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Paving the Way:
Introduction

When the Texas Highway Department was created in 1917, its first challenge was building a network of paved roads between Texas towns using the muscle power of men and mules to meet the demands of the latest innovation in transportation—the automobile.

Thirty years later, Texans debated the value of investing in a strong road system to support the post-war economy. The state committed to providing the access to markets for farmers, ranchers and oil producers that made the growth of the modern Texas economy and our cities possible. Landmark legislation—the 1946 Good Roads Amendment to the Texas Constitution, dedicating fuels taxes to roads and schools, and the 1949 Colson-Briscoe Act, creating the farm to market system—assured Texas would invest in transportation to support a growing economy.[1]

In the 1950s and 1960s, the Highway Department faced a new challenge in building the interstate highway system. And it succeeded, building more than 3,200 miles of interstate highways for Texas—more than any other state.[2] With most of the interstate system completed in the 1980s and 1990s, the department began exploring how other modes of transportation—airplanes, buses and shipping via the intracoastal canal—fit into the state’s transportation system. The Legislature recognized the agency’s changing role by recreating it as the Texas Department of Transportation (TxDOT) in 1991. Changes came too in the way Texas paid for roads, with a new emphasis on toll roads, especially in Houston and Dallas.

Today, state policymakers once again face critical challenges driven by a changing economy and growing population that could shape what TxDOT does and how it does it for decades to come.

To stay on course, TxDOT will need clear vision, new skills and the ability to react quickly to the changing needs of the emerging economy. Unfortunately, today it is questionable whether TxDOT is equipped to meet these challenges. The agency’s mission has been thwarted by an inward-looking corporate culture that is notoriously resistant to change and a management philosophy deeply rooted in the past instead of focused on the future.

Much of our modern economy—increasingly reliant on just-in-time and zero-inventory methods—is driven by a need for the speedy delivery of products and raw materials, making reliable transportation systems vital to continued economic growth. The new mobility of the American worker means transportation patterns are in a constant state of flux. And, our new economy is global in nature, untethered by lines on maps. This requires transportation planners to think in terms of interconnected, multimodal networks, rather than individual arteries. As our world shrinks and more Texans have a hand in transportation decision-making, transportation solutions are going to involve complex institutional and social issues in addition to physical improvements.

In the past, most transportation solutions were fairly simple. When demand increased, Texas simply built more roads, more rail lines and more airports. Today, however, a host of issues makes it much more difficult to build or expand traditional systems. Land and construction costs have escalated steadily, as have concerns about the impact of transportation projects on communities and the environment. At the same time, a growing share of local, state and federal transportation resources must be used to maintain and rehabilitate the state’s aging infrastructure. As a result, the demand for new highways has outpaced government’s ability to meet our needs by 20 to 1 for the past 20 years.[3]

TxDOT argues that it has only 36 percent of the resources required to meet the state’s transportation needs. However, it is has made little effort to find ways to save money by reallocating staff, streamlining processes, increasing outsourcing and/or reengineering operations in order to drive more resources into meeting critical construction and maintenance needs.

The department must also do more to utilize modern technologies such as the Internet to transform its internal business processes and enhance relationships with its customers. Instead of embracing modern technology as a key tool for increasing productivity, today some TxDOT offices restrict many employees from Internet access fearing they will use the time inappropriately or unproductively. This mindset must change.

TxDOT is at a crossroads and must abandon its outdated business-as-usual approach to meet the challenges of the Information Age. TxDOT must adapt to an economy powered by services and high technology and modern patterns of business and personal transportation.

Recognizing the challenges TxDOT faces and voicing concern about the agency’s ability to meet them, in 1999 the 76th Legislature asked Texas Comptroller Carole Keeton Rylander to conduct a performance review of TxDOT with particular emphasis on the following areas: contracting practices, geographical distribution of construction and maintenance projects, project financing with both state and federal funds, and general business practices.


