vice-chair of the Killeen-Temple Urban Transportation Study, the MPO -- which is an opportunity for public input into this entire process which we don't get near enough public involvement in -- I can certainly understand your comment earlier, Mr. Chairman, about does the public really recognize what's going on and do they believe what's happening.

And I would just like to ask you through this process, and continuing process in the future, to give us a chance to help you to help get that word out to the public. And so I'm really pleased that this public hearing is occurring today, 20-20 hindsight as to whether that would have helped with the enhancement project hearings if we'd have had an opportunity to have had input into that.

I attended the consensus meeting on March 6 that we had here at your offices over on Riverside which, again, at the MPO level we had the opportunity to discuss and debate and try and help you to determine from our perspectives what the cuts and how they would impact us at our level, and that was just a particular meeting on the 6th that was Category 3 funds, and that continued.

We had a meeting as recently as yesterday with our MPO to continue to figure out how can we reduce those funds to address the needs of the state because of both the reduction in funding from the federal level but also the increase in construction costs which is the other side, and we haven't even talked about that this morning, this has all just been about a continued reduction in federal funds.

So my comment is to say to you thank you for the opportunity to be able to give input into this process at this level, and please give us at the MPO level the opportunity to continue to give you input through the process. Let us help to decide where the cuts need to be from the MPO. We know our projects; we know what we come and ask you for; we are still looking for those alternative ways of funding projects.

In Temple we are looking at a pass-through financing plan and we hope to be at your meeting in either April or May to bring a financing plan to you for or pass-through financing project which should make a significant impact to the I-35 construction project that's going to go on in through Temple.

So those are my comments, sir, and I'd be happy to elaborate on that if you have any questions, but otherwise, again, appreciate the opportunity.

MR. WILLIAMSON: I'm sure commission members want to dialogue; I know I do. It's free form, guys. Anything for the mayor of Temple?

(No response.)

MR. WILLIAMSON: Okay, Bill, I want to preface this question with the most earnest assurances I can give you that I do not wish to engage in a philosophical debate about the Trans-Texas Corridor, but I do earnestly ask you if you have advice about how we deal with, on the one hand, knowing that the comprehensive development agreements which is private sector financing, the pass-through toll agreements which is, in effect, binding future gas tax revenues back to the current time, the Mobility Fund which will be depleted this year, and the corridor which offers the opportunity to loop the five urban centers of the state and parallel Interstate 35 at this time -- if all of those initiatives are either delayed two years or even done away with, as someone who lives astride Interstate 35 and who sees our books and knows that there is no revenue to expand 35, how do we at the commission explain to our policy making board, the legislature, that it's these tools to do these things, for not only is there no money to expand 35; there's soon to be even less money to do anything anywhere in the state. What advice could you give us?

MAYOR JONES: Far be it from me to be able to provide that kind of advice. I'm concerned about it as well. I grew up in an area where toll roads have been commonplace for my entire life, from the time I learned to drive back in the '60s. I grew up in the Chicago area so I've seen toll roads and I get on our toll roads that we have here today.

State Highway 130 -- when I went to Houston the other day and got to take State Highway 130, and I was on 45 the day after it opened going down towards St. David's Medical Center, and they're wonderful facilities. They're built in miraculously quick time frames compared to what we see in normal construction times.

And if our legislature does not see that, the benefits of those types of facilities, the way we can build them, the speed at which we can build those facilities and that the monies aren't there otherwise, I don't know that there's any advice I can give you to tell them other than we in the trenches out in the cities are just going to have to communicate with our legislators to help them to understand these issues.

I think it's the only way we're going to be able to build highways in Texas. We're already behind the eight ball with the growth we've seen in the last decade and a half, and growth has outpaced our ability to construct highways. And it's just going to get worse; it's not going to get better.

And so if we don't come up with the alternative methods -- I mean, I stood here in June of 2002, a month after being elected mayor, to bring a project here for our Northwest Loop that you've helped us to fund to get that developed and that's what we're going to do the pass-through financing proposal on to really bring that thing and get it done so we can have that I-35 bypass.

The fact that we've done all of that and still that's the only way we can build these roads is, with these alternative methods of financing, and if the legislature doesn't see it, I don't know how I can help other than contact individual legislators and meet with them as frequently as we can to tell the tale.

MR. WILLIAMSON: Well, I'm frequently the recipient of criticism for asking those questions from this podium as if to suggest that I'm trying to get you to agree with me. I'm not. I am really perplexed watching the session, watching the public hearings, and then behind the scenes listening to the angst, the concern. And I am a little bit curious about how to explain it in a better way because we're obviously not doing it the best way.

MAYOR JONES: I read the articles with great interest relative to what's going on in the legislature right now. The moratorium -- that might not be the right word, but I think that's the word that was used -- on the private funding agreements, the CDAs for tolled facilities, and the moratorium that's being placed on those, it specifically affects one particular project. So I'm concerned as well.

