Texas Department of Transportation Workshop Meeting
Ric Williamson Hearing Room
Dewitt Greer Building
125 East 11th Street
Austin, Texas 78701-2483
Wednesday, January 28, 2009
Deirdre Delisi, Chair
Ted Houghton, Jr.
Ned S. Holmes
Amadeo Saenz, Executive Director
Steve Simmons, Deputy Executive Director
Roger Polson, Executive Assistant to the
Deputy Executive Director
MS. DELISI: Good afternoon. It is 1:37 p.m. and I would like to call this special meeting of the Texas Transportation Commission to order. Note for the record that public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State at 3:45 p.m. on January 20, 2009.
Before we begin today's meeting, please place your cell phones and other communication devices on the silent or off mode.
Today's meeting will involve a series of discussions on various topics before the department and the commission. Meeting in an open forum gives us a chance to deliberate, gain greater understanding, and provide guidance and direction to staff.
We will accept public comment that is relevant to any of the posted agenda items but will not have an open comment period as we do during our regularly scheduled meetings. To comment on an agenda item, we ask that you fill out a yellow speaker's card and identify the agenda item you wish to speak on. You can find these cards at the registration table in the lobby. We will limit each speaker to three minutes.
Before we begin, do any of the commissioners have any questions or comments?
MR. UNDERWOOD: One quick, Madame Chairman.
MS. DELISI: Yes, Commissioner.
MR. UNDERWOOD: After going over some of the documents we saw, I guess we're saving paper because we're shrinking them and whatnot, so I wanted to give these to our fellow members, you'll need this, it's a magnifier.
MS. DELISI: I already got mine, I actually needed it today.
MR. UNDERWOOD: It has a flashlight on it too in case you're working late.
MS. DELISI: All right. Now with that behind us, Amadeo, I will turn the meeting over to you to take us through the rest of the agenda.
MR. SAENZ: Thank you, Madame Chair. With your concurrence, I'd like to begin today's meeting with agenda item number 3. Mary Meyland is going to present a discussion item on the current status of the vehicle miles traveled tax, and then she's got a plane to catch because Mary is going to Maryland to go look at what their performance management program is like. So Mary will come up and she'll have someone help her presenting the vehicle mile tax program.
MS. MEYLAND: Yes. Thank you very much, Chair, commission. Thank you very much for the opportunity to come up here and present basically an overview of the status of VMT across the nation, and to help me do this, we're asking Ginger Goodin, from TTI, to come up here and make the presentation. They've been working with us from the very beginning of the idea and working with the NET RMA in developing maybe a pilot project that's going out for a grant from the FHWA, and hopefully we'll hear something about that here in the next few months.
I'll go ahead and invite Ginger up to the podium and we'll go ahead with the presentation. Thank you for moving me up in the agenda.
MS. GOODIN: Thank you very much. I appreciate the opportunity to be here today. You should have a handout in front of you with the slides and I'll go through that.
First of all, the first slide has some benefits that have been kind of articulated related to VMT fees, and I'm sure you're familiar with the general concept. There's been a lot of discussion about this idea as a very long term approach to addressing issues with the fuel tax, and it's been supported by the TRB committee that's looking at the long term viability of the fuel taxes for transportation finance, two national commissions have been looking into it, AASHTO is supporting further research and development, and there are a number of states who have interest in this topic.
I want to just touch on some of the activities that are going on, both in the United States and internationally. The Oregon Department of Transportation has conducted a pilot project, and some of you may be familiar with that, but also there were pilot projects that were conducted in Puget Sound Regional Council in the Seattle region, the University of Iowa has a large study that's going on right now in six areas around the country, and the Minnesota Department of Transportation has a pilot that's in the development phase right now, and there are a number of states who have expressed interest in this particular topic.
In Germany there is a truck tolling system that is in operation, and the Netherlands is looking at a full scale implementation of VMT fees, both commercial and passenger vehicles, and there are some other European systems that are in various phases of application and development.
As part of the research that we've been doing, we've been working with Mary in kind of developing a tool to look at potential revenues that could be generated from a VMT fee concept. What we show here is what we've done is developed what would be considered an effective fee for travel for the fuel tax versus a potential VMT fee, and basically what we did is we started with 2010 as kind of the base year and projected fuel tax revenue and determined what the per-mile fee would be for kind of a break-even amount of revenue generated, and from there we projected it out. So what you see on the VMT fee line is a flat rate, and that's assuming that would continue over time, it's not varied by class of vehicle or any other thing, it's just a flat rate on all VMT, and then what you see on the fuel tax line reflects the increase in fuel efficiency that's projected to take place over time, so in essence, what this is showing is an effective per-mile fee for travel for comparison of those two approaches.
In addition, we've looked at state fuel tax revenues from 2010 through 2035 -- this is in billions of dollars -- looking at a fuel tax versus a VMT. What you see in yellow would be what would be for education, the 25 percent of the state revenues, and before we get stuck on the numbers here, there are many assumptions, of course, that go into the modeling that we did, and what we're trying to portray here is really an order of magnitude difference between the two revenue approaches.
Of course, there are a number of challenges and barriers towards implementation of any kind of VMT fee system. What I have shown here is public acceptance and I'll talk a little bit more about that on the next slide. Technology configuration kind of characterizes the smart car versus smart road. Smart car would be where the car tabulates the mileage from inside the vehicle and transmits it out. The smart road would typically use the infrastructure to determine the mileage by the positioning of readers on the roadside.
What we see happening in the pilot projects that are being tested is we're seeing tests of both of those kinds of systems. The Iowa study, for example, is looking at that smart car technology where the onboard unit in the vehicle would tabulate the mileage and transmit it by cellular to a billing center, for example. Whereas the smart road, that's the concept that Minnesota DOT is looking at and how could that roadside infrastructure be used to do that type of activity.
Obviously there's some pricing options. As I mentioned before, in our revenue estimates we were using flat fees, but there are certain policy objectives that could be met in the way that you set up your pricing. There's been an argument against VMT fees in that it will lessen the incentive to switch to more fuel efficient vehicles, but you could set up your pricing policy to encourage that. In Germany, for instance, they do have an emissions charge on top of the mileage charge that's based on emission class of the vehicle. There's congestion pricing for very congested metropolitan areas. That's something that could potentially be done with a mileage-based fee system or pricing based on vehicle size and weight.
And obviously there are some challenges associated with how this would be done administratively, what are the state and federal roles, how would the transition from a tax to a user fee work, and what would the phased implementation of that look like.
We've been involved in research on this topic for about a year, working with the Northeast Texas Regional Mobility Authority. Partnering with them, we began about a year ago to look at public and political acceptability of this type of system. Instead of trying to define what the system would look like, we were using a variety of listening techniques, including an advisory committee, some focus groups and some interviews in the region. We laid out what some possibilities would be, and based on what we learned from that, we developed a framework by which any potential pilot project could be evaluated.
And so these are some of the public acceptability concerns that we heard through that research. Obviously privacy and data security concerns -- I'm not going to go through all of these but I'll just touch on the ones that seem to resonate with the public. Low cost administrative functions, I think there was concern of creating a whole new bureaucracy or administrative system when the fuel tax collection is a pretty simple, low cost process. Charging by individual road types was a concern in the rural area, the feeling being they should be charged a different rate than say for a metro area. Certainly by vehicle class, but also another item that resonated was local retention of revenue and that any new system should show clear added value over the current system.
I just wanted to touch on some activities that are going on in Texas right now. The Northeast Texas RMA back in November submitted a federal grant proposal to conduct a pilot in Northeast Texas. We haven't heard the result of that, but we are continuing to do some research in support of a potential pilot. We're right now conducting an analysis of technology alternatives and we're also looking at institutional issues as well. As part of that research, we'll be conducting a national symposium on this topic that will be held in mid April here. We're involved in this because we thought it would be good to bring in kind of the national and international experts on this, the people who really know about the topic, who are doing it right now, take advantage of their collective wisdom to help us in designing pilot project in Texas.
And that concludes the slides I have. Are there any questions that you have for me or for our researchers who have been involved?
MR. HOUGHTON: I do. On the chart that has effect on fuel efficiency and you have the gas tax going down, revenues going down, are we taking into consideration population growth?
MS. GOODIN: Yes.
MR. HOUGHTON: So even with that booming population growth, we're seeing these kind of decreases, or assuming that.
MS. GOODIN: What this is showing is the effective per-mile rate for the fuel tax versus the VMT. Is that the one that you're looking at? So this is a model that's kind of an earlier iteration of the model that TTI developed to do revenue forecasts, so it does account for population growth, it looks at different population growth scenarios, and this we used kind of midterm growth. And so what we're trying to show is that on a per-mile basis what you're getting is much less under the fuel tax than you would if you had a flat fee in this particular scenario.
MR. HOUGHTON: And then on your revenue availability, you have significant revenue growth over time.
MS. GOODIN: And again, I don't want us to use these specific numbers, but the idea is to look at the order of magnitude of difference. We've set up this model to run a variety of different VMT scenarios under different policy options, again, a flat fee versus some other kind of variable fee. So as the research and the development and the thinking about this continues, we'll be able to look at different options and what that revenue might look like, but again, we're just trying to show for illustrative purposes that there would be a difference.
MR. UNDERWOOD: I'm going to follow up on Ted's comment. The fuel efficiency, when you were doing this graph or whatnot, did you take into consideration the new administration in Washington? Because I understand now they're actually speeding up, the new president is pushing more for fuel efficient cars in a quicker time frame. So this graph is really going to be even more of a drastic drop then, isn't it? It's going to happen faster instead of that gradual curve down. I think you'll actually see a drop in like three or four years, it will really just start nosediving, even with increasing vehicles because they're going to require much more efficient vehicles.
