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Chapter 7

Transportation and the Texas-Mexico Border Region


Summary

The liberalization of trade with Mexico through the North American Free Trade Agreement (NAFTA) and the state’s unprecedented economic expansion have created highway infrastructure needs that cannot be met with current TxDOT resources. As a recent New York Times article noted, “Inadequate infrastructure is one of the chief threats to a thriving economy.”[1] The TxDOT study provides the tools necessary to develop a sound transportation infrastructure that will lead to greater economic opportunity for all Texans.


Background

Transportation reflects the movement of life and prosperity in the Texas-Mexico border region. On a typical day in the border region about 95,000 pedestrians and more than 205,000 vehicles commute cross the Texas-Mexico international bridges to work or shop in each other’s countries.[2] Every day 12,000 trucks transporting goods manufactured in Texas and the US and valued at $290 million crisscross the Texas and Mexico ports of entry and border commercial zones. [3] At the same time, 1,220 rail cars are transporting goods valued at $49 million over Texas’ six rail border crossings.[4]

Joining this movement are motorists in the three transportation districts along the Texas-Mexico border who drive a combined total of almost 29 million daily vehicle miles—a daily total exceeded only by the Houston, Dallas, San Antonio and Fort Worth transportation districts.[5] The Houston, Dallas, and San Antonio districts are anchored by cities ranked among the top ten most populous in the nation.[6]

Since 1990, Mexico’s northern border urban areas have experienced rapid and dramatic population growth, outpacing growth in Texas’ counties along the border. By the end of the 1990s, the population in the largest Texas counties and Mexican states along the Texas-Mexico border had topped a combined 13.6 million.[7]

The US-Mexico border region continues to gain economic significance for Mexico, the US, and Texas. The economic gain is driven in large part by the maquiladora industry’s impact on employment and trade. From the 1994 implementation of the North American Free Trade Agreement through March 2000, Mexico’s maquiladora industry has been the most dynamic sector of the Mexican economy, adding 1,400 new plants and creating about 640,000 new jobs—increases of 68 percent and 110 percent respectively over this period.[8] Total maquiladora production is projected to reach $83 billion in 2000, with about $66 billion, or 80 percent, generated by the border maquiladoras.[9]

The border region’s international bridge and highway infrastructure is being strained by flourishing international trade, the continuing growth of maquiladora manufacturing plants, a growing population, and the accompanying increase in commercial and commuter traffic between the US and Mexico. The combination of these factors results in increased traffic congestion, which impedes travel in the border communities and on border ports of entry.

Transportation in the border region resonates with power, energy, and economic potential. The roads and bridges that support the greatest volume of overland trade and international traffic in the US demand Texas’ increased attention if the border region is to realize its economic potential and compete successfully in the global economy.


The Border Region

The Rio Grande, or Rio Bravo as it is known in Mexico, forms the Texas-Mexico border and serves as the geographic center of a region that is growing in economic and cultural importance, not just for Texas, but also for the US and Mexico. The Rio Grande is the southern border of 15 Texas counties and the northern border of four Mexican states. The Texas counties along the border are El Paso, Hudspeth, Jeff Davis, Presidio, Brewster, Terrell, Val Verde, Kinney, Maverick, Dimmit, Webb, Zapata, Starr, Hidalgo, and Cameron counties (though 43 Texas counties are considered part of the border region). The Mexican states along the Texas-Mexico border are Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas.