I can be concerned on the one side for those in my community and our surrounding area that they're concerned about how that's being done, so I listened. And I'm a supporter of Trans-Texas Corridor, as you know, and I've spoken in public before about that project in Central Texas, but I'm also concerned to make sure that we do it the right way, that it is a good long-term solution. So while it gives me concern that we're not looking at alternative methods, it also gives me concern that -- if we're doing it too quickly and we're not taking everything into consideration.

And I think the process is working, quite frankly. I heard a lot of the concerns that were brought up two and three years ago that were incorporated into legislation, that was passed by the legislature, that was responded to by this commission, and I think the process is working just fine.

MR. WILLIAMSON: Well, maybe I fret too much about it.

MAYOR JONES: Well, I think that's what you're paid to do up here.

MR. HOUGHTON: I have a question, Mayor.

MAYOR JONES: Mr. Houghton.

MR. HOUGHTON: Can we put up this chart, Categories Balances for Rescissions?

One of the thoughts, Mayor, is to take a pro rata cut across the board. Would you recommend that?

MAYOR JONES: I don't know enough about all those funds, Commissioner Houghton, to be able to make an intelligent answer on that either way. I don't know that level of detail on all these funds.

MR. HOUGHTON: Maybe that's not a fair question.

MAYOR JONES: I wish I could help you with that but it's just not something that I have enough information on to be able to make an intelligent response to.

MR. HOUGHTON: Well, be prepared, those that want to speak, because that's a question I'll ask everyone.

MAYOR JONES: I don't come to you saying today: Support my project; cut every place, but don't cut my project.

MR. HOUGHTON: We get emails and we get letters that recommend what gets cut, and I would just like to hear people in the audience today that have the opportunity to speak on what they would recommend.

MAYOR JONES: All I come to you today is to allow us, at least at the MPO level because that's where our public input opportunity is for our citizens at the very basic level of government, and that's right to the people and they can come and meet with us and we can talk about specific projects that impact their lives every single day in our communities.

The Category 3 funds, the Category 4 funds as it relates to Interstate 35 construction and what's going to happen with those dollars, and then we have the opportunity to make decisions for all of our projects within the MPO, as we just did for the Category 3, and I think we came up with a very good solution that met the objectives that were given to us from the commission, through the legislature and from the Federal Highway Administration. They said, Here's what you need to achieve.

We met in a consensus meeting on March 6, we went back to the MPOs with the further reductions, met the objectives that we were told we had to meet, and met the needs of our particular areas, our communities and the projects that they had in a way that continues to move the ball forward.

And I think that's the level that we can most effectively for your benefit because we're an open process.

MR. HOUGHTON: If we told you that the cut was 8 percent, you'd go figure it out.

MAYOR JONES: We'd just go figure it out; we'd try and see where it is that we can make cuts.

MR. HOUGHTON: Local decisions made by local folks.

MAYOR JONES: Absolutely, yes, sir.

MR. WILLIAMSON: Regional decisions made by local leaders. Even in your area, the MPO is regional. Right?

MAYOR JONES: Yes, it is.

MR. HOUGHTON: What's your footprint: Killeen, Temple?

MAYOR JONES: All the way over to Copperas Cove, so that's a little bit of Lampasas County, and we even pick up a little tiny piece of the Brownwood District and then the Waco District, south of Waco in the Temple-Killeen area.

MR. WILLIAMSON: I'm going to give Mike a heart attack but I want to ask you this question. Have you been in the MPO process for a while?

MAYOR JONES: Almost five years.

MR. WILLIAMSON: What would you think if we realigned TxDOT districts to MPO boundaries?

MAYOR JONES: Well, I don't know that that would be that effective. I think we have a good working relationship with the Waco District right now, and even though there are two MPOs within that area. You'd just increase your administration costs.

MR. WILLIAMSON: That's what I tell him when he asks me about it. I say, Things are okay right now.

MAYOR JONES: I don't know that I could recommend that.

MR. WILLIAMSON: I don't ask that in a flip manner. I think that question is being asked a lot behind closed doors with our policy makers, not from the perspective of they want to do it but from the perspective of if this is going to be a transportation session again, let's think about everything else that might give us a reason to think about how the delivery system works. So you might be, just in the back of your mind, kicking around what your answer would be if Ms. Delisi were to ask about it.

MAYOR JONES: I'm only have the perspective from KTUTS and the Waco District, but I'd say there's enough on our plate to deal with; let's not break something else that might not be broken already. And if that piece is working, then let's leave that alone. Let's work on the things that need the attention.

MS. ANDRADE: Mr. Chairman, I have a question. Let's stick to rescissions. Mayor, with what you've heard, that we may have a future $600 million cut, are you going to take that message back to the MPO so you all can start thinking about it? I mean, since you're asking to let the local MPOs, let the local people decide how you're going to deal with that perhaps $25 million cut this time around, are you going to start discussing the fact that there may be a future cut? I mean, is that a message that you'll take back to your MPO?