Challenges to Texas’ Transportation System

Today, Texas’ transportation system is faced with serious challenges, and traffic congestion compounded by a growing population and the constant need for construction and repair is at the top of the list. Drivers stuck in traffic are frustrated by the time and money they waste, and the flow of trade that supports the Texas economy is threatened.


Congested Urban Areas

Texas has one of the nation’s fastest-growing urban populations, and growing congestion on city roads was a frequent concern cited in public transportation hearings held around the state. “In Houston, $1.9 billion is lost per year due to transportation congestion; 780,000 hours per day are lost in work hours,” according to John Butler Jr., a former TxDOT commissioner who participated in the February 17, 2000 hearing in Houston. “Vehicle traffic will have increased by 82 percent in the 20 years between 1990 and 2010.”

According to the American Highway Users Alliance, three of the nation’s top 15 traffic bottlenecks are in Houston. Sixteen more of America’s 150 worst traffic bottlenecks are located in Houston, San Antonio, Austin, and the Dallas-Fort Worth area.[4]

Traffic congestion in major Texas cities increased throughout the last decade. A Texas Transportation Institute study found that the annual delay per driver in Austin rose from 11 hours in 1982 to 53 hours in 1997. In Fort Worth, this delay rose from eight to 38 hours; in Dallas, from 15 to 58 hours. In Houston, the perennial traffic capital of Texas, the annual increase in driver delays rose from 37 to 58 hours.[5]

Unfortunately, problems created by traffic congestion are not limited to inconvenience or even to additional risks to personal safety. High-technology companies and trade sparked by the North American Free Trade Agreement (NAFTA) have produced major economic benefits for Texas, but the state’s infrastructure must be adequate for the economy’s needs if this prosperity is to continue. Already, Texas has lost at least one source of employment opportunities due to transportation problems. When Dell Computer decided to locate a new facility in Tennessee instead of Texas, one of the major reasons cited was traffic congestion on Texas roads.[6]


NAFTA

The need for constant repair and improvement to existing roads has become more urgent since passage of NAFTA, which substantially increased the number of heavy trucks passing through Texas. NAFTA-related traffic now accounts for nearly 16 percent of all Texas truck travel.

In 1996 (most recent figures available), the majority of NAFTA truck freight between the US and Mexico was carried on Texas highways, and 75 percent of all NAFTA traffic traveled on rural interstate and other highways.[7] The volume of traffic on those roads has increased considerably since then. Nine “ports of entry” along the Texas-Mexico border reported more than 2.3 million truck crossings from Mexico into Texas in 1999, a 250 percent increase over the total in 1994 when NAFTA went into effect.[8]

According to TxDOT, 13 Texas highway corridors carry almost 90 percent of NAFTA truck traffic. Interstates 35 and 10 (through El Paso, San Antonio, and Houston) together carry about half of all NAFTA truck traffic, with traffic on I-20 (El Paso through Dallas-Fort Worth), US 77 (from Brownsville to US 59) and US 59 (from Laredo through Houston) accounting for the remainder. The department further reports that NAFTA traffic comprises more than two-thirds of all truck traffic on I-35 from Laredo to San Antonio, US 281 from the McAllen-Edinburg-Mission metropolitan area to US 59, and US 77 from the Brownsville-Harlingen-San Benito area to US 59.[9]

This shows how vital international trade is to the state’s economy. Exports account for 14 percent of the gross state product, up from six percent in 1985. And Mexico is the state’s most important trading partner. In 1999, $41 billion, or almost half of Texas’ exports went to our southern neighbor.

The impact of NAFTA traffic already has imposed significant social and infrastructure costs on Texas. Based on an assessment of the impact of NAFTA on Texas highways in 1996, TxDOT estimated the traffic cost to Texans—through traffic congestion, increased air and noise pollution, accidents and pavement damage—to be about $600 million. Based on that estimate, the cost to Texans living in the border highway districts of El Paso, Laredo and Pharr during that year was about $178 million, or 30 percent of the statewide total.[10]

At the same time, border cities have benefited greatly from the increased trade. For example, in Laredo total shipments through the largest US-Mexico land port increased 89.5 percent from 1994 to 1997.[11] The city’s largest share of employment is now in transportation services.