Exhibit 1
Texas’ International Bridges and Border Crossings

Texas’ International Bridges: There are 23 vehicular international bridges along the length of the Texas-Mexico border (Exhibit 1). These bridges are owned by the US government, the state of Texas, local governmental entities, and private companies (Exhibit 2). The Mexican portions of all international bridges spanning the Rio Grande are owned by the Mexican government.[10]

Exhibit 2
Location and Ownership of
International Bridges along the Texas-Mexico Border

Bridge Name
County
Ownership
B&M Bridge at Brownsville
Cameron
Private
Progreso-Nuevo Progreso
Hidalgo
Private
Starr-Camargo Bridge
Starr
Private
Fort Hancock-El Provenir
Hudspeth
US International Water and Boundary Commission
Fabens-Caseta Bridge
El Paso
US International Water and Boundary Commission
Bridge of the Americas (BOTA)
El Paso
US International Water and Boundary Commission
Presidio Bridge
Presidio
State of Texas
Veterans International Bridge at Los Tomates
Cameron
Cameron County and City of Brownsville
Gateway International Bridge
Cameron
Cameron County
Free Trade Bridge at Los Indios
Cameron
Cameron County, City of San Benito,
and City of Harlingen
Pharr-Reynosa International Bridge
Hidalgo
City of Pharr
McAllen-Hidalgo-Reynosa Bridge
Hidalgo
City of McAllen
Roma-Ciudad Miguel Alemán Bridge
Starr
Starr County
Juárez-Lincoln Bridge
Webb
City of Laredo
Gateway to the Americas Bridge
Webb
City of Laredo
World Trade Bridge
Webb
City of Laredo
Laredo-Colombia Solidarity Bridge
Webb
City of Laredo
Camino Real International
Maverick
City of Eagle Pass
Eagle Pass Bridge I
Maverick
City of Eagle Pass
Del Río-Cuidad Acuña International Bridge
Val Verde
City of Del Rio
Ysleta-Zaragoza Bridge
El Paso
City of El Paso
Good Neighbor Bridge
El Paso
City of El Paso
Paso del Norte Bridge
El Paso
City of El Paso

Source: Texas Department of Transportation.

NAFTA opened the domestic markets of the US, Canada, and Mexico to cross-border trade. But the trade flows through Texas’ international bridges, which support the greatest volume of overland international trade and traffic in the US.


Economic Factors affecting Border Highways

International trade is vital to Texas’ economy. Exports account for 14 percent of the gross state product, up from six percent in 1985. Mexico is the state’s most important trading partner and the US’ second largest trading partner after Canada, its other NAFTA partner.

In 1999, $41 billion or almost half of Texas’ exports went to Mexico. On average, Texas exported more than $112 million in merchandise to Mexico every day during 1999. The export average rate for 2000 is even higher. Texas exports to Mexico topped $38 billion in the first three-quarters of fiscal 2000, a daily average of $138 million. Texas exports to all countries total a combined $83 billion during the same three quarters in 2000.[11]

Population Growth: According to Mexico’s preliminary census estimates, the population of the Mexican states bordering Texas—Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas—had increased by 22 percent, to almost 12 million, from 1990 to 2000, adding 2.2 million residents. On the US side, the population of El Paso, Webb, Hidalgo and Cameron counties increased about 391,000 inhabitants, from 1.4 million in 1990 to 1.75 million in 1999—a 29 percent increase.[12]

By the end of the 1990s, the population in the largest Texas counties and Mexican states along the Texas-Mexico border had topped a combined 13.6 million.[13] This population increase was due in large part to NAFTA, which helped catalyze border industrialization and the continued development of the maquiladora industry.

Growth of Maquiladora Industry in Mexico: Since NAFTA was implemented in 1994 and through March 2000, Mexico’s maquiladora industry has been the most dynamic sector of the Mexican economy, adding 1,400 new plants and creating about 640,000 new jobs—increases of 68 percent and 110 percent respectively during this period.[14] Total maquiladora production is projected to reach $83 billion in 2000, with about $66 billion, or 80 percent generated by the border maquiladoras.[15]

In 1999, about 61 percent of the maquiladoras were located along the US-Mexico border and 39 percent in the interior of Mexico. Most of the border maquiladoras are located in the cities of Tijuana (764), Mexicali (190), Juárez (331), Reynosa (115), and Matamoros (139). These maquiladoras employed more than 600,000 in March 2000.[16]