MAYOR JONES: I think I have that responsibility. I mean, I was waiting to hear Mr. Behrens's answer from Commissioner Houghton's question of should we take that into account right now.

MR. HOUGHTON: I can only speak for myself, but my recommendation would be take this looming $600 million back to your MPOs. That is a message that needs to be worked on.

MS. ANDRADE: Yes, we need to start talking about it. Whether it happens or not, and I think most likely it will, I think that it's very important because I think one thing that people get frustrated is that sometimes we don't have enough time and some things come up as surprises, but here you've heard this and you need to start talking about it.

MAYOR JONES: Well, and I think that's prudent to do, and then as we look at -- and I'll just refer to it as that part of the dollar that was in red -- that component, all those little slices -- all of a sudden now each one of those is going to be important.

When we're talking about $600 million, we're not just going to go over here on the construction piece and say our KTUTS MPO is 7.4 percent of the $288 million and so out of what construction dollars we have, is it going to be Category 3; is it going to be Category 4? we're also going to look at, in addition to construction dollars, planning dollars, all those little slivers, and now each one of those is going to be important for us to consider potentially.

So if that's real and if that's something that we at this level are faced with, then it's our responsibility to look at that at our level as well, yes ma'am.

MS. ANDRADE: I would encourage you. And thank you, Mayor, thanks for everything that you do.

MAYOR JONES: Thanks very much for your allowing me to speak today.

MR. WILLIAMSON: We appreciate you coming up.

Martha, I don't see a card. Did you not want to testify? Will you permit the chair then to recognize a city councilperson who's a strong advocate of transportation, although not always in agreement with what we do, the Honorable Martha Tyro from Temple. We're glad you're here.

MS. ANDRADE: Next we have Alan Clark.

MR. CLARK: Good morning, and thank you for the opportunity to be here. My name is Alan Clark and I'm the director of the metropolitan planning organization for the Houston-Galveston area.

My remarks today, I think, should be kept in mind are really just remarks from Alan Clark because I've not had the opportunity to make any definitive policy decisions with our policy council. In fact, one thing I think that is one of those factors that we cannot change is the fact that the federal government gave TxDOT very little time to respond to this rescission because I think their history has been they've been much smaller and they were generally viewed as administrative type actions of relatively little consequence to current programming, but that is not true when it's $300 million worth of budget authority.

I would like to speak, though, to the outcome that I would hope we could achieve instead of saying cut this one by X percent or that one by Y. First, to maintain the transportation improvement program process that we have based upon the Unified Transportation Plan. That's a long, multi-year document. The TIP focuses on the next four years, if you include 2007, a five-year window, and it's unclear to me how the programming in our TIP process relates to the unobligated balances that you've been discussing this morning.

Generally, I believe that TxDOT gives us programming targets that are sort of a blend between what we know about authorizations and what we expect in the actual appropriations process. So it is hard for us to judge to what extent of our planned TIP process -- which is due to you all in just a very short amount of time -- may be overextended.

Second, you've heard already concern about one program category, congestion mitigation air quality. I would not say that none of its unobligated balances should be sacrosanct. I would say that we would appreciate the opportunity to consult with you about the obligations we expect to make in the next TIP cycle because those will be directly tied to performance in our state air quality plan.

And then another general guideline or outcome would be to attempt to preserve the dollars where you have the greatest flexibility. Some of the programs are what I call the O negative blood donor funding programs. The surface transportation program flexible funds, the equity bonus program -- you have the greatest discretion on how to apply those funds. Actually, the congestion mitigation air quality program doesn't seem very flexible, but the metropolitan planning organizations do use it in an extremely flexible manner.

I would also make, in addition to these general observations, some promises. The metropolitan planning organizations always have felt TxDOT is our largest and most important partner in providing mobility and transportation. We're willing to work with you in any way necessary to meet this immediate goal, although there's a very short time, and I realize your ability to consult with us in any great amount of detail will be extremely limited. You won't have time to ask us to have policy council meetings and vote on specific areas most likely.

However, this appears to be a long-term problem for both of us. What I would suggest is that we continue this dialogue. We might want to formalize it in some way, but we begin to work now against the contingency that we could see significant additional rescissions into the future.

My only other thought about this process is one that you've already spoken to, a concern that, to the extent possible, we enable local decision-makers to participate in these decisions. They're eager to do so. For example, if you all determine that these rescissions would actually mean a reduction in the money that we are currently programming for this next TIP cycle, we would welcome the opportunity to know how much reduction might be needed, what ability we have to influence where those reductions might be, and to make specific recommendations back to you.