Listening to Texans About Their Transportation System

An important part of the TxDOT review process was gathering input from private citizens, elected officials, business leaders, public interest groups, TxDOT contractors, and employees. The review team interviewed TxDOT staff, visited TxDOT offices in 15 cities and held public hearings in six Texas cities. In addition, with the assistance of NuStats Research and Consulting firm, a public opinion forum was created to provide individuals with a variety of venues for voicing their opinions and comments about transportation issues and TxDOT’s performance. These venues included a series of public meetings, a Web site, a telephone hotline and a series of brief surveys. (see Figure 1-1).

Figure 1-1

Listening to Texans: Key Features of the TxDOT Performance Review Public Opinion Forum

  • A toll-free telephone hotline (1-877-TXDOT4M) provided information on public meetings and collected public comment.
  • A Web site, www.TXDOT4M.org, contained information about the performance review and public meetings, and provided two opportunities for the public to participate in the review with a comment page and a brief survey.
  • Five public meetings provided citizens and key stakeholders an opportunity to share comments. The meetings were held in Houston, El Paso, Dallas-Fort Worth, Brownsville, and Laredo. More than 150 people participated in the public meetings.
  • Three surveys were conducted to collect a variety of perspectives on the performance of TxDOT and customer satisfaction with the agency. The surveys were conducted with TxDOT employees, the general public and TxDOT contractors. Hundreds of questionnaires were completed.

Several key themes emerged from the surveys, hearings and interviews, including:

Need for Alternative Revenue Sources and Toll Roads. Many Texans voiced the need for alternative revenues to supplement transportation funding, with discussion at several hearings turning to toll roads. “People understand roads are not free,” said Robert Eckels, Harris County Judge, at the February 17, 2000 transportation hearing. “And the people of Houston are receptive to toll roads.” El Paso Mayor Carlos Ramirez said toll roads are a good alternative that includes a public and private partnership. “If we look at toll facilities, especially in the high volume areas, it will help us tremendously,” Mayor Ramirez said during the March 9, 2000 hearing in El Paso. “Private and public sectors working together for toll facilities works, and I think the State of Texas is ready to take that step.”

Need to Focus Increased Attention on NAFTA and Trade-related Issues. Citizens living in cities and towns located near the US-Mexico border (El Paso, Brownsville and Laredo) spoke of NAFTA and trade-related problems.

These included:

  • Traffic congestion caused by long waits at border crossings;
  • Displeasure with heavy transport vehicles traveling on roads designed for light vehicles and the need for roadway/interstate improvements to support heavy traffic; and
  • Concern over the potential loss of NAFTA trade-related economic growth in these communities due to inadequate investment in infrastructure improvement.

At an April 13, 2000 Brownsville hearing, Alan Johnson, executive vice-president for Texas State Bank, noted that, “We need alternative funding methods to meet our transportation needs. NAFTA has increased the international traffic in the Valley. Infrastructure is not just a transportation issue, it’s a safety and economic development issue as well.”


Widespread Concerns About the Equity of the Agency’s Funds Allocation Process

The federal government and nearly all state and local transportation agencies throughout the country continually struggle to allocate funds that address strategic problems in a fair and equitable manner. Although TxDOT has worked hard to develop and maintain equitable planning, programming, and allocation mechanisms, many Texas officials, local governments, business interests, and private citizens are not happy with the agency’s allocation processes. People don’t understand them. They don’t trust them. And they don’t think they’re fair.

In a survey conducted by NuStats Research and Consulting for the Texas Comptroller’s office, nearly two-thirds (62 percent) of all respondents believed that their region does not receive a fair share in TxDOT-related funding.

Need for Speedier Project Delivery. Numerous local officials said TxDOT needs to focus more on delivering projects quickly and less on process. “TxDOT has become process-driven instead of schedule driven,” says George Human, Director of Transportation for the City of Richardson. “You need to find a way for the agency to become schedule driven.”