Almost 600 maquiladoras are located in cities along the Texas-Mexico border employing 375,000 in March 2000. Total production in 2000 was projected to reach $49 billion for maquiladoras located in Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas.[17] Due to traffic bottlenecks in the northern border cities, new maquiladoras have started to locate in the interior of Mexico.[18] The principal maquiladora industry sectors in these border states are electrical machinery, electronics, apparel, and auto parts.[19]

US Gains from NAFTA: Just as Mexican enterprises have reaped financial gain because of NAFTA, so too have US companies, especially those enjoying joint-production with maquiladoras. US producers gain from production-sharing because 82 percent of materials imported to maquiladoras are provided by US suppliers. In 1998, $31 billion worth of US components were shipped to maquiladoras south of the border.[20]

Regional intra-industry trade has increased between the US and Mexico:

  • US-Mexico trade in transportation equipment has risen by 325 percent, from $8 billion in 1993 to $34 billion in 1999. Mexico is the largest export market for US vehicles and auto parts.
  • US-Mexico trade in textiles has reached $17 billion in 1999, a 300 percent increase since 1993. Mexico is the main supplier of textiles and apparel to the US.
  • US-Mexico trade in electronics reached $53 billion in 1999, a 200 percent increase since 1993. Nearly all US producers in electronics are in joint partnerships with Mexican firms.
  • Mexico is the number-one supplier of household appliances to the US, with exports topping $8 billion in 1999, a 143 percent increase since 1993.[21]

Texas Gains from NAFTA: According to the Texas Department of Economic Development, “geographic proximity and strong industrial linkages makes Mexico Texas’ largest export destination.”[22] With NAFTA, economic activity has tripled on the Texas-Mexico border. The beginning of 2000 saw almost half of the state’s exports go to Mexico. It is Texas’ trade with Mexico, to a large extent, that now makes exports account for 14 percent of Texas’ gross state product, up from six percent in 1985.[23]

Texas exports to Mexico rose from $24 billion in 1994 to $41.4 billion in 1999, a 74 percent increase (Exhibit 3).

Exhibit 3
Texas Exports to Mexico 1994-1999
($ in millions)

Merchandise Export
1994
1999
Percent Change
Electronic Equipment and Components
$5,799
$11,377
96
Transportation Equipment
$3,757
$6,170
64
Industrial machinery & Computers
$2,398
$4,506
88
Chemical and Allied products
$1,430
$2,684
88
Rubber and Plastics Products
$1,068
$2,480
132
Fabricated Metal Products
$1,514
$2,189
45
Primary Metal Industries
$1,009
$1,856
84
Petroleum Refining and Related Industries
$473
$1,436
204
Textile Mill Products
$399
$1,350
238
Scientific Instruments
$1,125
$1,129
No change
Subtotal
$18,972
$35,177
85
All Other Merchandise
$4,878
$6,236
28
Total
$23,850
$41,413
74

Source: Texas Department of Economic Development and Texas Comptroller of Public Accounts.

This red-hot trade translates into more jobs throughout the state, in both urban and rural Texas. For example, trade with Mexico in 1998 accounted for 377,000 jobs in Dallas; 183,000 in Austin; 165,000 in the McAllen/Brownsville area; 150,000 in Laredo; 132,000 in Houston; 907,000 in other metro areas; and 283,000 jobs in rural Texas. In fact, Texas-Mexico trade accounts for one in every five Texas jobs.[24]


NAFTA Traffic and Texas Highways:

Economic integration due to NAFTA has greatly increased overland trade and truck traffic on Texas highways and at the Texas-Mexico ports of entry. As noted above, traffic congestion at the international bridges spanning the Rio Grande River as well as the cities and counties along the Texas-Mexico border has worsened significantly. 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 became effective.[25]