MS. GOODIN: We haven't made any updates to the fuel efficiency model in the last week or so, but that's an ongoing discussion that we've had in working out what -- again, we're trying to project into the future but using the best information we have, we continue to update it.
MR. UNDERWOOD: This one looks bad enough, so to speak, and I can see it getting even worse -- not worse, but I'm saying it's good in the fact that the vehicles will be getting better efficiency. Thank you.
MR. HOLMES: A couple of questions. Where did you start on fuel efficiency in 2010 and where did it end up in 2035? Do you remember the numbers?
MS. GOODIN: I'll have David Ellis answer questions on the fuel efficiency.
MR. ELLIS: The question was in terms of fuel efficiency, first of all, they're split between personal vehicles and commercial vehicles.
MR. HOLMES: We're just talking about fleet average, but you can break it out.
MR. ELLIS: I believe it starts out at about 16-1/2 fleet-wide average -- that's a weighted average based on VMT -- and eventually tops out at about 35 miles per gallon by 2035. I believe that's the fleet-wide weighted average that's used in these particular calculations.
MR. HOLMES: Not some of the exotic numbers that are thrown around that get to 60 and 70.
MR. ELLIS: Right.
MR. HOLMES: Can you comment -- you talked about smart car, smart road, is there a preferred technology that better captures congestion pricing, whether it's smart car or smart road, or can you do it either way just as efficiently?
MS. GOODIN: I don't think it necessarily matters. You would have to have some type of geo-referencing of the vehicle. You will need to know where that vehicle is, whether it's in a zone or on a facility, and I think the technology is developing to where the potential is certainly there to do that. There have been some proposals for a near term implementation that would not include a geo-referencing part of it, it would essentially be a pay-at-the-pump model where as a vehicle pulled up to the fuel pump, it would read off of either a vehicle registration or a license plate some information about the vehicle so that it could tie a fuel efficiency in, a standard fuel efficiency, and then figure what the mileage would be and then charge a per-mile rate. Again, that's something that's been thrown out there as a possibility. Under that scenario you would not be able to do congestion pricing because you wouldn't know where those miles are driven and you wouldn't be able to charge accordingly -- or what time, essentially what time.
MR. HOLMES: But that's kind of a critical piece of it. Right? Isn't that a critical piece?
MS. GOODIN: Well, I think in any system what you start with is what you're trying to achieve, and if it's strictly revenue generation, then there's certain technologies and techniques that will support that if you want to do congestion pricing, if you want to do emissions charging, whatever. I think it starts with what is it that you're trying to achieve with the system, and then you can design it accordingly. But again, I don't think the technology is going to be the big issue, I think the technology will come along, I think it's the public acceptance part of it that's going to be the challenging part.
MR. HOLMES: I'll agree with that.
MR. UNDERWOOD: One quick other question to follow up on that. How are you going to be able to figure out what to do with out of state vehicles on this because they're also using the roads?
MS. GOODIN: Again, that's where the geo-referencing comes in, and that's how Oregon dealt with it, they used G.P.S. so that whenever a vehicle left the state, it would know that it left the state and it was tied into the odometer, and so it would be tabulating miles and when it noticed that the vehicle went out of the state then it would stop tabulating the miles.
MR. UNDERWOOD: But what if you're from out of state coming into state is what I'm getting at.
MS. GOODIN: That is one of those administrative issues that are yet to be addressed. And again, there's a number of different pilot projects going on, I think there's interest in trying to establish a national framework so that states can develop at their own pace but within some national framework and national standards. And then how that would be implemented and transitioned and how you would deal with states that are implementing sooner than others, I think those are all questions that are yet to be answered and explored.
MR. UNDERWOOD: But the followup on that is that when we do the study, as we go forward with the study, we need to find out how many vehicles from out of state and be able to compare that as to how much revenue we're losing. Because the last time I checked, one 18-wheeler is going to do the damage of about 9,600 vehicles. Isn't that correct, Amadeo?
MR. SAENZ: Yes, sir.
MR. UNDERWOOD: So it would be important to let them help pay for the roads that they're using. Thank you.
MR. MEADOWS: In that same vein, I was just curious, how smart are these cars? Is that car smart enough to know that it's driving on a toll road?
MS. GOODIN: The G.P.S. technology, we're in the process of evaluating it. It could, I don't think it could tell by lane where it is but I think by facility the potential is there to do that now.
MS. DELISI: What's the nature of what the NET RMA is looking at doing in their pilot project? Is there a particular technology that they're trying to use?
MS. GOODIN: No, and the grant proposal was submitted under a program in order to try to see if funding could be secured before we had gone through the process of really looking at technology alternatives. We had a general framework that was set up in the proposal with a rural emphasis based in kind of the Northeast Texas area. I can't remember exactly how many but we want to do both passenger cars and commercial vehicles in a pilot which you would solicit participants to do that and presumably place an onboard unit in the vehicle and be able to test a number of different attributes. But at that point that the grant proposal was submitted, there was no specification of the technology that would be used. That's something that's part of the current research that's going on now.
MR. HOUGHTON: Well, Oregon has completed their study.
MS. GOODIN: Correct.
MR. HOUGHTON: So why wouldn't we piggyback the results of Oregon and go forward instead of reinventing that wheel?
MS. GOODIN: That's certainly a valid point that we're looking at as part of the research.
MR. HOUGHTON: We apply for grants but based on what? In other words, we know the framework, it's on my desk, the Oregon results. Why don't we piggyback on that and go to the next step and move faster instead of looking for grants and trying to do something different?
MS. GOODIN: Well, there's certainly some advantages to the pay-at-the-pump model which is the Oregon model, but the national research that's going on out of the University of Iowa -- and Austin is one of the places that that's being studied -- is not a pay-at-the-pump model, it's more of the German truck tolling model where your onboard unit is going to calculate your miles and it's going to transmit it via cellular technology to a billing center. So that's different than the pay-at-the-pump model.
MR. HOUGHTON: Got to start somewhere.
MS. GOODIN: Absolutely, that's right.
MR. HOLMES: Are there any large scale systems using VMT based fee systems? I see international applications, the Netherlands. When you say the Netherlands, is that all vehicles on the road, is it a pilot project, is it just within a congested metropolitan area like Amsterdam? What does that mean?
MS. GOODIN: The German truck tolling system is probably the largest implementation and it is one of the few implementations that's actually in effect now, and it's only on large commercial vehicles. They do pay a per-mile rate with the emissions charge on top of it that I mentioned. Netherlands is in the process of developing a national system that will use VMT charges on all passenger vehicles and commercial vehicles. I don't know much of the detail on that specific system but I know within the next five years they're hoping to have that on the ground. We're hoping to have the Netherlands come to our symposium so we can hear more about their particular effort.
MR. HOLMES: With 22 million registered vehicles in Texas and however many there are in the United States, to go to a system that is based on VMT, do we have the computing power capable of dealing with all that? I mean, that sounds like a huge amount of computer power. Who knows?
MS. GOODIN: I don't know.
MR. HOUGHTON: Let me go back to Northeast Texas RMA. What is the criteria of their grant application, based on what, pay-at-the-pump technology?
MS. GOODIN: We did not specify a technology in that grant application?
MR. HOUGHTON: So it's just dollars, give me some bucks and we'll figure it out.
MS. GOODIN: Yes. Part of the grant was to design the system.
MR. HOUGHTON: What kind of system?
MS. GOODIN: And that was to be determined as part of the grant. Now, we've continued to do some research and I think we can refine that to the point that by the summertime we would have a recommendation.
MR. HOUGHTON: So you've got the Germans and you've got the folks in Netherlands, the Austrians and the Swiss. Commissioner Meadows, would you like to go to Europe with me and we'll go look at these systems.
(General talking and laughter.)
MS. DELISI: On that note, any other questions? I think we're done. Thank you very much.
MS. GOODIN: Thank you.
MR. SAENZ: The next item on the agenda, commissioners, going back to agenda item number 1, and James Bass is going to present a discussion item dealing with transportation development credits and the potential use as a non-federal share of eligible projects. James, it's all yours.
MR. BASS: Thanks, Amadeo.
MR. HOUGHTON: Can you follow that act, James?
MR. BASS: No. The back of the room couldn't hear; if you could please turn your microphone on.
For the record, I'm James Bass, chief financial officer at TxDOT, and this afternoon I'm going to walk you through a white paper on transportation development credits, hopefully answer some of the most basic questions, what are they, how many of them do we have, how can we use them, how do other people use them, and also address any other questions that may arise during our discussion.
The first question is what is a transportation development credit. First off, they used to be called toll credits, but now they are transportation development credits. They are not cash but they are a financing tool that allows entities to use their federal obligation authority without the requirement of coming up with non-federal matching cash dollars and thereby increasing the flexibility of the resources they have available to them.
Who can earn transportation development credits? Under federal law right now, it is just the state, and the amount of credits that a state can earn for any year is determined by the amount of toll revenue -- and I put that in quotes because it's further defined -- toll revenues used for capital expenditures to build or improve public highway facilities that serve interstate traffic. One thing is that toll revenues are more than just the payments that drivers pay through their electronic toll collection, they also include right of way leases, interest earnings, or the proceeds from any bond issuance or loan proceeds that are backed by those toll revenue streams. A state grant for a toll road is not considered toll revenue and cannot be counted for in the determination of the earning of transportation development credits.
The facility, in order for that facility to generate credits, it must be open to the public, it can be operated by a quasi-public or a private toll authority, and there's a maintenance of effort test that in a particular federal fiscal year the state's total non-federal highway and transportation capital expenditures must equal or exceed the average of prior years, and so your state contribution to transportation must be either growing or remaining flat in order to earn credits within a particular year. That in the federal rules is referred to as a maintenance of effort test, and in Texas we, of course, track that and in most years we do meet that maintenance of effort test, however, in 2004 and 2005 we did not meet the maintenance of effort test and so the state was not able to earn any development credits based upon expenditures in those years.