Obviously there are limits imposed in the rescission order. Not all programs are equally available for reduction, but we could explore any areas of possible flexibility. It could be that this could even involve some financing decisions, perhaps either delaying or financing a project in a different way to enable other projects that are critical and ready for project letting to be able to proceed. I think we're very aware of the great difficulty in doing that and would be willing to work with you in any way that we could to accomplish that.

Really, that's the extent of my comments. I'm happy to respond to any of your questions.

MS. ANDRADE: Thank you, Alan. Members, any questions for Mr. Clark?

MR. HOUGHTON: How many members in your MPO?

MR. CLARK: There's about 25 or 26.

MR. HOUGHTON: Are they elected officials or a combination of both?

MR. CLARK: They are a combination. For example, in addition to the local governments, TxDOT from Houston and Beaumont districts have voting members; our port, our largest transit authority are voting members.

MR. HOUGHTON: Mayor or city council members?

MR. CLARK: Yes.

MR. HOUGHTON: Or county judge?

MR. CLARK: That's correct. Or they're a designated representative in many cases that's a commissioner.

MR. HOUGHTON: State reps, senators?

MR. CLARK: We do not have currently any representatives of any legislative body other than local governments.

MR. HOUGHTON: And how many counties does your MPO have?

MR. CLARK: We have eight.

MR. HOUGHTON: Eight counties. Would you recommend that we look at the looming $600 million?

MR. CLARK: Yes, I would. It's particularly difficult for the three non-attainment cities. Not only must we meet funding commitments for clean air projects, but in recent years the failure to implement in a timely way even added capacity projects that can be a challenge to the overall air quality process. So we're really boxed in, and as a consequence, it would be very important for us to know of these reductions. It would have consequence to the analysis of our plans and programs and their ability to contribute to air quality.

I know it seems contradictory to say that mobility projects are good for air quality but many of them are because of the levels of congestion that we experience. So if we are looking to make cuts in our programming activities that would have important consequences for our overall ability -- for example, to meet air quality goals -- again, the other aspect of that is to look at alternative ways to achieve some of those important goals, and we're doing that every day.

MS. ANDRADE: Thank you very much.

MR. CLARK: Thank you very much.

MS. ANDRADE: Next is Dan Kessler.

MR. KESSLER: Good morning, commissioners, Mr. Behrens. I'm Dan Kessler. I'm the assistant director of transportation with the North Central Texas Council of Governments. I'm here this morning on behalf of Michael Morris -- I know that's big shoes to fill -- who is our director of transportation and of course our Regional Transportation Council.

Personally, I'm usually the one waiting in the wings at our presentations to make sure our staff has usually got all our I's and t's dotted and crossed as we present before you. In fact, we're looking forward to being here before you next week with our Dallas-Fort Worth delegation appearance before the commission, as our partners in mobility and perhaps will have more opportunity to discuss this then as well, but we look forward to that presentation.

Basically acknowledging, again, the $3.4 billion in rescissions, the $288 million impact to the state, we've estimated that conservatively this could be as much as $50 million in a rescission for the Dallas-Fort Worth metropolitan area -- in fact, I'd emphasize conservative. I think that could be more.

We've basically identified, I think, four guiding principles -- I'd echo all of Alan's comments -- but four guiding principles that we've come up with. Again, with limited information about the balances in these accounts, it's difficult to make specific decisions. But the four basic guiding principles we've identified are:

First, we'd propose that the commission develop target reductions applied proportionally to each TxDOT district, that these reductions be based on average allocations in the Unified Transportation Program to account for the variability in allocations from year to year.

Second, we'd propose that the commission permit metropolitan planning organizations to review the transportation enhancement program for additional reductions to minimize the impact of rescissions on funding programs that improve congestion, safety, air quality, economic opportunity, and asset value.

Third, we'd propose that the commission delegate to the MPOs in the urban and metropolitan areas and to TxDOT districts in the urban areas the responsibility to determine which funding categories to reduce in order to achieve the target reductions. As Alan said, we know the time is short; we're used to tight schedules. I think it's reasonable, given the importance of this, that we would move ahead.

And then finally, I'd echo the comments that you heard, both from Mr. Simmons and Mr. Clark, that NCT COG proposes that the commission exclude the congestion mitigation air quality Improvement program funds and other programs to the extent that they result in air quality improvements. As we've mentioned, that could potentially affect our ability to meet our commitments in the state implementation plan for air quality for determining target reductions.

And of course, we want to minimize the possibility of roadway sanctions on remaining capacity funds. And even to Commissioner Houghton's comment earlier -- and I think Alan touched on it for a moment, not only do we need these congestion mitigation air quality programs for air quality initiatives, but even in our ability to show conformity of our current transportation improvement program and our metropolitan transportation plan --

Our margin of error is so close in Dallas-Fort Worth between 2007 and 2010, if we did not have those funds for those programs, we would not be able to show conformity of the plan in our TIP, and I think that speaks to the importance of those programs.