Because of increasing trade with Mexico, the ability of the border’s transportation infrastructure to move goods has become increasingly important. Five of the eight major trade highway corridors that handle the majority of overland commercial and passenger traffic and connect both nations’ major production, urban and tourist centers meet at the Texas-Mexico border (Exhibit 4).[26]

Exhibit 4
U.S.-Mexico Major Highway Routes

Increase in Overland Trade: The US shares 2,000 miles of border with Mexico, 1,254 miles of which is along the Texas border. In Texas, 23 international crossings serve as overland ports of entry for trade (exports and imports) with Mexico. The 1999 value of US trade to and from Mexico by truck through Texas ports exceeded $106 billion—$53.6 billion in imports and $52.6 billion in exports—an 85 percent increase from the 1995 total of $57.3 billion.[27]

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.[28]

The volume of traffic on those roads has increased considerably since then. The commercial truck crossings from Mexico over the nine Texas ports for which truck crossing data are available, have increased 216 percent since 1990, from a combined 726,000 in 1990 to combined 2.3 million in 1999.[29]

NAFTA Traffic and Border Highways: The need for constant repair and improvement to existing roads has become more urgent since passage of NAFTA. NAFTA-related traffic now accounts for about 16 percent of all Texas truck travel. In 1999, about 4.4 million (2.3 million into Texas and 2.1 million into Mexico) truck crossings were made through nine Texas ports.[30] The international bridges at Laredo alone, the busiest port on the border, had 2.8 million commercial vehicle crossings.

In only the first six months of 2000, there were 1,616,737 Mexican truck crossings. At the present rate, the numbers of Mexican trucks entering Texas ports will reach 3,233,474 by December 2000, a 41 percent increase over 1999.

NAFTA Traffic Impact: The impact of NAFTA traffic, while focused on a relatively small number of highways, has imposed significant social and infrastructure costs on Texas. Based on a 1998 assessment of the impact of NAFTA on Texas highways, TxDOT estimated the traffic cost to Texans—through traffic congestion, increased air and noise pollution, and accidents and pavement damage—to be about $600 million in 1996. Based on that estimate, the cost to Texans living in the border highway districts of El Paso, Laredo and Pharr during that year would have been about $178 million, or 30 percent of the statewide total.[31]

Texas Priority Corridors: Trade traffic and the additional traffic resulting from the state’s economic growth of late have combined to put a great deal of stress on the Texas road network. Most notable is the Interstate Highway 35 corridor, which originates at Laredo and has become the primary trade corridor between Mexico and all parts north. Other affected highways in the state include US Highway 281, originating at McAllen; US Highway 77, originating in Harlingen; US Highway 59, originating in Laredo; and US Highway 277, originating in Del Rio. Also heavily affected are the various arterial roads providing connections between the border and Interstate Highway 10 in El Paso. Congress has designated these NAFTA corridors, along with other highways that connect to them, as parts of “High Priority Corridors on the Nation’s Highway System.”[32]

There are 43 High Priority Corridors; some are within a single state while others are multi-state corridors. Five multi-state corridors (Corridors 18, 20, 23, 27, and 38) are located in Texas.

Corridor 18 begins in Brownsville and McAllen, proceeds north toward Houston, connects with I-69 and continues on to Michigan. Corridor 20 follows US 59 from Laredo through Victoria and Houston up to Texarkana. Corridor 23 starts in Laredo as I-35, flows north in Texas through San Antonio and Dallas, and proceeds through Oklahoma, Kansas, Missouri, Iowa, and Minnesota. Corridor 27, the Camino Real Corridor, begins in El Paso and proceeds north through New Mexico, Colorado, Wyoming, and Montana. Corridor 38, the Ports to Plains Corridor, begins in Colorado and goes to the Texas-Mexico border via I-27.[33]

These corridors will help extend NAFTA trade north and south. By 2010, some 2,000 barriers to the movement of goods, services, and money among the three signatory nations will be eliminated, with Texas retaining unsurpassed links to its hemispheric neighbors.[34] But Texas must find ways to fund its mammoth transportation needs if it is to reap the benefits of its location.