The amount of credits earned in a year is based upon, again, that broad definition of toll revenues that is spent on expenses for public highway facilities including bridges, tunnels, certain ferry systems that, again, serve the interstate traffic. Expenditures for routine maintenance, snow removal or mowing are not eligible costs, nor are debt service costs eligible to generate these credits. It must be for a capital expenditure on the highway facility.
One of the recent changes to the federal rules, it used to be that if a project involved any federal money, all of the expenditures on that project were not eligible to earn credits, so you may have had a billion dollar project that involved $50 million of federal money for some portion thereof. Well, none of the billion dollars would generate any of development credits. That was changed -- led by TxDOT's Government and Public Affairs Division working in D.C. to open that up -- and now the federal dollars that are spent on that project are not eligible but it doesn't taint or impair the remainder of that project from earning development credits, so you can still earn development credits on a project that involves federal funds, they're just earned on a pro rata basis, whereas, before it would completely disallow any money being earned.
The next step is if we have these development credits and they're not really cash and we earned them in certain years, how can they be used. Again, they can be used as the non-federal match for most federal aid highway projects but not emergency relief projects, and they can also be used on the non-federal match for capital transit projects, and generally speaking, in federal parlance that's Title 23 of the U.S. Code which is Highways, and then Title 49 which is Public Transportation is what the development credits can be used.
To give an example, in a typical or make-believe highway project of $10 million, the way we would normally fund that project is we'd sign an agreement with Federal Highways and obligate $8 million federal dollars towards that project. We would then match it with $2 million of state funds. If we were to utilize transportation development credits for that same $10 million project, it would allow us the flexibility to obligate $10 million of federal dollars to that project and then we would have to allocate $2-1/2 million of development credits for that project. It keeps the same four-to-one ratio.
The key to that example is that additional $2 million of federal money to that one project comes within the finite or limited total federal dollars available to the state in that year. In other words, it doesn't generate any additional federal money, it just allows us to apply more federal money to fewer projects.
And to perhaps carry that example through -- because later on I'll tell you how some of the other states utilize their development credits and this example would be how the State of Florida uses theirs -- if we assume, just for a simplistic example, that we have $80 million of federal dollars available to the State of Texas in a year and we have ten projects costing $10 million each, so a total need of $100 million, we would normally do all ten of those projects and they would each be funded $8 million of federal dollars and $2 million of state dollars. By utilizing the development credits, what we'd be able to do is fund eight of those projects at 100 percent from federal funds so we would use all of our $80 million of federal dollars and rather than spreading it over ten projects, we would merely apply it to eight projects. We would then utilize our development credits as the match for that.
We would then have remaining $20 million of state funds that we could use to build projects nine and ten, or perhaps there's another project in the state that is not eligible for federal assistance and it may rank higher in our priority listing than project nine otherwise would have. But as we're going through the process and matching those federal dollars, we're going to match all the dollars and in our normal course of business we would have built and funded projects one through ten. Hopefully that made sense. And that example again highlights it provides flexibility but it does not provide additional federal dollars to the state for actual expenditure.
There are some cases where the use of development credits do allow the state or other entities to gain access to federal funds that we might not be able to get access to. As an example, discretionary project awards, as an example, transit projects on FTA, there are discretionary awards that are made to transit providers or to regions of the state, and one of the criteria they look at is whether or not the recipient is going to have money to be able to match the federal dollars. There's no reason to give somebody a $10 million discretionary award of federal money if they can't come up with the local matching dollars.
That puts a lot of strain on some of the transit providers to either make reductions in other areas of their operations to try to and free up money to match or gain access to this federal money, or to get other local taxes to come up with that, and so through the utilization of development credits, people have been able to gain access to that.
A real world example of that was here in Central Texas area, the Austin to San Antonio commuter rail study, they had, I think it was, a $5.6 million federal grant or earmark that required, again, that four-to-one matching ratio. Well, the Austin to San Antonio commuter rail study has no money, has no revenue stream. They came to the department to look for different options. As it was not highways, we couldn't use dedicated Fund 6 to grant that to them to use as the match, so they were fearful that that $5.6 million of federal money was just going to sit there and they weren't going to be able to gain access to it. Through the commission's allocation of development credits to the commuter rail study, they were able to use those development credits to match the $5.6 million of federal dollars available to them, get access to that money, and then fund their study or at least a portion of their study.
Some examples of uses of transit projects where development credits have been utilized are vehicle purchases and that's been the most requested use, and then other capital expenses for preventive maintenance costs or smaller capital purchases. City of Galveston and DART have utilized development credits, and then it could also be used for some facility construction, maintenance buildings -- I think Hunt County Committee on Aging have utilized development credits to assist them with that.
As I mentioned earlier, I was going to talk about how some of the other states use their development credits. Florida has been applying their credits on a statewide basis since 1993. The state uses their credits on almost every federal aid project so that most of their federal highway program is 100 percent federally funded. They don't use any of their state cash to match the federal dollars, thereby freeing those up to go on other state-administered projects.
Pennsylvania uses their credits to increase federal funding to 100 percent for betterment projects for the added capacity, and they also use it on transportation enhancement projects for the construction phase of those projects. In Pennsylvania, if the local sponsor has fully funded the development of the project with local funds, then Pennsylvania allows for the use of development credits as the match for the federal transportation enhancement dollars during the construction phase, thereby removing that burden from the local sponsor.
Missouri reserves their credits for a situation where project matching funds are unavailable to increase federal funding to 100 percent of project costs, and the way I interpret that is something similar to what we did in the state of Texas back in 2001 which was prior to the department having the short term borrowing ability. The balance of the State Highway Fund had hit $4 million cash balance, no ability to borrow on a short term basis, the brakes were slammed on to try and control expenditures and reduce expenditures.
One of the big questions was whether or not we were going to be able to continue to award additional construction projects during the interim until the cash position got in a better place. The ultimate decision was yes, we would continue to award projects and we awarded and funded those projects with 100 percent federal dollars by using the development credits. So we were able to award the projects and keep those going, knowing that there was going to be no net cash expenditure from the State Highway Fund because the matching dollars were coming from the development credits.
The State of Ohio uses their development credits as match for Garvey projects and also shares its credits with local governments for both highway and transit projects.
How many development credits does the State of Texas have? Between the delivery of the white paper to your offices that showed $664 million of development credits, we received another letter from the Federal Highway Administration approving our last round of development credits and it was a significant amount of $480 million, so that gets added to the $664- so we're over a billion dollars in development credits.
One of the things that billion dollars is primarily made up of is expenditures of the Central Texas Turnpike System here in the Austin area and North Texas Tollway Authority. We have not always been successful in getting responses back from all of the local tolling entities on their expenditures in a particular year that would then allow us to go get the development credits for the state, and so I believe only $54 million or so of that over a billion dollars has come from the Harris County Toll Road Authority. We don't have anything for the expenses of CTRMA here in the Austin area to date. We continue to have those conversations and hopefully explain the benefits of development credits to them and why we need that information.
So we have this balance of development credits, how can they be used, and we talked primarily it's providing the matching for highway and transit dollars, but through rules of the commission that were adopted a few years ago, we take those development credits and they're pretty much split into two different buckets. Development credits are either determined to be earned locally -- and locally would mean that they're earned by NTTA, HCTRA or an RMA or even a TxDOT project if it's within a geographic region of an RMA -- in those circumstances, any development credit that's earned, 75 percent of them go into a local account and 25 percent go into a statewide account. In addition, if we have non-locally earned credits -- and those would come from a TxDOT project outside the boundaries of an RMA -- those would go into the statewide account. All of them that we've earned to date are in the 75 percent local and 25 percent state buckets.
The commission rules say that the dollars in the 75 percent bucket are reserved for use in the region that they were created and earned and they are available to that region for the period of three program calls, that the department would go out and say we want your responses on how you would utilize development credits and then we would score them on a number of criteria, how they would reduce congestion, expand economic opportunity, enhance safety, really meet and address the five goals of the commission and the department. Under those rules, a highway project would not be eligible to receive credits unless it provided direct support of a rail, transit, bicycle or some other mode project, so it couldn't simply just be a highway project.
If after three program calls all of those dollars have not been utilized, they would transfer from that 75 percent bucket over to the statewide bucket. The statewide bucket of the 25 percent is controlled and awarded at the discretion of the commission. The commission could decide to award some or all of the dollars in the 25 percent category through a program call or through individual applications. To date there have been no program calls and any award of development credits have come from the statewide pot on an individual application basis. Whenever we do a program call, the comments of the local MPO will also be a consideration that the commission would consider in going through and awarding those credits, whether or not the MPO is supportive of the project.
Those are all of my prepared comments, kind of walking through the white paper. I'd be very happy to address any additional questions that may have generated or take any direction you'd like to provide to us.
MR. HOUGHTON: Reconfirm something. The credits to date are generally earned from NTTA and the CTTS?
MR. BASS: Yes.
MR. HOUGHTON: So those credits on a 75-25 are being applied to those regions as we speak?
MR. BASS: Seventy-five percent of the credits have been deposited into the local account, and none of those have been utilized to date because they're reserved to respond to program calls which we have not had any yet. So the projects that have been funded with development credits -- and I hesitate to use the word funded --
MR. HOUGHTON: Allocated?
MR. BASS: -- allocated, have been allocated from the statewide account, the 25 percent account.
MR. HOUGHTON: We've done that, I remember it's been transit projects, capital.
MR. BASS: Primarily transit projects. Again, we utilized them for highway projects back in 2001 as the match for that. The commission has also recently, within the last year or two, approved the use of development credits as the matching mechanism for planning funds for MPOs, and so that's probably been the most recent allocation of development credits.