I also have the current privilege of serving as the chairman of TEMPO which is our board of 25 MPO directors. We met yesterday. I want to thank Mark Marek, your director of your Design Division. On the fly and not as part of his daily schedule, we asked him to come over to the Thompson Center and he did and was able to brief all our MPO directors on the rescission process. Many of them have stayed over and are here with you this morning because they wanted to hear this discussion.

And I think while we didn't really have the opportunity to come up with a consensus -- again, as Alan mentioned, none of us had the chance to go back to meet with all our policy boards -- as a body, I think the MPOs certainly agreed with Mr. Marek's observation about the principle of retaining those funds that give both the state and our metropolitan areas the greatest amount of flexibility, and that's something I think we can work with you go to through and do that.

I think we'd certainly want to echo a comment that, Commissioner Houghton, you made earlier that it's troubling that we're not seeing the attention to this on the federal level that I think is warranted, not only in the rescission process but the overall funding shortfall that we're facing.

We're certainly not seeing, I don't think, the debate and the attention to the federal funding as we've done in Texas, nor the accomplishments that we're making in Texas on a state level when it comes to these funding challenges.

And then finally, I know I can speak with confidence for all the MPO directors that all 25 MPOs stand ready to work with you on this challenging issue, and any way that we can assist you with this process over the next several weeks, we'd be glad to do so. And thank you for your time.

MS. ANDRADE: Thank you, Mr. Kessler. Any questions?

MR. HOUGHTON: I have a couple. Give me an example of a CMAQ project. We all talk about it.

MR. KESSLER: Sure. We have many, many projects. We kind of classify it as all oars in the water. We have about 25 to 30 different air quality program initiatives in our region. Many of them are reducing single occupant vehicle travel, so, for example, the funding of high occupancy vehicle lanes in our region was initially done with our CMAQ funds.

We're now using those funds for a lot of programs directed towards alternative fuel technologies, pilot programs, working with local governments.

One of our largest programs that we use CMAQ funds is on intersection and traffic signal improvements. We have a $16 million program working with local governments where we go into each of the corridors. We audit them; we try to find what's the quickest, most efficient way that we can make operational improvements with those funds.

So they're really targeted towards a series of what I would call directed programs with a very quick implementation time. And one of the things the federal government requires of our programs is that we must demonstrate measurable air quality benefits, and so all these funds go directly towards some type of program implementation that we can do that.

MR. HOUGHTON: Let me ask you on this CMAQ issue, what's your budget on CMAQ at the RTC?

MR. KESSLER: I would say roughly we probably program approximately $50 million a year in CMAQ funds.

MR. HOUGHTON: And where does the money come from?

MR. KESSLER: As stated earlier, it's federal funding, and then we have to come up with a 20 percent local match on those programs.

MR. HOUGHTON: And who matches it?

MR. KESSLER: Largely those come from local government initiatives. As I mentioned, when we're out there improving traffic signals and intersections, we'll go to a city of Dallas or Irving or Mesquite and they'll provide the 20 percent local match for those programs.

MR. HOUGHTON: Does your tolling authority contribute any to CMAQ?

MR. KESSLER: I don't believe so at this time.

MR. HOUGHTON: Do they contribute any dollars to other programs in your RTC?

MR. KESSLER: Well, we're certainly in negotiations with our tollway authority about ultimately reaching that point, but currently their funds have been focused on their toll facilities.

MS. ANDRADE: Thank you very much.

MR. KESSLER: Thank you, we appreciate it.

MR. HOUGHTON: Let me ask you another question. So if we say the cut is 6 percent, you go figure it out. Is that the authority you want?

MR. KESSLER: I think so, yes, sir. Thank you.

MS. ANDRADE: Next we have Linda -- I wasn't sure how that is pronounced.

MS. LA SUT: Thank you. My name is Linda La Sut. I'm the director of the MPO in Bryan-College Station, and we did have the opportunity to have our policy committee and our technical advisory committee meet two days ago. They represent the City of Bryan, City of College Station, Brazos County, Texas A&M University, TxDOT, and of course, the transit agency.

We weren't armed with all of the information that we have today, but we did try to go through the issues and we had the cooperation of our district engineer, Bryan Wood, who presented a lot of the different slides that you saw today, along with the projected gas tax.

I handed out some information such as Tonia Ramirez's document on the unreliability of federal financing. We've been talking about this for years, and especially a lot in the last couple of months, and I think this time the committees really understood that this means we're dealing with unobligated monies but for future projects, there will be fewer of them.

And so some of the recommendations that they've made are now, I guess, already off the board, but I'll talk about them anyway. They first wanted to have the commission look at the -- I know there are federal earmarks, but look at the earmarks that are not in the long-range plans, the metropolitan transportation plans, and just pull those monies.

And I understand that they're protected by law and they're already obligated, but that was one of their recommendations, and I certainly think it would be an exercise perhaps for the $600 million to see if we could pull those monies. We'd have to change the law, I guess, though to do it that way.