“Time has a way of killing projects,” Jerry Hiebert, executive director of the North Texas Tollway Authority, told at a transportation hearing in Arlington. “The more time we spend on planning, permitting and funding, the less likely the project will be implemented.” The need to move faster was stressed in Brownsville, too. “We need to get construction of I-69 started,” said Cameron County Judge Gilberto Hinojosa. “We believe the payoff for Texas and the United States will be very large.”[12]


Learning from Others: Innovations in Transportation Policy and Management

TxDOT must learn to adapt to an economy powered by services and high technology and changing patterns of business and personal transportation. It can do so by adopting innovative management techniques that provide higher-quality results for the agency’s ultimate customers, the businesses and citizens of Texas. It must do a better job with its resources.

To accomplish this, there is much to be learned from other states’ experience and even from beyond our nation’s borders. Of course, this knowledge needs to be coupled with a sound understanding of the particular circumstances and needs in Texas. A review of best practices in other states and countries revealed a number of major trends in transportation policy that are likely to affect TxDOT. Most importantly, TxDOT needs to develop an approach that seeks to improve transportation services for Texans. It must look outside TxDOT for ideas and innovations rather than resist change.

Growing Use of Tollroads and Public-Private Partnerships. Perennial funding shortages have caused many states to create toll-road agencies and allow private entities to build roads and collect user fees.[13] State DOTs also are examining opportunities to “sell” unused capacity on High Occupancy Vehicle lanes by converting some of them to toll lanes. Such steps can provide funding for other activities, including mass transit projects.

New Federal Financing Options. The US government already supports a number of innovative financing options for transportation. For instance, the federal government now permits states to issue bonds backed by future federal grants. Since 1998, seven states have issued these Grant Anticipation Revenue Vehicles, or GARVEE bonds, for highway construction projects, and five others are considering it.[14]

Less Rowing, More Steering. State DOTs traditionally have been large, self-contained entities that rely little on private contractors other than for road construction. As outsourcing has become more common, the private sector has stepped forward to play a larger role. Today, almost every state DOT has contracted for some responsibilities beyond construction, including rest-area maintenance, road maintenance and engineering design. Some states have taken this concept much further. Virginia’s DOT has outsourced responsibility for maintaining entire sections of its interstate highway network.[15] South Carolina’s DOT has divided the state into two areas and hired a firm for each to handle all functions involved in road projects, including rehabilitation work. The outsourcing arrangement is expected to complete projects in only seven years, instead of 27 years under traditional approaches.[16]

More Accountability for Performance. More and more, citizens and their legislators are demanding increased accountability from state departments of transportation in exchange for funding. Transportation agencies, in turn, are beginning to insist on outcome-based terms when contracting for services.

One method governments use to hold contractors accountable for results are pavement warranties. These are contract guarantees that a road will function appropriately for a certain period of time. If it does not, the provider replaces or repairs the road surface at no cost to the government. One of the most interesting long-term pavement warranties is a 125-mile road-widening project (from two to four lanes) on New Mexico’s Corridor 44. The contractor, Koch Materials, guaranteed to pay for the upkeep and repair of the road for 20 years.[17] The New Mexico State Highway and Transportation Department estimates that this warranty contract will save the state $89 million in highway maintenance costs over 20 years.[18]


An Uncertain Future

TxDOT has not always been willing to make hard choices in response to growing demands. TxDOT must now accept, embrace and implement fundamental changes in how it operates to continue to carry out its mission. Our review of the agency and of best practices in other states has convinced us TxDOT must look much different in ten years than it does today if Texas is going to continue to thrive. The agency must rethink and redesign many of its business processes, some of which have become nothing short of archaic. The culture of the agency will have to become more open to new ideas and new ways of conducting business. The department carried Texas through the 20th Century, but each milestone must serve as a reminder that every challenge Texas faced in the past demanded a new approach for the future. The same is true today (see Figure 1-2). The recommendations contained in this report can help TxDOT pave the way to a promising future for Texas’ transportation system.