MR. HOUGHTON: But it's not new money, it's just a reallocation.
MR. BASS: It's a flexibility tool. Again, there are a few examples of earmarks or discretionary money that may have been trapped if not for the utilization of development credits, so you could say that's extra money, but in our normal routine programs, there is a set amount of federal dollars and utilizing these development credits just gives us flexibility in how we apply those.
MR. HOUGHTON: Does that apply to transit too when you talk about additional money, if you have a transit project, a municipality and they just don't have the money to get over the hump?
MR. BASS: Right. On the FTA side, the transit side, you're going to have the regular program funds, some to the larger MTAs go directly to them, small urban and rural flow through the department.
MR. HOUGHTON: But the bucket is the same, it's a finite amount of dollars, it's just a matter of where it's going,
MR. BASS: Correct, and whether or not they would have the local resources available to fully utilize all of the program dollars. And then in addition to that, just like on the highway side, you may have some discretionary awards, earmarks or application, discretionary programs of FTA that areas apply for. And again, one of the criteria, my understanding, that the Federal Transit Authority looks at is if we award this discretionary award to your area, are you going to be able to provide the match and actually utilize the dollars.
MR. MEADOWS: I've got a couple of questions. I assume you capture the credits based on some sort of ratio of capital investment made by the entities. Right? But can you recapture it? In other words, if HCTRA hadn't been using those capital expenditures, is there any way to go back some period of time and recapture?
MR. BASS: Yes. The federal program really started in 1992 was the first year, and on the federal side we can ask for credit for any expenditure at any time, so even though we've already asked for some of the expenditures in 2007, once we receive additional information from HCTRA, as an example, or CTRMA, we can then go ask for that to be added to our account. Once we've earned a credit, from the federal perspective, there is no shelf life.
MR. MEADOWS: It's evergreen.
MR. BASS: It's there.
MR. MEADOWS: I'm going to call it evergreen.
MR. BASS: It's there till we use it.
MR. MEADOWS: So what I'm seeing, just based on what I think I know about capital expenditures that would fit the criteria as you've described, basically you're talking about NTTA projects probably the lion's share of the $600- and whatever.
MR. BASS: Right, so the total we've earned -- which is different than our current balance -- is $1.2 billion, and perhaps surprisingly, the biggest chunk, $735 million of that is from the Central Texas Turnpike System here in Austin. NTTA is around $450- and then another $50- from HCTRA.
MR. MEADOWS: It's just a lot of opportunity out there like in the near future I think we're seeing; I think that's important to note.
Do you earn the credits based on just the local entity's capital investment? It's not the total capital investment of the project, but there's got to be criteria that specifically --
MR. BASS: There are certain exclusions on the capital investment.
MR. MEADOWS: I don't get credit on a TIFIA loan.
MR. BASS: Since you have to repay it, you do get credit. That's another change that was made a couple of years ago through the commission's push -- primarily at that point it was Commissioner Nichols working with Coby's office.
MR. MEADOWS: Okay.
MR. BASS: But if the commission decides to grant dollars to a toll road, those do not count in part of the calculation of earning development credits. If the commission loans money to that toll road, it would count, but a state grant does not count.
MR. MEADOWS: That's fine. I was just trying to get a feel for that. And is there some sort of -- we can talk about this later -- I'm curious, a ratio, what sort of ratio, like how many miles do you have to fly till you get a credit?
MR. BASS: It's dollar for dollar, as long as it's an eligible source of that dollar.
MR. MEADOWS: Last question, that 25-75 ratio, is that our policy or is that programmatic?
MR. BASS: That's commission rules.
MR. MEADOWS: It's commission policy. Okay, thanks.
MR. HOLMES: James, I think I heard you say that before credits could be used the project had to have some other component, a hike or bike or rail or some other.
MR. BASS: That also is a requirement of the commission's rules that if out of this 75 percent local account, one of the projects came in and they said we want to use development credits for matching for this highway project. The rules state that's not an eligible use from that local account. The applicant must show how that highway project would also benefit another mode of transportation so it couldn't singularly be for a highway project, it would have to have additional benefits. But again, that is a component of the commission's rules, not federal.
MR. HOLMES: Do you recall the logic behind that?
MR. BASS: No. I recall the discussion; I wasn't necessarily on the winning side of that discussion. But I think it was to broaden and help promote some of the other modes in that a lot of times projects for the other modes, be it bicycle, pedestrian, anything else, tend to have a harder time coming up with the cash dollars for the required match, and so I think the intent was to try and address those projects or provide a benefit to those projects first because they generally have a tougher time coming up with the matching funds.
MR. HOLMES: And I can understand that we might want to encourage by prioritizing projects that benefit other modes of transportation, but to eliminate those that do not, it seems to me we might want to rethink that. Let me ask another question too.
MR. BASS: I'm sorry, if I can add to that because it may broaden it up a little bit. It's also if it will improve air quality in a highway project, again meeting one of the five goals. So we haven't ever had the rules tested, I guess, is a way to say, but most highway projects would improve air quality, I would think, and as long as that could be demonstrated, I think that would be eligible under the program. I'm looking for assistance here.
MR. HOLMES: Within the existing rules, and I see Bob scurrying up here.
MR. HOUGHTON: With his rule book.
MR. HOLMES: With his rule book, yes.
MR. JACKSON: Let me read from the rule book. There's additional limitation on the exception to the limitation. A A project is not eligible for award unless the proposer demonstrates that the project provides direct support of a rail, transit, bicycle, pedestrian project or will improve air quality. An air quality project is not eligible unless the proposer demonstrates that the project is located in an area currently in non-attainment, that the project will solve specific traffic congestion problems in a manner other than adding additional highway capacity for single occupant vehicles@ -- so widening of a highway will not work as an air quality project -- A and that the project will decrease mobile source emissions and reduce vehicle miles traveled.@
MR. HOLMES: Let's just say that we wanted to add lanes five and six to 35, if we amended those rules, could these credits be a possible application in a project such as that?
MR. JACKSON: Yes.
MR. HOLMES: Okay. Let me ask another question. On rail, is it passenger rail only or is it freight rail and passenger rail? Could you do Tower 55? Is there some component that allows that?
MR. BASS: Generally, no, but as we just learned, there's always exceptions and exceptions to the exceptions. Again, it must be Title 23 Highway or Title 49 Public Transportation program, and so in looking at it, financing freight improvements from Federal Highway and it goes through all the different programs of Federal Department of Transportation, and under Title 49 Transit -- and I'm just reading off of this, no legal advice to this point -- it talks about the ability to do freight rail but only as kind of a secondary benefit, and in one of the comments I think it illustrates it, it says, Title 49 Rail Modernization, and it talks about it's available for capital improvements for fixed guide way systems that have been operating at least seven years, but in the comment it says, A Rail freight benefits from capital improvements on shared commuter rail lines.@
So I think what it's saying here is the primary purpose and intent of the project must be public transportation. If there are secondary benefits that go to freight rail, that's fine, but the primary benefit of the project must be public transportation, commuter rail, something like that.
MR. HOLMES: On the Florida model where their credits were utilized on all the federal projects and then they took the state money and built others, it didn't sound to me like we had enough credits that we would be able to do that.
MR. BASS: We could do that for a period of time. For example, if we have $250 million of credits in the statewide account, we could use that as the match for a billion dollars of projects, so we could do a portion of a year. Another reason that Florida uses that, my understanding is, they follow different development processes if a project is federal or state. In Texas we follow the same process for all projects, development process for all projects, keeping open the eligibility of all projects for federal participation. So Florida has two different development models that they follow: if one is federal, they're going to follow all the federal guidelines and regulations; if they're not having any federal money, they have a state process they go through. Currently in Texas we develop all projects the same way in accordance with the federal program.
MR. HOLMES: It would seem to me that we might want to understand the rules and restrictions that we have placed on ourselves. It's possible that there might be benefits from additional flexibility.
MR. HOUGHTON: One of those rules might be environmental, federal dollars, state dollars?
MR. BASS: Might be.
MR. HOUGHTON: Could be.
MR. BASS: From the Florida perspective.
MR. HOUGHTON: We have a billion dollars worth of credits is what you just said?
MR. BASS: No. In the statewide account we have at least $250-, and so that $250- would be able to serve as the match for a billion dollars, again, generally speaking, 80/20, four-to-one ratio for matching dollars. And so there could be a billion dollars worth of work that could be --
MR. HOUGHTON: Relieve ourselves of $200 million of state dollars.
MR. BASS: Correct, or $250-.
MR. HOUGHTON: But in the regions that it has been generated. Correct?
MR. BASS: No. From the statewide account it can be used --
MR. HOUGHTON: Anywhere.
MR. BASS: Correct.
MR. HOUGHTON: So it's just moving money around and relieving yourself of some --
MR. BASS: Providing flexibility. And one of the other things that may have not come through very clear in the example back on the ten projects and we have $80- of federal money, one of our primary financial goals, obviously, is to match all of our federal dollars because if we spend $1 of state money, we gain access to $4, so that's one of the primary goals. And back to my example of ten projects at $10 million each, let's alter that to say we actually have twelve projects at $10 million each but two of them are not eligible for federal participation, the amount of traffic or whatever does not raise the road into federal eligibility, but we only have $20 million of state funds and we only have $80- obligation authority from the feds, under our normal process we would just fund those ten projects that are eligible for federal funds because that's how we would not lose any of the $80-, so we would fund those ten and these two would have to sit over here.
By utilizing the development credits, we could apply the $80- of federal money to the first eight projects on this list and match them with development credits. Now we have $20 million of state funds remaining. We could then compare project nine on this list to project one on the ineligible for federal participation list and see which one is a higher priority for the department, for the commission, for the region, and then fund those projects. Right now, because of the goal to match and get every federal dollar, we go farther down the eligible list before that becomes an issue, before that becomes a discussion.