And then we also looked at not touching categories of funding 1, 6 and 8 which are preventive maintenance and rehabilitation, structures replacement and rehabilitation, and safety. Those, of course, are the top concerns for our MPO.

And then we also propose, like the other two large MPOs have echoed, that they be fair and equitable to all-sized MPOs across all funding categories. So if you were to cut unobligated funds from Categories 3 and 4 which affect more what I work with, the monies that we receive, that you also proportionately cut Categories 2 and 7.

And we also, of course, would like maximum flexibility for the MPO to decide on where the cuts should occur. If you can give us the target -- and again, the other large MPOs mentioned this -- then we'd like to be able to meet locally with our representatives and discuss which future projects that would affect.

But I'd like to give a lot of thanks to our district engineer who brought this to our attention before we even received the email about the rescission. It gave us time to meet with our board, and I'd like to thank you for letting me speak today.

MS. ANDRADE: Thank you very much. Ted, any questions?

MR. HOUGHTON: I understood from an email that I got from Mike Behrens that Bryan-College Station would be exempt from any type of cuts.

MS. LA SUT: I could take that back to my committees; they'd love that.

MS. ANDRADE: That's what I also heard for San Antonio. Fred, did you hear that for your area too?

MR. UNDERWOOD: Yes, ma'am, I heard that.

(General laughter.)

MS. LA SUT: I know you haven't asked me, Commissioner Houghton, but for the $600 million, we definitely intend to take that back to our committees to share the information.

MR. HOUGHTON: I haven't finished asking yet. And my question was if we said the cut is 6 percent, you go figure it out.

MS. LA SUT: Yes. We've already turned around some ballpark numbers and know that it's going to affect either a lot of small projects or some large ones that we have for our area.

MR. HOUGHTON: So you'd like that kind of flexibility?

MS. LA SUT: Yes, we would. Thank you very much.

MR. UNDERWOOD: One question, ma'am. How is your feeling on the fact that the recommendation -- the conversation is that they not affect the air quality, to keep that $279 million and not touch it, so to speak? What is your position on that?

MS. LA SUT: Well, we're in attainment; we do not receive CMAQ funding, but I have worked for larger MPOs before and I really feel that CMAQ money -- and my committee did talk about this -- that it should almost be protected as well because they provide important benefits for mitigating air pollution, and along with safety, I think CMAQ funds should be protected as well.

MR. UNDERWOOD: The reason why I ask that, when you get into some other areas and rural areas where this really has no effect for them, they're going to actually take a bigger cut, so to speak, for the fact that they don't have this problem of the air quality issue.

MS. LA SUT: Well, my committees are really good at looking regionally for our area, Brazos County, and they also understand that we can't just say take Houston's and Dallas's money. They're servicing the bulk of the population, they're in the non-attainment areas, and so we understand that the cuts are going to have to be done, we just want them to be done equitably and proportionately across all MPOs and funding categories.

MR. UNDERWOOD: Thank you, ma'am.

MS. ANDRADE: Thank you very much, and congratulations for having such a great communication between your district engineer and your MPO. That's great.

MS. LA SUT: It really is good. Thank you.

MS. ANDRADE: Thank you.

Alan, we have a question for you. Would you come back up?

MR. HOUGHTON: My memory, I forget most of the time. Alan, my question, is to Dan, give me an example of CMAQ projects in your area.

MR. CLARK: We have many of the same kinds of activities. A couple he didn't mention specifically that I'll add to -- in addition to our programs to encourage car pooling and van pooling, we have also spent -- helped to develop our HOV system with our transit authority. We have a program where we are directly subsidizing the acquisition of clean heavy duty vehicles because heavy duty truck engines contribute a very large percentage of the total nitrogen oxides from on-road vehicles, disproportionate share.

And so we have a program to aggressively purchase older vehicle engines and allow them to either be refurbished, or in most cases, they have to be replaced. We actually destroy the old engine to ensure that we're getting air quality benefit from that. In one year alone, we devoted $40 million to that particular program effort because of its very large air quality benefit.

MR. HOUGHTON: Dan said his budget is $50 million on CMAQ. What's yours?

MR. CLARK: It's about the same.

MR. HOUGHTON: About $50 million?

MR. CLARK: It's about the same amount. Let me also say, though, that we do look for mobility projects that qualify under the CMAQ program that have substantial air quality benefit, and one of those has been to identify key locations where an additional direct connector, for example, can relieve a bottleneck that we're seeing on the ground. So we have had a large dollar value of those projects historically.

One of the challenges in the future is that the clean air process with its very near-term deadlines, often makes it difficult for us to make air quality decisions that play into the strengths of local governments because many of those relate to land use decisions. So I don't personally like buying truck engines, have nothing against the companies that own them. We're trying to help them out, but I know that's not as lasting as some of the other kinds of efforts we could take.