Highway Construction Expenditures on the Texas-Mexico Border

NAFTA and the state’s expansion have created highway investment needs that challenge TxDOT’s resources. Highway construction projects on state roads in counties along the Texas-Mexico border are planned and designed by the staff of four Texas Department of Transportation Districts: El Paso, Odessa, Laredo and Pharr.

Comparisons among these districts can be made by examining historical funding allocations based on functions of need and equity, in three straightforward ways:[35]

  • average district and average statewide spending per capita, 1985-1999.[36]
  • average district and average statewide spending per daily vehicle miles traveled (DVMT), 1985-1999.[37]
  • average district and average statewide letting volume, 1989-2000.

For overall period from 1985-1999, TxDOT appears to have done a reasonable but imperfect job at meeting its definition of a fair allocation.

Exhibit 5
TxDOT District DVMT*
Highway Construction and Maintenance Expenditures, 1985-1999

TxDOT District
Average
Spending
Per DVMT
Percent
of State
Average
Total
State
Spending
Childress
$14.28
164%
$464,467,196
Houston
$11.51
133%
$9,121,995,998
Lubbock
$11.35
131%
$1,298,051,351
Laredo
$11.15
128%
$595,693,915
San Angelo
$10.40
120%
$593,309,538
Paris
$10.09
116%
$1,154,119,491
Corpus Christi
$9.72
112%
$1,361,677,527
Brownwood
$9.51
109%
$470,765,280
Abilene
$8.93
103%
$788,074,275
Amarillo
$8.81
101%
$957,873,338
Lufkin
$8.79
101%
$877,347,538
Wichita Falls
$8.76
101%
$702,671,880
El Paso
$8.63
99%
$1,073,333,542
Austin
$8.58
99%
$2,407,715,017
Atlanta
$8.33
96%
$986,559,070
Bryan
$8.28
95%
$1,080,251,588
Pharr
$8.04
93%
$1,255,818,502
Beaumont
$7.96
92%
$1,366,269,128
Odessa
$7.70
89%
$679,001,489
San Antonio
$7.64
88%
$2,870,083,273
Yoakum
$7.64
88%
$1,003,061,327
Fort Worth
$7.58
87%
$3,061,781,026
Dallas
$7.22
83%
$4,697,284,624
Tyler
$6.78
78%
$1,248,308,106
Waco
$5.20
60%
$894,067,595
Statewide
$8.69

$41,009,581,614
* DVMT: Daily vehicle miles traveled.

Sources: Texas Department of Transportation, Texas Comptroller of Public Accounts,

and Trans Tech Management, Inc.

As shown in Exhibit 5, spending per DVMT figures illustrate seven of the 25 districts received less than 90 percent of the statewide average, while the Childress District received an inordinately high level of funding.

Exhibit 6
TxDOT District Per capita
Highway Construction and Maintenance Expenditures, 1985-1999

TxDOT District
Average
Per capita
Funding
Percent
of State
Average
Total State
Spending
Childress
$694.70
458%
$464,467,196
San Angelo
$258.13
170%
$593,309,538
Brownwood
$256.80
169%
$470,765,280
Paris
$253.87
167%
$1,154,119,491
Atlanta
$228.61
151%
$986,559,070
Lufkin
$226.58
149%
$877,347,538
Bryan
$217.87
144%
$1,080,251,588
Yoakum
$214.88
142%
$1,003,061,327
Abilene
$209.10
138%
$788,074,275
Lubbock
$205.19
135%
$1,298,051,351
Wichita Falls
$198.85
131%
$702,671,880
Amarillo
$189.70
125%
$957,873,338
Beaumont
$176.05
116%
$1,366,269,128
Corpus Christi
$175.32
116%
$1,361,677,527
Austin
$160.44
106%
$2,407,715,017
Houston
$156.69
103%
$9,121,995,998
Tyler
$154.28
102%
$1,248,308,106
Odessa
$141.09
93%
$679,001,489
Laredo
$136.96
90%
$595,693,915
Fort Worth
$133.85
88%
$3,061,781,026
San Antonio
$122.04
80%
$2,870,083,273
Dallas
$112.45
74%
$4,697,284,624
El Paso
$108.50
72%
$1,073,333,542
Waco
$106.01
70%
$894,067,595
Pharr
$102.90
68%
$1,255,818,502
Statewide
$151.62