I don't want to over-interpret what I think I heard you say, Commissioner Holmes, but I think it would be your request that staff sit down with the commission aides and go over our current rules on development credits on how those are utilized just to make sure there's a fuller understanding of that program and then see if there's any comment or feedback on that.
MR. HOLMES: Yes, with a view to being as efficient as we can be in utilizing those credits where we get the most project dollars deployed as possible.
MS. DELISI: Does it also raise the larger question about whether or not we should rethink the policy of every project going through the federal criteria? I mean, I understand why we do it, but I think we need to reconsider that to give ourselves as much flexibility as possible.
MR. HOLMES: I agree. What's the argument that we do it?
MS. DELISI: Well, I think the argument that I've heard in the past is you're maintaining the possibility that at some point down the road you may want to put federal dollars into a project, and if you haven't gone through the federal process, then you'd have to go back and reinvent the wheel and go through all that before you could do it.
MR. BASS: As an example, stimulus money -- hopefully coming some day soon -- is federal money and can only be used on projects that have followed the federal process, and so all of our projects that are to that point in Texas have followed the federal process, and so all of those would be eligible, assuming they meet all the other tests, to utilize some of those stimulus dollars.
MR. HOUGHTON: What project hasn't followed the federal process in the state of Texas?
MR. BASS: I'm not sure that there is one.
MR. HOUGHTON: So to depart from that --
MS. DELISI: Well, no TxDOT project.
MR. BASS: Correct.
MS. DELISI: Like HCTRA works under a different.
MR. HOUGHTON: Yes, TxDOT.
MR. BASS: But I'm assuming in Florida with the stimulus money they'd have to look and say these projects are --
MR. HOUGHTON: Well, they've got two programs going on.
MR. BASS: Exactly, and so the stimulus money can only go for the projects that have followed the federal process.
MR. HOUGHTON: So tell me what project, other than the toll authorities in this state, who haven't followed that process.
MR. SAENZ: All of our projects follow the federal process.
MR. HOUGHTON: So this would be a complete departure from what we've done in the past, or potentially.
MR. BASS: And I'm not sure, Amadeo, how recent is that direction? I'm not sure when that policy was implemented.
MR. SAENZ: Fifteen, twenty years ago, I guess. Bob, do you remember? You're not that old.
MR. JACKSON: Yes, I think the ship channel bridge, what happened with that bridge was maybe the main reason why we started to make everything federal aid eligible.
MR. SAENZ: One of the things, commissioners, that we're going to have to look at because of some of the things that Federal Highway people have said, is once you start a project federal, you can't change it in the middle of the stream. So if we change to be flexible, any new project we decide up front we're going this way or that way because they don't want you to change because they say if you're changing, it's because you're trying to circumvent some kind of process in their direction.
I do have one question, James, that you said that if we provide money in the form of, say, toll equity to a local tolling entity and if it's a grant, then they can't get toll credits for that.
MR. BASS: Right.
MR. SAENZ: But can we get toll credits for that? We're investing in that project.
MR. BASS: No.
MR. SAENZ: Why not?
MR. BASS: Because I think the primary --
MR. SAENZ: If it was state dollars.
MR. BASS: -- in the broad sense in the definition from the federal program, it's the expenditure of toll revenues. Generally toll revenues includes bond proceeds or loan proceeds because they're backed by that revenue stream and the granting of state funds is not normally associated with the additional expenditure investment by drivers on the toll road.
MR. HOLMES: James, it sounds like HCTRA has not pursued the development credits. Do we have an idea of why they haven't done that?
MR. BASS: No, sir. From the $50 million early, we did get responses several years ago to our request for information. For some reason that's stopped. A couple of months ago I did have a conversation with Allen Clark from the Houston-Galveston Area Council, and he offered to have some conversations with HCTRA on development credits and how they could be utilized and how they would be beneficial for the area. It's probably time for department staff, myself or whoever, to contact Harris County Toll Road Authority and see what concerns they may have or what confusion there may be on providing that information to us. It's not something we can get on our own or independently from reviewing annual financial statements, we really need to get it directly from the toll authority.
MR. HOLMES: Has the NTTA applied for and received all of the credits that they would be entitled to?
MR. BASS: We've earned all of them, they have not applied to utilize any of them. The NTTA has not utilized any of them, they've earned quite a bit.
MR. HOLMES: You said like $450-.
MR. BASS: Correct.
MR. HOLMES: It sounds to me like they should have more than that, though.
MR. BASS: Well, but it's only for capital expenditures since '92, and so the North Dallas Tollway and some of the existing assets that they had on hand were prior to the beginning of this federal program. And the other thing to keep in mind on that, President George Bush Turnpike -- not the eastern extension but the original one -- when it was built the commission, the department provided a loan to NTTA to help fund that project. We got reimbursed, it involved federal money. At that time one dollar of federal money made the whole project ineligible. And so that circumstance limited a lot of expenditures by the NTTA that would have otherwise been eligible, and again, that was I think 2007 was the first year that new rule change was applied that one dollar of federal money does not make the whole project ineligible, you just don't get credit for that one dollar.
MR. SAENZ: And I guess, James, the reason that maybe the NTTA or HCTRA would not apply to use toll credits is because they're not using federal money, so they have nothing to match. The toll credit is really just something that allows you to leverage a federal dollar.
MR. BASS: Right. And it's only the state that can earn, even though the state is the only entity that can earn or have a transportation development credit balance, the state can earn those credits based upon the expenditures of the local toll entities. Thank you.
MR. SAENZ: James, just looking at my notes, I guess we want to look at our rules of how we accumulate and we'll also work with John and take a look at our rules that we have and our processes that we have with respect to developing projects as federal and state, and then also we need to visit with local tolling entities.
MR. BASS: Thank you.
MR. SAENZ: Thank you, James.
Commissioners, moving on, agenda item number 2, David Casteel will lead a group that's going to present to you kind of the combination of the 2030 report that we had last month as well as the revenue estimate report that was provided by TEMPO. He's got some help from TTI and I'll turn it over to David.
MR. CASTEEL: Thank you, Executive Director Saenz. For the record, my name is David Casteel; I'm the assistant executive director for District Operations. And as Mr. Saenz said, in December we had two very informative discussion items concerning needs and revenue. This is a followup discussion to those December discussions.
The 2030 Committee, led by Dr. Walton of the University of Texas, laid out their forecast for mobility, bridge and pavement needs for the next 22 years. This groundbreaking research was followed by a discussion by Dan Kessler, president of the Association of Texas Metropolitan Planning Organizations, or TEMPO, who served as chair of a joint TEMPO/TxDOT workgroup discussing population and fuel efficiency trends and how these are projected to impact revenue in future years to come. These two discussions from December helped us as planners and as Texas to define better than ever before the transportation challenge we have lying before us.
At the December meeting, Executive Director Saenz rightly pointed out that before the 2030 Committee needs analysis can be compared to the TEMPO/TxDOT workgroup revenue forecast, two additional computations must take place. First, the 2030 Committee expressed their needs in 2008 constant dollars and did not adjust for inflation to the year of possible implementation. The TEMPO/TxDOT workgroup, conversely, expressed revenue in projected year of possible receipt. These two studies need to be expressed in the same year of expense and receipt time frame before they can be related.
Secondly, the 2030 Committee focused on mobility, pavement and bridge needs. Their work was groundbreaking and the most thorough assessment we've had in Texas, and most likely the highest quality assessment done anywhere at any time at a state level, but TxDOT's charge in Fund 6 uses extend beyond the scope of the 2030 Committee's work. To compare gross revenue on a long term forecast as derived from the TEMPO/TxDOT assumptions, the total required expenditures must consider costs outside the scope of the 2030 Committee's, costs such as pavement expenses, such as ferries, requisite planning and engineering and like.
I'm joined today by two researchers -- and Mr. Barton was going to join us as well -- one an engineer and the other an economist from Texas A&M who have worked with both the 2030 Committee and the TEMPO/TxDOT workgroup. These gentlemen, Tim Lomax and David Ellis, have been working with staff to allow us and other Texans to garner full use of the excellent 2030 Committee work and the TEMPO/TxDOT workgroup efforts by making the computations as outlined by Mr. Saenz.
This work allows us to look beyond the short term, more concrete forecast supplied by our CFO as we plan for long term future elements. The other TxDOT expenses you see in this report are certainly a work in progress as we evaluate the effectiveness of extending short term expenses to a longer term time frame, and we will continue to work on those. Also, as well, the degree of certainty, as you look further out into the future, is less than with the short term work that Mr. Bass does, but it's used for a different purpose as well. We don't program projects based on these type of things, we just plan for the future. It also helps us as we evaluate ways to improve the efficiency in the department, we can certainly look at some of these numbers again.
And with that, I'll turn it over to Dr. Lomax.
DR. LOMAX: Thank you, commissioners. For the record, Tim Lomax, research engineer with the Texas Transportation Institute. So my job is to give you a short overview of what we found trying to put these two studies together, and me and my colleagues will be able to answer questions.
Could you go back one? Thank you. I'm an Aggie so apologize for the lack of ability to run a remote.
The first thing we wanted to do is one process slide, make sure that you understand the 2030 Committee, this group that Texas Transportation Institute, Center for Transportation Research helped staff, but this independent group was the one that came up with the infrastructure and mobility needs, again, constant 2008 dollars. The TEMPO working group, along with TxDOT, but again, an outside group helped by researchers, came up with a revenue model. And so what we've got are one group that came up with a needs number, one group that came up with a revenue number. Needs are bigger than revenue, unfortunately -- I'm sure you're all well aware of that -- so the challenge is sort of putting those two together. But again, two different groups outside of the sort of usual TxDOT planning process.
