Transfer the Texas High Speed Rail Authority to the Texas Railroad Commission

The Legislature should transfer the functions of the Texas High Speed Rail Authority to the Texas Railroad Commission in September 1993.


Background
In 1992, the Texas Performance Review (TPR) conducted a review of the Texas High Speed Rail Authority (THSRA). TPR July 1992 report on the authority contained the following recommendation, which would need legislation to be implemented.

THSRA, an independent state agency with five full-time employees, originally was ch arged with awarding a franchise for the private development and operation of a high-speed rail system in Texas. Since awarding the franchise to the Texas High Speed Rail Corporation in 1992, the agency s primary mission has become overseeing the corporation s activity. At present, state law requires THSRA s functions to be transferred to the Texas Railroad Commission (RRC) in 1995.

The main functions of THSRA and RRC fall into two major categories: administration and regulation.

Both agencies are responsible for routine administrative functions such as payroll processing, purchasing, budgeting and accounting. THSRA s size does not justify hiring its own accountant, attorney, budget director and other administrative specialists, but contracting for such s ervices also can be expensive. The current situation, in which both agencies perform similar administrative functions for similar operations, is duplicative and results in higher total costs than would the combination of these functions in a single agency.

Both agencies also conduct regulatory functions. RRC is an experienced regulator of railroad financing, construction, operations and safety; moreover, RRC already is required by law to oversee safety issues related to high-speed rail. In addition, a federa lly funded program for rail planning has been assigned to RRC by the governor. THSRA must deal with similar financing, construction, operations and safety issues. Both agencies also have oversight responsibilities. Again, the result is an overlap in regu latory functions and the inefficient use of state resources.

RRC has expertise and resources that an agency of THSRA s size cannot reasonably be expected to maintain. For example, RRC has a legal staff with administrative law capabilities. The commission also has considerable rail transportation expertise that could be useful to THSRA.

There is no compelling logistical or policy reason to delay THSRA s transfer to RRC until 1995. In fact, the opportunities for increased administrative effectiveness and efficiency indicate that a delay should be avoided.


Recommendation
The Texas High Speed Rail Authority (THSRA) should be abolished and its functions transferred to Texas Railroad Commission (RRC), effective September 1, 1993.


Implications
This recommendation would subject THSRA s functions to RRC s additional oversight and accountability procedures, and provide its operation with managerial and administrative expertise it now lacks. Consolidating these functions will result in better coordination of rai l transportation and better transportation and safety regulation.

Fiscal Impact
The franchisee corporation, which pays THSRA s lease, overhead and administrative costs, might experience a decrease in these costs due to the consolidation. Savings to the franchisee also would follow from the resultant ability to receive discounted purch asing rates through bulk ordering with RRC. While THSRA s functions may continue to require five full-time employees, it may not prove necessary to employ staff at the high s alary levels currently in place. For example, the executive director (at a salary of $85,680 per year) would no longer be needed; a program director (at about $55,000 per year) could replace this position for a savings of around $30,000. A $10,000 annual l ease expense also could be eliminated, as could some current administrative expenses. There would, however, be no fiscal effect on the General Revenue Fund.

To meet the expectation of the Legislature and the public that the high-speed rail system be built without taxpayer funds, it will be necessary to account for and expend funds for the project separately. RRC s current accounting system can maintain separate accounts for such projects and charge the account for all costs, both direct and indirect, incurred by the commission for high-speed rail activities.