$41,009,581,614

Sources: Texas Department of Transportation, Texas Comptroller of Public Accounts,

and Trans Tech Management, Inc.

For per capita spending, the Waco, San Antonio, Dallas/Fort Worth, and the Pharr and Laredo border transportation districts received less than 90 percent of the statewide average (Exhibit 6).

Another component of the construction expenditures to consider is letting volume—the value of construction contracts awarded in a fiscal year. Projects are let for construction after plans are completed and bids have been taken. Construction work begins after a contract is awarded. Therefore, letting volume indicates construction work scheduled to start that fiscal year.

Exhibit 7
TxDOT District Pre Capita Construction and
Maintenance Contract Letting Total
1995-2000

Construction and
Maintenance
District Letting Total
(in millions $)
Per Capita
Letting $
Childress
$207.2
$4,734
Paris
$523.3
$1,657
Atlanta
$471.9
$1,600
San Angelo
$219.2
$1,391
Lufkin
$379.7
$1,371
Amarillo
$439.8
$1,261
Bryan
$440.4
$1,248
Laredo*
$391.8
$1,171
Brownwood
$139.0
$1,108
Yoakum
$347.9
$1,083
Abilene
$267.7
$1,049
Wichita Falls
$250.7
$1,040
Beaumont
$492.9
$914
Lubbock
$379.7
$895
Tyler
$431.2
$753
Corpus Christi
$395.0
$729
Odessa
$225.3
$687
Waco
$391.8
$646
Pharr*
$599.7
$637
El Paso*
$449.0
$624
Austin
$745.3
$615
Houston
$2,594.8
$597
Fort Worth
$998.5
$581
Dallas
$1,803.7
$569
San Antonio
$986.6
$568
State Total
$14,572.2
$731
Border Districts*
$1,440.5
$722

Sources: Texas Department of Transportation and Texas Comptroller of Public Accounts.

In fiscal 1990, the letting volume for 24 TxDOT districts totaled $1.54 billion; the border districts (El Paso and Pharr) accounted for $64.4 million, or 4.2 percent of the total. In fiscal 2000, the letting volume for 25 TxDOT districts—which includes the Laredo district created in 1994—totaled $3.06 billion, and the border districts of El Paso, Laredo, and Pharr accounted for $332.3 million, or almost 11 percent of the total. The letting volume for the 25 TxDOT districts during the period from fiscal 1995 through fiscal 2000 totaled $14.6 billion; the border districts accounted for $1.44 billion or about 10 percent of the total (Exhibit 7).[38]

TxDOT’s funding allocation process turns the project selection process into a win-lose competition between different areas of the state and makes it difficult to build a statewide consensus on how funds should be spent. The first two analyses identified some inequities; allocations to a few districts should be brought closer in line to statewide averages. The analyses of recent letting volume trends indicates some of these inequities still exist, but that expenditures in the border districts are rising. Contract letting totals for the border transportation districts are very close to the state average and exceed the per-capita ratios of the Austin, Houston, Fort Worth, Dallas and San Antonio transportation districts.

While these analyses do not show great inequities in funding allocation, it is clear that many political officials, business interests, local agencies and everyday citizens are not happy with TxDOT’s allocation processes and question their outcomes. To some degree, this is not TxDOT’s fault: no allocation approach can give all regions all of the highway investments they believe they need and deserve.