So here's the 2030 needs in essence translated, if you will. The first column, the constant 2008 dollars, is what you saw in the report that we made in December with the exception of the rural mobility and safety number. I made a mistake in putting the slide together. Both $17 billion and $19 billion were referenced in the report; the correct number is $19 billion, so the total now is $315 billion, pavements, bridges and the two mobility categories.
If you adjust those to the same mechanism that the TEMPO working group did, adjusting for inflation, essentially spending money out into the out years, you see the total in the middle columns, a total of $488 billion. Again, adjusted for inflation, these are the numbers that are closer to what the TEMPO working group came up with.
The third column is the state share. You'll see those are the same on the pavement, bridge and rural mobility because, in essence, the state funds all of the financing, and those categories, the urban mobility is a little bit less than two-thirds, mostly because of state share but also because of some of those efficiencies we're going to get from commute options and intelligent transportation aggressive operations programs. So the total of the $387 billion you can think of as the state's share that might get matched up at some point against the state revenue.
So here's the revenue slide that the TEMPO folks presented, again, inflation-adjusted. This is just a refresher on that. $50 billion in state motor fuel taxes, $46 billion in federal motor fuel taxes, $34 billion in vehicle registration fees, and a mix of other revenue elements that add up to $158 billion.
The encumbrances, if you will, that Mr. Casteel talked about, the amount of money that is going to have to be applied in addition to those needs, the pavement, bridge and mobility needs, on the order of $100 billion right now. Again, this is a very rough estimate based mostly on trends and not on actual thorough examination of the issues, but you can see non-pavement maintenance is the biggest share of that -- these are guardrails, mowing, things like that -- the engineering to go along with all of the activities that TxDOT had are on the order or $15- or $16 billion. Administrative support, that is fairly small number, $6 billion -- again, still a lot of money but not a very big chunk of this $100 billion. Employee retirement and insurance, not necessarily anything anybody has any control over, these are, in essence, prior promises to pay retirement. Prop 14 debt service, likewise is another element that's already been allocated. The other agencies' expenditure are the funds that get transferred from Fund 6 to other agencies.
So again, on the order of $100 billion, bringing the total -- again, the encumbrances line on the bottom is one that we're still sorting out, trying to provide more detail, but the state's share of $387 billion of the total needs will get added to whatever those encumbrances are and balanced off against that TEMPO revenue of $158 billion. And again, those are all the state's share numbers; there will be an additional on the order of $100 billion needed from a combination of local, toll, other programs to fund the other mobility needs.
So that's the conclusion of this set of slides. I think Mr. Casteel, Mr. Barton, Dr. Ellis and I will be able to answer questions.
MR. HOUGHTON: How do we fund it?
DR. LOMAX: I'm sorry, I'm just the engineer, that's the economist.
MR. HOLMES: Am I reading this correctly, that if we have $158 billion of revenue, we have $100 billion of encumbrances, do we have $58- left over?
DR. LOMAX: Well, again, I wouldn't say that's true, partly because, again, we haven't tied down what those encumbrances are in detail. As I said, these are mostly trends. I would suggest that you've got a lot of staff people who are back trying to figure out how to save money on your expenses out into the out years, either buying right of way differently, doing engineering operations differently, saving money on maintenance needs. But if you were to choose the goal states that the 2030 Committee did, prevent worsening congestion, achieve very good pavement quality and eliminate all the seriously deficient bridges, then that's the kind of ballpark you're looking at, something over $300 billion in needs beyond your current revenue stream.
MR. HOLMES: But the encumbrances are on top of that.
DR. LOMAX: Well, you could take the $100 billion and add it to the $387 billion and that would get your total needs.
MR. HOLMES: The other way I was looking at it, you either add it to the $380- or you subtract it from the $150-.
MR. SAENZ: And one of the things that the reason that we are showing this way, to subtract it from the revenue, is because the 2030 Committee, separate and independent, identified this is how much we have in needs for mobility, pavement preservation and bridge preservation. And so then this is the total money that we get available to us, we've got to run the offices, turn on the lights, we've got to pay for the ferry systems, we've got to pay for all these other things, that costs me $100 billion over that time frame, so I've got $58 billion left to address the mobility, pavement and bridge needs.
DR. LOMAX: I guess that also assumes that the transfers to other agencies continue as well.
MR. SAENZ: It also includes the transfers to the other agencies. If you go back to the slide before that, the $28.5- is currently the transfers that go to other agencies; $8-1/2 billion goes into the employees retirement system to pay for our retirement and insurance; we have the administration support about $6 billion over that time frame; so when you add all of those up, that's about $100 billion of bills that have to be paid before we can have the rest of the money to use for the mobility, pavement and preservation.
MR. CASTEEL: Mr. Saenz, and that's a lot of money. Back in the springtime, we had a discussion with the commission, as we were contemplating the development of a draft Unified Transportation Plan, our eleven-year plan, and at that point we went through a discussion that we were projecting $78 billion worth of revenue over an eleven-year period and being able to go to contract with $28 billion. So the order of magnitude is what it is when you run the math. And certainly, we want to work on these numbers a lot more, they are a work in progress, and there's some assumptions on inflation built into these numbers that we might want to take another look at.
MR. BARTON: The point I was going to make was along the lines of the transfers or diversions -- as some of us refer to them -- so in that $100 billion number, if actions are taken to reduce those diversions or those other transfers, of course, that would reduce that encumbrance amount proportionately. So I think that one of the reasons that Mr. Saenz wanted us to show this information in this way is that out of that $100 billion of encumbrances that were referred to in that last slide, there is some, I guess, flexibility, if you will, to make choices about how we spend those non-pavement, maintenance, bridge preservation and mobility dollars to address other needs.
DR. ELLIS: Just to address potential solutions, I'm not going to get drug into that briar patch, but the trends model itself is a model that is designed to help you, policy makers, et cetera, look at that issue. It contains some 77 variables across eight different categories, both revenue and expense categories, that the user can alter to change scenarios, whether we're talking about rates of inflation and various categories of expense, or what does an increase in the gasoline tax mean, to what level, whether you want to index it or not, imposing a VMT tax, all sorts of different variables. And so it's a tool to use to help maybe get an answer at some point down the road to this question.
MR. HOUGHTON: Well, I think at some point in time what I see, we had an earlier presentation on a VMT and now we have a presentation on needs and whatever revenue we have available in the out years, and these don't seem to be merging, they seem to be parallel tracks. I've got to believe that some point in time we're all going to come to the realization the federal government is not going to help us. I mean, it didn't take me long to figure out -- and I'm not that smart -- when I went to D.C. last week that they're not going to raise the gas tax by two bucks, they're just not going to do it. That's the unemployment act of the congressional members and senators in Washington and they know it, they darn well know it. But at some point in time, we're going to have to come to the realization we're going to have to help ourselves, and that's hard decisions.
And I don't believe the folks over in the pink building are going to raise the gas tax either enough to meet our needs of a state that is growing, what, 1,200 people a day -- I mean, that's in good times -- and they're exiting California because of a variety of reasons and the Midwest.
So I guess my point to this is that we hear about NET RMA wanting to study something but we don't know what something is. There's been enough worldwide plans on VMT that they've kind of got an idea how it works, and we ought to look at that very closely on generating revenue as a user fee -- I don't consider it a tax. If I want to drive on that street, I'm going to pay for it; if I want to take a bus, I'm going to pay for it; if I want to take a train, I'm going to pay for it. And VMT seems to open more doors as to funding different modes of transportation than just -- and I know it's probably the wrong thing to say in this business -- funding concrete and asphalt, that it allows us to do other things.
So at some point in time, I would think that we need to start merging VMT with the needs and does it fill in the needs based in the out years, and we ought to get on with it and not wait around for the Road Fairy up on Pennsylvania Avenue to get this thing done.
And with that said, Madame Chair, I would hope that we could convince our folks across the street to start funding some of these analyses of VMT instead of just the kind of surface stuff that the NET RMA wants to look at through a grant -- feels- good-sounds-good kind of stuff.
MS. DELISI: I think you'll be hearing that conversation from across the street.
MR. HOUGHTON: I would hope so.
MR. BARTON: One other element that I wanted to point out in the presentation of the encumbrances, one of the elements is engineering, and I think it showed it to be $15.5 billion over the life of this analysis. I wanted to make sure you understood that's not the engineering that's necessary to do the additional mobility and preservation demands that the 2030 Committee identified, that's just the engineering to sustain the level that's at our current program. So when people are looking at that and saying, well, for $15.5 billion we can design, engineer and take care of $319 billion worth of need, no, that's not the case, that's just to sustain the normal program that we currently have available to us.
MR. SAENZ: John or Tim, the 2030 report in their costs they did include the engineering as part of the project cost. Correct?
DR. LOMAX: No, sir. The costs were built up from your letting projects, so it had construction in it, we added right of way to that, but there's no engineering component in that.
MR. SAENZ: Another thing, I think, commissioners, is earlier this year we completed and presented a study, at the request of Senator Shapleigh, a study that was prepared by Deloitte and by Dye that identified some potential funding sources or mechanisms that could be used to raise revenue, and of course, as Dr. Ellis said, we could also use the model that was developed as part of the TEMPO group to see if you increase the gas tax by so much, this is how much revenue it would bring. But we also identified about 14 or 15 different additional funding scenarios, one being like the TRZ that's been in place, looking at the vehicle mile traveled tax, we looked at increased vehicle registration fees, and it identified what potential revenue amount could be generated from those. Those have been on our website for probably the last four or five months in draft. Senator Shapleigh signed off on the report and it's been presented across the street.
