Commentary: How Texas makes it hard for itself to build infrastructure

The long range Texas Transportation Plan 2040 says: “TxDOT estimates that $5 billion more per year in highway investment is needed to generally maintain the current level of congestion and condition of our highway infrastructure.”

That’s $5 billion per year on top of what Texas is spending now — and that’s just the money needed to maintain today’s status quo, which is plagued by traffic jams. This massive funding discrepancy makes the Texas Legislature’s recent rejection of private infrastructure funding all the more perplexing.

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Private investors were willing to finance $30 billion in congestion-relief highway projects across Texas under long-term public-private partnerships. Despite the state garnering significant mobility benefits from $8.5 billion of similar projects implemented over the past decade, the Texas Legislature refused to approve 18 highway projects totaling $30 billion in infrastructure investments that had been proposed for public-private partnerships during this year’s session.

These projects would’ve provided the much-needed expansion of Interstate 35 in downtown Austin — but the option has now been prohibited by the Legislature.

Legislators made it harder for the Texas Department of Transportation to finance public-private partnership highway projects that have already been approved. Most such projects get a down payment of state highway money and finance the rest via toll revenue bonds and private equity. Instead of requiring $1 billion from taxpayers to build a $1 billion project, it takes 20 percent — $200 million — with investors coming up with the other $800 million. This stretches the state’s limited highway money much further.

But the Legislature banned such state equity investment. From now on, TxDOT or local mobility agencies can only loan money to a public-private project, which means toll rates would have to cover a lot more debt and may be too high for most motorists to afford. That means many of these already-approved projects won’t get financed or built.

Texas’ moves are especially ill-timed. The Trump administration is working out the details of its $1 trillion infrastructure plan focused on private capital investment and public-private partnerships (PPPs). The Trump plan is expected to provide financial incentives for projects done via such partnerships.

Legislators say Texans are tired of having to use toll roads — but nobody has been forced to use any of the toll-financed PPP projects. All but one simply added new express toll lanes to horribly congested freeways.

Others object to the idea that infrastructure investors providing congestion relief may get a return on their investments — as if earning a reward for providing better service were somehow un-American or un-Texan.

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A few also railed against non-U.S. companies wanting to invest in Texas infrastructure. That’s bizarre, given the state has a program called Texas One, which promotes Texas worldwide as a great place to invest. There are over 1,500 international firms operating in Texas creating good jobs and paying taxes. Why should highway companies be treated differently than auto or cellphone companies building things in Texas, like Samsung and Toyota?

A decade ago, Texas was known as America’s fastest-growing and most pro-business state. It welcomed billions of dollars of investments in needed highway expansion. The need for private infrastructure investment is still very real, and the investors are still very interested.

The Texas Legislature seems to think it’s done residents a service by slamming the door on these options. That’s bad news for motorists in Texas, as many other states will gladly grab the private infrastructure funding Texas is rejecting.

Poole is director of transportation studies at Reason Foundation, where he has advised four presidential administrations on transportation issues.

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