Let me also say on the levels of congestion mitigation air quality funding, when I suggested that we protect our current programming commitments, I think that we should look at the unobligated balance because reducing that in some way may not affect our ability to meet our programming commitments. So I wouldn't suggest that that not be looked at at all.

MR. HOUGHTON: Well, again, you would like to make those choices, not us. That's what I'm hearing, kind of the constant theme, consistent theme.

And I think we need to understand the relationship between the unobligated balances and the programming that we are now doing, because that programming level, as I understand TxDOT's past practices, is not based upon the apportionments but is something in between that and what they think Congress will actually give us in real dollars through the budget process.

MR. HOUGHTON: Alan, the other question is you said transit authority, you have transit authority's contributing dollars to CMAQ, HOV lanes. I remember that. You've talked about that.

MR. CLARK: That's very true, and really the participation in the congestion mitigation air quality program is like what Dan was sharing in Dallas; it depends upon who the project participants are. So we're working on a park and ride lot with Metro. They're going to be making a financial commitment that's at least 20 percent. It could very well be 50 percent or more of that project.

Same with TxDOT. They, of course, provide local match for those, but in many cases they're bringing in other funds to the project than simply the congestion mitigation air quality program.

MR. HOUGHTON: Does your tolling authority contribute to CMAQ?

MR. CLARK: Only if we have a project activity with them. For the most part, the connector projects to tolling facilities, for example, the ramp built between US 59 and Beltway 8 on the north side out from Intercontinental Airport, that was a CMAQ project. But even though it connected to the toll road, TxDOT was the implementing agent on that and I'm not sure that the toll road authority contributed to that particular project.

MR. HOUGHTON: Do they contribute other funds to the MPO in Houston?

MR. CLARK: Again, only as a match for their project activities. Having said that, though, of course, tolling is a major element of the financing of projects in our long-range transportation plan.

MR. HOUGHTON: I understand that.

MS. ANDRADE: Thank you very much.

MR. CLARK: Sure. Thank you.

MR. HOUGHTON: Thanks, Alan.

MS. ANDRADE: Next we have Kim McKnight.

MS. McKNIGHT: Thank you so much for having me. I'm Kim McKnight, I'm the executive director of the Texas Downtown Association. We are a 20-year-old statewide non-profit supporting Texas downtown revitalization.

A couple of points -- I don't want to speak too long -- we still haven't given up on that last round of enhancements that has been cut, and while you're thinking about how these cuts are going to be made, I just wanted to point out a couple of facts or just numbers for you to think about.

I just got a call yesterday from one of our members in East Texas, a town of 4,800 that spent $54,000 in engineering and architectural costs putting together a project to respond to your call for enhancement projects. Another town of 1,200 in the Panhandle spent $20,000 which is very significant.

Just being completely conservative and estimating of the 332 projects that came in, if you were to guess that they all spent about $10,000 apiece trying to put these in -- which I think is a very low number -- that's $3.32 million, and I would venture to say you could probably double that. So I just want to point out that there are some costs that may not be looked at.

And then further, 20 percent of that $687 million in requests that came in equals about $137.4 million that was sort of leveraged for this program locally, and these communities met, came to a consensus, got community buy-in for these local really community and economic development projects.

I think transportation enhancements as a term is kind of a misnomer because it implies that these are beautification programs; it implies that these are kind of fluff, if you will.

Quite frankly, our members and many of the people, if you would talk to them, these are really pretty serious mobility issues on a very small level. ADA access in their downtown supports local businesses, connectivity projects so that their citizens have a better quality of life. Better quality of life really affects the ability of a community to attract businesses and various things. It's a little bit harder to estimate and we haven't really undertaken kind of looking at what the economic impact of these enhancement programs are in Texas.

But I just want to point out that having this public hearing is so great because it allows us to bring up some issues that may not have really been thought about, but if we were given the opportunity to do some inquiry and finding out what really are the real costs involved in eliminating transportation enhancements and really what are transportation enhancements, are they really community and economic development programs, or is it really just beautification?

Further, I just want to point out that the cuts that are coming down federally are affecting every state across the nation, and to our knowledge, there is no other state that has taken the move -- I mean, we'll see now that we have this new round of rescissions -- to eliminate completely the transportation enhancement program.

I would venture to say that we have an amazing state with incredible cultural and natural resources, and I can't understand why we would think that our resources are somehow less important than other states', and if you look at the way enhancement funding is spent nationwide, you'll see that we are really behind the curve.

So just in trying to leave a few ideas before I leave, I don't know enough about transportation funding on a large level to really suggest to you what other things could be cut, but what I would suggest is that this is such a great start today by really talking to the communities, finding out what these different projects mean to them, so I would really encourage you -- and we can work quickly. I can promise that with a mandate to come forward with more feedback and more figures and more numbers, we will work very hard to get you information in a very short period of time.

