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Chapter 4.9

Add Flexibility to Enter into Interlocal Agreements


Summary

Texas Department of Transportation TxDOT is not permitted to enter into contracts with a single local government entity for non-highway improvements like sewer and intelligent transportation technology. This requires the Department to find other parties to contracts for purely procedural reasons. State law should be amended to give TxDOT and local governments more flexibility to enter into contracts with each other.


Background

TxDOT partners with local governments[1] to provide a variety of government services, including street and road maintenance, engineering and planning.[2] When contracting with local governments, however, TxDOT faces an unnecessary burden that has developed out of an apparent quirk in state statutes.

Because TxDOT contracts with local governments for non-highway projects under the authority of the Texas Interlocal Cooperation Act,[3] they may not contract with a single local government. According to TxDOT’s Office of General Counsel, TxDOT can only enter into a contract with two or more local entities.[4] This affects any non-highway improvement projects,[5] such as technology or sewer enhancements. The Contract Services Office (CSO) in TxDOT estimates that the Department enters into approximately 40 such contracts each year.[6]

The authorizing statute reads as follows:

  1. A local government may contract or agree with another local government to perform governmental functions and services in accordance with this chapter.
  2. A party to an interlocal contract may contract with a:
  • state agency, as that term is defined by Section 771.002; or
  • similar agency of a state that borders this state.

The issue of concerns comes from line (b) in which agencies may contract with “a party to an interlocal contract.” This means that a local government must already be engaged in an interlocal contract with another local government in order to contract with a state agency such as TxDOT.

According to the TxDOT Office of the General Counsel, the reason behind this is simply that the state law was originally developed for locals to be able to contract with each other. The provision to allow one of these localities to contract with a state agency was added later.[7] The effect of this statute is that TxDOT must find two local entities to participate in each interlocal agreement.

CSO says that they routinely have to find extra local government entities to add as parties to contracts. First are those situations when TxDOT may wish to enter into a contract with a city or county for a non-highway improvement, e.g., installation of conduit in the right-of-way for traffic studies. Second is contracting with entities other than cities or counties for any purpose, highway or non-highway related. Here are example situations:[8]

  • The Department has the facilities to test roadway materials, but it cannot test material for a local government unless there is a second local government involved.
  • TxDOT has river authorities that treat the sewage from TxDOT rest stops. To do this, they had to put two river authorities covering two different rest stop areas into one agreement.
  • If TxDOT wants to rent a piece of equipment with an operator from a county, they have to involve another local government.

This statute creates an unnecessary step that is contrary to the Interlocal Cooperation Act’s purpose of “increas[ing] the efficiency and effectiveness of local governments.”[9] Within TxDOT, the CSO appears to be the only organizational unit that initiates interlocal agreements and is thereby affected by this statute. Some counties are beginning to complain about the added burden that this statute causes them.[10]

In interviews, representatives of both the Texas Municipal League[11] and the Texas Association of Counties[12] stated that they support any change that will grant local governments more flexibility in contracting with state agencies.


Recommendation

State law should be amended to allow individual local governments to contract with state agencies.


Fiscal Impact

The purpose of this recommendation is to remove an unnecessary step in the contracting process and has no significant fiscal impact.


Endnotes

[1] Defined in V.T.C.A., Government Code §791.003 (4) as a “(A) county municipality, special district, or other political subdivision of the state or a state that borders this state; or (B) combination of two or more of these entities.”

[2] V.T.C.A., Government Code, §791.003 (3).

[3] V.T.C.A., Government Code, Chapter 791.

[4] V.T.C.A., Government Code, Chapter 791, Subchapter B, §791.011(a) and (b); interview with Richard Monroe, general counsel, Office of the General Counsel, Texas Department of Transportation, Austin, Texas, February 21, 2000.

[5] Interview with Richard Monroe, general counsel, Office of the General Counsel, Texas Department of Transportation, Austin, Texas, February 21, 2000.

[6] Interview with Jennifer Soldano, director, Contract Services Office, Texas Department of Transportation, Austin, Texas, July 20, 2000.

[7] Interview with Richard Monroe, general counsel, Office of the General Counsel, Texas Department of Transportation, Austin, Texas, February 21, 2000.

[8] E-mail from Jefferson Grimes, manager, State Legislative Affairs, Texas Department of Transportation, Austin, Texas, September 29, 2000.

[9] V.T.C.A., Government Code, Chapter 791.

[10] Interview with Jennifer Soldano, director, Contract Services Office, Texas Department of Transportation, Austin, Texas, July 20, 2000.

[11] Interview with Monte Akers, attorney, Texas Municipal League, Austin, Texas, June 8, 2000.

[12] Interview with Carey Boethel, director, Government Relations, Texas Association of Counties, Austin, Texas, June 9, 2000.