Figure 1-2

TxDOT in the year 2010

  • The agency has primarily become a transportation system manager rather than an engineering or construction operation.
  • Intelligent transportation systems make the most efficient use of physical infrastructure and make driving safer.
  • Web-based systems allow citizens to do all transactions with TxDOT.
  • More new toll roads built faster than roads built using traditional methods provide relief from congestion in urban areas.
  • Alternative financing techniques mean there are more resources to put into infrastructure to keep pace with the dynamic economy.
  • New construction techniques allow TxDOT to deliver projects faster so the transportation system can keep pace with population and economic growth.
  • Private sector business practices transform TxDOT’s approach to include Web-based business and zero inventory.

Endnotes

[1] Texas State Department of Highways and Public Transportation, Responding to the Changing Environment, Summary Report, McKinsey and Company, Inc. July, 1976, pp. 1-1, 1-2. (Consultant’s report.)

[2] Texas Department of Transportation, Pocket Facts, September 2000.

[3] Federal Highway Administration, Office of Highway Policy Information, Highway Statistics 1998 (http://www.fhwa.dot.gov/ohim/hs98page.htm). (Internet document.)

[4] American Highway Users Alliance, Unclogging America’s Arteries: Prescriptions for Healthier Highways, by Cambridge Systematics, Inc. (Washington, DC, November 1999) (http://highways.org/cdrom/unclog.html). (Internet document.)

[5] David Schrank and Tim Lomax, The 1999 Annual Mobility Report: Information for Urban America, (College Station, Texas: Texas A&M University Press), (November 16, 1999), p. III-8.

[6] Linda Harper-Brown and Jack Miller, “Population Overriding Texas Roads,” The Dallas Morning News (Dallas, July 30, 2000), p. 6J.

[7] Texas Department of Transportation, Effect of the North American Free Trade Agreement on the Texas Highway System, by Louis Berger and Associates, Dye Management Group, and Street Smarts (Austin, Texas, December 1998), p. 3. (Consultant’s report.)

[8] Texas A&M International University, Texas Center for Border Economic and Enterprise Development, Border Trade Data, March 3, 2000 (http://www.tamiu.edu/coba/bti/bridge/trucks/trknorth99.htm). (Internet document.)

[9] Texas Department of Transportation, Effect of the North American Trade Agreement on the Texas Highway System, p. A-VIII: 2.

[10] Texas Department of Transportation, Effect of the North American Trade Agreement on the Texas Highway System, pp. 18-23

[11] Eric Dittmar and Keith Phillips, “Border Region Makes Progress in the 1990’s,” Vista, December 1999, and The Economy in Action, Federal Reserve Bank of Dallas, p. 2. (http://www.dallasfed.org/htm/pubs/vista/dec_99.html). (Internet Document.)

[12] Comments at e-Texas Transportation Hearing, Arlington, Texas, May 9, 2000.

[13] California Department of Transportation, Final Report on the Finance Provisions of the AB 680 Transportation Project Development Franchise Agreements, by Price Waterhouse (Sacramento, California, February 22, 1991). (Consultant’s report.)

[14] Telephone interview with Jennifer Mayer, Western Resource Center, Federal Highway Administration, San Francisco, California, August 7, 2000.

[15] Telephone interview with Dennis Shea, Department of Transportation, Richmond, Virginia, April 16, 2000.

[16] South Carolina Department of Transportation, “27 in 7: Peak Performance at SCDOT,” August 24, 2000 (Brochure.)

[17] The warranty also covers maintenance of drainage works and all structures for 10 years, and can be voided only in the event of a hazardous waste spill, natural disasters, or damage by state maintenance crews.

[18] New Mexico Department of Transportation, “New Mexico Corridor 44 Project,” presentation by Charlie Trujillo, New Mexico deputy secretary of Transportation, at the Design-Build for Transportation Conference, Salt Lake City, Utah, April 23, 1999, p. 3.