DR. ELLIS: Mr. Saenz, just to add one thing to your comments, most of those revenue tools that were included in that report also have been rolled into the model. As I said, vehicle registration fees, VMT taxes, gasoline taxes, indexing, bonding, any number of different alternatives, we tried to incorporate those into the model so somebody can sit there and play kind of a what-if game with different types of scenarios.
MR. HOLMES: Amadeo, did I understand you to say that the trends model is on the website?
MR. SAENZ: No. The report from Dye that identifies those tools. The trend model now has been updated and incorporated so that someone can go in there and say, okay, if I want to use a vehicle registration fee and I want to increase it by $20, you can do the input and it will run the calculations for you.
MR. HOLMES: And the trends model, is that being distributed, utilized? Who has that now?
DR. ELLIS: Well, this has been a model that has still been very much a work in progress. We've worked with Jessica Castiglione out of the San Antonio office, as well as others here at TxDOT to make sure that before we run this thing out that we are confident in what we're doing and we're just about to the end of that trail, and what we have been doing, as we've been wrapping that up, is building a user interface so that somebody who is not familiar with the inter-workings of the model, basically they just see some very user-friendly screens where they ask them questions, they enter the answers, and it gens up a report for them in terms of total expenses, total revenues, and the shortfall, if that is, in fact, the case.
So we're in the process of finalizing both the model and the user interface, and until we got the model completely finished -- which, knock on wood, I think we're there -- then we finish off this user interface in the next few days and then it's ready to use. We wanted to be very careful, Commissioner, to make sure that we didn't roll one version out and then two weeks later have to roll another one out and we had multiple versions out there that then produced different answers.
MR. CASTEEL: This work is somewhat responsive to some audits that we've had and to some Sunset recommendations to work with the MPOs to help them more consistently predict the revenue that's going to be available to them as they develop their federally required 25-year plans. Previous audits have shown that there are some weaknesses and inconsistencies in assumptions by the various MPOs, so the TEMPO work and then using the trends will help them as those policy boards at the MPOs project what they think revenue will be for a 25-year period so they can build their financially constrained plans. So we're being responsive to requests by doing this work.
If I was the CFO, I would be nervous about all of this because it looks like a cash projection, and it's not, it's a planning projection, and Mr. Bass deals on a different platform when he's programming projects than others do at MPOs when they're planning for the future and planning for policies, so I just wanted to throw that out there, that we're being responsive, we believe.
MR. SAENZ: Thank you, gentlemen.
Moving on, agenda item number 4, commissioners, we have another discussion on the development of our 2009 Safety Bond Program, and Carlos Lopez, division director for the Traffic Operations Division, will make the presentation. Carlos.
MR. LOPEZ: Thank you, Amadeo.
Good afternoon, commissioners. My name is Carlos Lopez; I'm director of the Traffic Operations Division, and I appreciate the opportunity to come talk to you a little bit about the 2009 Safety Bond Program call.
As you might recall, in 2003, Proposition 14 was passed and at that time gave the department the authority to issue $3 billion in bonds, guaranteed by Fund 6, and that 20 percent of that amount had to go to safety projects. As a result of that, we did a 2004 Safety Bond Program call. That authority was further extended to allow for an additional $3 billion, and the same percentage for safety projects remained in the legislation. That's why we're now doing another Safety Bond Program call.
So back before the first program call, we got with our friends at TTI and said, Okay, we've got this huge chunk of money, $600 million, how might we invest it to get the biggest return -- in other words, save the most amount of lives? So they looked at the available crash data that we had at the time, where were the crashes happening, what kind of crashes were they, on what kind of roads, and they gave us some recommendations for categorizing the types of projects that we may want to ask for from our districts.
Before this call, we ran that paper by them again and wanted to see if they had changed their mind, they hadn't, they thought the same categories would still make a lot of sense, and that was the basis for the call that we just went out with. So what we did with this call, we categorized it into six different categories and asked the districts to send projects in.
The first category was to widen narrow roads, and what we mean on narrow roads are roads that are less than 24 feet in width. In our state we have about 30,000 miles of our 80,000 miles are roads that are 24 feet or less, so we're still a very rural state in that perspective. So by widening these roads, getting a shoulder on there, that gives us the opportunity to put an edge line, and an edge line helps address that run off the road problem that we have in our state in our rural areas, gives better visibility to those particular types of roadways. It also will allow to put in some rumble strips along the edge lines and along the center lines to help protect against head-on accidents and run off the road accidents.
They also suggested that we call for projects to install left turn bays, and again, this is in rural areas. Quite often you have an intersection where you have to make a turn and people have to stay in that through lane to make that turn, and sometimes it can be a little scary, so a left turn bay project will get people out of the through lane and allow them to wait for a gap in traffic so that they can make that turn a little more safely.
They also recommended that we look at median barrier types of projects, and this can include both concrete or cable barrier which you see a lot around our state. That obviously helps protect against those often very deadly head-on type collisions that we see on our divided roadways.
Another category we're asking for projects is for converting four-lane undivided roads to four-lane divided roads, either through some type of grassy median or some type of continuous two-way left turn lane. This is a kind of strategy you'll see in many of our Hill Country type of roads that ought to make those a lot safer. One other thing that we've known from history just on crash data is that when you go from an undivided roadway to a divided roadway, your fatality rate basically gets cut in half, it makes the road that much safer. We're also asking for grade separation projects, both highway-highway and highway-rail.
We issued the call for projects in early December and projects were due this past Monday, and we did get quite a few projects in. We just tallied this up last night. We got 419 projects submitted, totaling about $731 million. We anticipate being able to program about $450 million in this particular call. That went from a high of 186 widening projects totaling $296 million to a low of one railroad grade separation project for $6.5 million. And then we had a number of projects in each of the other categories.
MR. HOUGHTON: Just one railroad grade separation?
MR. LOPEZ: One railroad grade separation. And the reason for that, Commissioner, is because typically when you build a railroad grade separation, you probably already have lights and gates there and it's more of a congestion type issue and you don't typically have a lot of crashes, it's just people can't get to the other side of town. But we wanted to call for those projects in case there happened to be one out there and maybe this is the one.
MR. HOUGHTON: Where was that?
MR. LOPEZ: It was in the Atlanta District.
MR. SAENZ: You don't have any trains in El Paso.
MR. BARTON: There were no projects turned in from El Paso?
MR. LOPEZ: I don't have that in front of me, John, I'm sure there were some, but they have a very safe district.
(General talking and laughter.)
MR. HOUGHTON: Drive the speed limit.
MR. LOPEZ: Drive the speed limit, and you have 80 out in your part of the world, sir.
So anyway, what we will do now is we'll rank these projects using our safety improvement index. That's the same index we use for our annual federal safety call, and what it basically is is a cost-benefit ratio that determines if a project truly is a safety project and if it's the best one when ranked among others, and it takes into account the amount of crashes, fatalities and injuries you have at a location, the kind of improvement you're going to make, and the amount of cost, and it's a brutally objective formula, it literally just ranks it by what it is out there.
In that same TTI report that suggested these categories, we also asked, okay, how much of that money should we spend to any given category. They suggested at that time that whatever amount of money we have, we ought to do maybe half to widenings and maybe a third to converting four-lane undivided to divided roadways and for median barrier projects. So what we'll do after we rank all these projects, we'll come up with some scenarios and run them by administration, following those type of guidelines, see where everything falls and see what makes the most sense and what might, again, save the most amount of lives. And of course, after we go to administration, we'll come back to you no later than March with a program of work. A lot of these are quick turnaround type of projects, especially the widening and cable barrier, that we might even be able to get into this year's letting, and again, get lives saved quicker and get people to work also.
Back when we did the first program call, we asked for predictions of how many lives might be saved, and at that time with that program, the prediction was we'd save about 90 lives a year and prevent about 1,800 injuries. I think, in my opinion, that's going to be a little low. Once we get some good before and after data -- and three years is typically good trend data on those projects -- we'll use our very new crash records system to look at before and after and see what those projects really did so we can report that back to you and any member of the legislature that might be interested.
Texas is the only state in the country that can say that over the last five years, from '03 through '07, that the number of fatalities went down every year. We're the only state in the country that can say that and that happened at a time when our economy was very robust, the state is growing, the number of cars are increasing. So any time you can reduce the raw number of fatalities in that type of scenario, good things are happening.
As you can imagine, our rate has plummeted 20 percent in that same five years, so our fatality rate is right about the national average now and that's a neighborhood Texas has not been in in many, many moons. So obviously the first Safety Bond Program helped make that happen, a lot of the gains we've made on behavioral have made that happen, and obviously we hope that this Safety Bond Program can help continue that trend.
With that, I'll close and try to answer any questions you may have.
MR. UNDERWOOD: Carlos, what does it cost, how much problem is it to put the rumble strips in?
MR. LOPEZ: You have different types of rumble strips. On our divided roads we usually put what's called a milled-in, outside the edge line. That will normally run somewhere around 20 cents a foot to put those in, it's not that expensive.
MR. UNDERWOOD: Exactly.
MR. LOPEZ: Now, where we have a narrow road and just a seal coat where we don't have a whole lot of pavement structure to do that kind of milled-in, we'll put in something like a profile stripe that has little bumps on it and that will give you the rumble effect. That runs about a dollar a foot, but not only is it you stripe, it gives you that rumble effect, and because it has that bump, when it rains that bump stays above the rain line and you still get that reflectivity back. So it has a lot of good positive benefits from a safety standpoint when we put in that kind of stripe.
In fact, Amadeo can mention this, we talked about that at our district engineers meeting earlier this month and encouraged our districts to use that type of application.
MR. UNDERWOOD: My point is if we start widening these roads, we've got 30,000 miles of narrow roads, shouldn't we put the rumble strips in at the same time?
MR. SAENZ: Yes, sir.