Also, I would just like to encourage TxDOT to be as creative as possible and really try to look at maybe some out-of-the-box ways to fund things that are important. I'm sure you are, but I just want to sort of emphasize that I think that this is an excellent time to show real creativity and ingenuity.

That's really all I have to say, and I just want to thank you so much for having this hearing. I can't tell you how many members called to say they were so happy to hear that there was a hearing; they couldn't be here, and we appreciate you so much for letting us speak.

MS. ANDRADE: Ted, any questions?

MR. HOUGHTON: Let me just make a couple of points on your statement regarding other states not going to the methods that we have.

MS. McKNIGHT: Yet.

MR. HOUGHTON: Yet. A little known fact maybe outside the transportation world, Texas is the largest donor state.

MS. McKNIGHT: I do know that.

MR. HOUGHTON: The other flip side to that, we're 50 out of 50 in receipts.

MS. McKNIGHT: I understand.

MR. HOUGHTON: And now on top of that, we have a growing population. Mike, did we let more projects last year than any other state? Is that an accurate statement?

MR. BEHRENS: We typically let about 1,100 to 1,200 projects every year.

MR. HOUGHTON: Every year? Number one in letting, so we're building more than any other state but with less dollars.

MS. McKNIGHT: With less dollars. Well, I appreciate that, and something I want to tell you is I learned so much in the presentation this morning, and had we had that opportunity to get all this information three or four months ago, we could have spent these last four months really solving this issue. So we're at least starting now, and I really appreciate that.

MR. HOUGHTON: Would you rather take this up with your local MPO as far as enhancements is concerned?

MS. McKNIGHT: I think most of our Downtown Association members are city managers; they're city planning staff; they're tourism and economic development folks who are already working through their MPOs, and I think that that is a great way to start the process of getting public feedback.

MR. HOUGHTON: So you would like to work with Senator Watson as far as determining whether --

MS. McKNIGHT: Absolutely.

MR. HOUGHTON: Or Alan Clark in Houston?

MS. McKNIGHT: Absolutely.

MR. HOUGHTON: Or Roy Hillyard in El Paso?

MS. McKNIGHT: Absolutely, we would, we really would.

MS. ANDRADE: Commissioner, did you have any other questions?

(No response.)

MS. ANDRADE: I just want to thank you, and I know this is difficult for you all because you're involved in it, but we feel your pain, I mean, these are difficult decisions. And I'm so glad that you were here to better understand our situation, and I think that you need to take it back to your membership of what difficult decisions we're having to make for the state of Texas.

MS. McKNIGHT: And I appreciate that, thank you. And as far as how best to solve this, whether we work through the MPOs, I think any solution that involves some sort of bottom-up decision making is what we're in support of. And again, whatever we can do to help, we're happy to. Thank you.

MS. ANDRADE: Thank you very much.

MR. HOUGHTON: Thank you very much.

MS. ANDRADE: Next we have Vic Suhm.

MR. SUHM: Good morning. I'm Vic Suhm. I represent the Tarrant Regional Transportation Coalition and the North Texas Commission. In the interest of your time, I'm going to say ditto to everything Alan Clark and Dan Kessler said. I know you're under a time crunch this time. In the future, if you could just give a percentage hit to the MPOs and let them make the decisions, it probably would make our life easier and we would probably be more pleased with the results.

That's all I have to say. Thanks a lot.

MS. ANDRADE: Thank you very much.

MR. HOUGHTON: Thanks, Vic.

MS. ANDRADE: Next we have David Hollingsworth.

MR. HOLLINGSWORTH: For the record, I'm David Hollingsworth. I am a member of the Williamson County Historical Commission but I'm mostly speaking here today for myself.

My suggestion is cut the programs proportionally. There are various programs. How important are each of the programs? That was already laid out by Congress. They've already said we think this much should go into this bucket, this much into this bucket. That's a metric that everyone can understand, and I understand that some of them are more difficult to pull from than others, but that is a fair and equitable metric.

I also understand that the MPOs want more flexibility and so maybe these two things should go hand in hand: half should be fixed; half should be handed off to the MPOs to decide.

Road construction is not an unqualified good. It is a good, but it also has negative effects. The negative effects are partially mitigated by transportation enhancement projects. If you cut the transportation enhancement projects, that removes some of the systemic mitigation for the negative effects for road-building.

The amount of money that we're talking about here in terms of transportation enhancements is very important to these local communities, but it's very small in terms of the amount of money that we're talking about for TxDOT as a whole. I have a graph here -- and I'm sorry my printer isn't working so great, so this line may not show up so well.

This is TxDOT's budget for 2007 -- I got this off of the pocket facts -- it's $7,379 million. This line here is the construction goal in just the Austin District for 2007 -- now, they're not going to meet that because of various reasons -- that was $957 million. This line is $466 million, that is transportation enhancement funding from 1993 through 2006. So that's 13 years worth of transportation enhancement funding is small in comparison to the constructio