MR. LOPEZ: Yes.
MR. UNDERWOOD: I don't know if that's what they asked for, but shouldn't we is what I'm getting at.
MR. LOPEZ: And the way we approached that at our meeting earlier this month is definitely use them where you have a crash problem because that's when they make the most effect when you see something new on the road. We tossed around earlier about doing a whole systematic type placement right away and we kind of backed off that just to focus on the safety efforts, but Commissioner, you make a very good point, that is something we can do when we do any type of overlay or seal coat.
MR. UNDERWOOD: I just think it's critical, and I say that from living in a college town where you're always reading about these young people coming back late at night, Sunday night driving back to go to class, and those long, flat stretches of road sure would be nice to have that rumble strip to kind of wake them up and get them home safe and get them back to the dorm safe.
MR. LOPEZ: I agree with that point. That's an issue that sometimes there's real little middle ground: people just really love them or just don't like them. David Casteel and I were at a public meeting in Commerce, Texas last week and we were talking about some safety issues on a narrow road they had, and we were suggesting rumble strips for their road and one person got up and said they make too much noise. And I said, Well, you know, if it's making noise, that means somebody's life was maybe being saved.
MR. UNDERWOOD: Right, or at least you're where you shouldn't have been with your vehicle. Question, how does this affect motorcycle operators, this rumble strip?
MR. LOPEZ: Well, so far we haven't had, I believe, a crash issue.
MR. UNDERWOOD: I didn't mean a crash, how does it affect the performance of the vehicle when all of a sudden you're on that strip.
MR. LOPEZ: When it's on that flatter milled-in, we haven't seen any issues whatsoever with motorcycles.
MR. UNDERWOOD: Now, with the raised is what I'm going to get back at now.
MR. LOPEZ: The raised, I'm not aware of any issues. Most motorcyclists complain about not being able to turn at a signal and not picking their motorcycle at a detector, but I have not heard of complaints of our profile.
MR. UNDERWOOD: As a motorcycle rider, would you check on that for me, please?
MR. LOPEZ: I'll be glad to.
MR. UNDERWOOD: Thank you.
MR. SAENZ: Fred, can we get you to do a couple of test runs and see what you can tell us?
MR. UNDERWOOD: I'll volunteer my son, he's a little bit more in that program and whatnot, he's younger and bounces better than I do if it goes bad.
MR. LOPEZ: We'll check that, Commissioner.
MR. UNDERWOOD: Thank you.
MR. LOPEZ: Any other questions?
MR. SAENZ: Carlos, we received projects in this Monday?
MR. LOPEZ: Yes, sir.
MR. SAENZ: When do you think you will bring them to the commission?
MR. LOPEZ: No later than March.
MR. HOUGHTON: [Inaudible - no microphone.]
MR. LOPEZ: I just got this really late last night, Commissioner, I just added up numbers in my head. Well, if you think about it, in East Texas a lot of narrow road, windy roads, but there are divided highways in West Texas too. But I can get that breakdown for you, sir. We'll get that to your office.
MR. UNDERWOOD: I'll follow up on that railroad too. You know, there are a lot of communities where the rail runs through the community, and I remember in one of my travels and whatnot, they were very upset for the fact that when the railroad came through, the emergency vehicles couldn't get across the railroad track to the other side of town with an ambulance. But we still only had one. Is that correct?
MR. LOPEZ: We only had one, that's correct, sir.
MR. UNDERWOOD: Okay, thank you.
MR. SAENZ: Thank you, Carlos.
MR. LOPEZ: Thank you, commissioners.
MR. SAENZ: Commission, agenda item number 5, Brian Ragland will present an update on the implementation recommendations of the State Auditor's Cash Financial Forecasting and Fund Allocation Audit. Brian.
MR. RAGLAND: Good afternoon. Again, my name is Brian Ragland, director of the Finance Division, and I'm here, I believe for the fourth time, to give you an update on the State Auditor's audit on the Financial Forecasting and Fund Allocation program. Out of the eighteen recommendations the State Auditor made to us, twelve of those have been completed or either marked as substantially complete. Today I want to give you updates on four of those recommendations.
Number 4(a) suggested that we needed to modify our reports and coordinate with the LBB to help us ensure that we're complying with Rider Number 20-B in the General Appropriations Act, and what that rider asked us to do was to prepare a revenue report, a variance report with reasons for fluctuation, and expenditure information at the same level of appropriations. And we agreed with the State Auditor's Office that the department's cash forecast report was not the most appropriate place to do that with, however, the LBB had previously asked us in an e-mail to continue using the cash forecast report to comply with that rider. Therefore, that's what we've done but we've worked on improving it.
We've had discussions with the LBB as recently as September and we converted our September 2008 cash forecast into an appropriation level format, and that was for FY '09 to '19. We're still working on getting the past information for '06 to '08. We have sent this to the LBB, we are still awaiting their response as to whether or not that meets their needs or whether or not they think that that complies with the spirit of that rider.
Recommendation number 9 asked us to complete our annual reconciliations of the cash forecast with the Comptroller's Cash Report in a timely manner, and obviously resolve any discrepancies that are identified, and to perform that reconciliation in a greater detail than what we were doing before. Our response was that the reconciliation process, with appropriate deadlines, would be included in our Cash Forecast Policies and Procedures Manual, and that, in fact, we would complete that process in a greater level of detail.
So far this year we've done a preliminary reconciliation of the cash forecast. We did that immediately after year end with the information that was available in the Comptroller's system which is called USAS. Since then we've received their published annual Cash Report and we are working with the Comptroller's Office to identify line items that we cannot necessarily decipher what is contained in that line item, so we're asking them for more information so we can get on an apples to apples basis. So hopefully we'll have that completed next month.
Recommendation number 11 recommended adjusting districts' work programs when districts' actual expenditures from the initial funding allocations in their work program. On a higher level, we're currently working on an information resources project that will address this recommendation, but in the meantime, we've developed a report that is broken down by obligation amount by district, and it not only accounts for the letting amounts but it also accounts for the impact of change orders, final expenditures and other charges that count against those obligation limits. I did provide a copy of the format of that report to each of your aides, I believe last week, and so that's available for you to take a look at and provide any feedback to us.
MR. HOLMES: Is right of way included in that or is that a separate category?
MR. RAGLAND: It is not, it's separately budgeted for. The things that were not being picked up necessarily in the past were change orders, final estimates where quantities had changed that they were bid on a per-unit basis within the bid documents, and then just little things like law enforcement providing traffic management onsite. All of those things we're trying to capture and show a total cost against that obligation limit, excluding right of way and engineering. So it's basically the things that should have counted against the obligation limit.
And then finally recommendation number 12 is to develop and implement a transparent process that communicates to districts the reduction in current year funds when districts accelerate their projects. They recommended that we should consider developing a documented agreement between districts which lend money to another that needs it to accelerate a project. We're working on a high level information resource project and that is being designed to track those transfers of funds between districts, and we're also actively working with the administration on this recommendation. We need some further analysis of the options available to us, but we had originally put this to be completed in September 2009 and we don't see that being any different at this time.
And that concludes the four items I wanted to mention to you today. I'll obviously be back again next month and show some more progress to you. Any questions?
MR. SAENZ: Brian, I guess going back to 11 and as a followup to Commissioner Holmes's question, as we go to total project cost in the years to come, then the right of way costs will just be included and added into that report.
MR. RAGLAND: Right, it will be budgeted on the front end so it will be an expense against that budget.
MR. HOLMES: But not engineering.
MR. RAGLAND: I believe so, it's total project cost.
MR. SAENZ: Engineering and right of way and construction will all be budgeted to the project and will all be tracked.
MR. HOLMES: [Inaudible - no microphone.]
MR. SAENZ: Right now I think all we're tracking is the construction cost because that was what they were allocated.
MR. RAGLAND: It's the direct -- I don't know if direct is the right word, but it's the project costs that count against the letting cap.
MR. SAENZ: We do have some reports, Commissioner, that are prepared by the Construction Division that keep track of our engineering costs on projects, and those we can make available. And I think John Campbell in Right of Way also has a report where he's tracking the right of way costs on projects, and those could be very easily incorporated. In fact, I was going to visit with you guys later on on those reports.
MR. RAGLAND: I think it's a good interim step.
MR. SAENZ: What we're trying to do here is trying to make sure we capture so as the districts get their allocation at the beginning for construction, then there is a truing up for change orders, there is a truing up for overruns, there is a truing up for final estimates, and that may have an impact, either positive or negative on their annual budget amount which will allow them to have to make decisions if they're saving money -- just like our letting this month that we were 23 percent under -- they may be able to add a project at the end of the year for this year versus if they get behind, then they'll have to delay a project. So everybody knows up front.
MR. RAGLAND: It becomes more important as we progress through the year because they are approaching their limit and need to know exactly where they stand.
MR. HOLMES: Well, it's clearly important progress, but at some point the total project costs need to be included, right of way and engineering.
MR. RAGLAND: Yes, sir.
MR. HOLMES: And whatever else there might be out there that doesn't come to mind.
MR. RAGLAND: We've learned there's a lot of little things. Thank you.
MR. SAENZ: Thank you, Brian.
Madame Chair, that's all of the items we have.
MS. DELISI: There being no more business before the commission, I will entertain a motion to adjourn.
MR. HOLMES: So moved.
MR. UNDERWOOD: Second.
MS. DELISI: All in favor?
(A chorus of ayes.)
MS. DELISI: Please note for the record that it is 3:33 p.m. and this meeting stands adjourned.
(Whereupon, at 3:33 p.m., the meeting was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Transportation Commission
LOCATION: Austin, Texas
DATE: January 28, 2009
I do hereby certify that the foregoing pages, numbers 1 through 85, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Nancy King before the Texas Department of Transportation.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731