Summary

Texas’ infrastructure needs exceed available financing. TxDOT estimated in 1997 that the state should spend $11 billion annually on highways, bridges, and aviation needs. Yet the actual amount of money available totaled $3.1 billion annually. Although federal funding under the new Transportation Equity Act for the 21st Century (TEA-21) increases available funding to Texas by an average of $700 million per year from 1999 to 2003, this additional funding has not been enough.

According to Robert Nichols, a member of the Texas Transportation Commission, “We lack the resources to maintain and expand the existing system.” Max Proctor, director of TxDOT Programming and Scheduling, quantifies Nichols’ statement: “We now have 36 percent of the money we need to keep pace with growth.” In other words, the current lack of resources will delay project development and contracting by as much as 20 years.[39]

The roads and bridges that support the greatest volume of overland trade and international traffic in the US demand increased attention if the border region is to realize its economic potential and help Texas compete successfully in the global economy. Texas may not have enough resources to meet all of its transportation needs. But Texas can meet its critical needs by taking advantage of all opportunities to maximize the impact of its revenues.


New Tools to Finance Critical Transportation Needs

Texas presently finances highway construction using the traditional pay-as-you-go method of financing. Hence, Texas plans its construction expenditures to match its cash flow, which limits the amount of construction that can be initiated in any given year.

A number of federally supported financing programs authorized since 1995 focus on increasing states’ ability to meet critical infrastructure needs. This study recommends two programs: grant anticipation revenue vehicles backed by future federal funds, called GARVEEs; and access to federal credit assistance via the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA). The primary objectives of these programs are to:

  • maximize the ability to leverage federal funds for needed investments;
  • more effectively use currently available funding; and
  • move projects into construction faster than traditional approaches.[40]

1. Use GARVEE bonds. A legislative effort to enhance TxDOT’s leveraging capability failed in 1999. Texas SB 966 would have authorized the use of GARVEE bonds, while Senate Joint Resolution 45 would have amended the Texas Constitution to authorize the issuance of such bonds. Both bills died in the House Transportation Committee. Meanwhile, GARVEEs have been issued by New Mexico, Ohio, Mississippi, Colorado, Arizona, Arkansas, Oklahoma, and New Jersey. Other states with the authority to issue GARVEE bonds include Alabama, California, Colorado, Florida, and Nevada.[41]

The primary benefits of GARVEES include:

  • accelerated project delivery—by accumulating needed capital funding for a construction project in a lump sum rather than having to build up funding obligation over a great many years.
  • better funds management—and facilitate the funding of larger projects without adversely affecting smaller projects. The State of New Mexico, for example, boasts significant cost savings by employing GARVEEs to bundle construction projects that would otherwise be strung out over a great many years.
  • avoidance construction and right-of-way inflation costs—with current construction and real estate inflation factors and historically low interest rates, on an all-in basis, there can be significant net cost savings of project acceleration, even accounting for interest and other financing costs.
  • realization of economic development related benefits—as well as safety and environmental benefits as early as possible.

GARVEE bonds, by accelerating construction programs, could bring economic growth more quickly to an area of the state where the need is especially great. GARVEEs would be especially helpful in funding construction projects in the Rio Grande Valley that are scheduled to start within the next three years. These include an $81 million project in Webb County, a $12.4 million project in Val Verde County, one for $29 million in Maverick County, and another for $5 million in La Salle. GARVEEs also would be beneficial to the TxDOT Laredo district, where more than $200 million in transportation projects are in the planning and design stage.[42] Another potential project is the proposed outer-loop Northeast Parkway in El Paso. This project would redirect commercial truck traffic from the Zaragoza port of entry and west-bound traffic around the city of El Paso into New Mexico.

Border Focus. GARVEE bonds would allow the state to fund large, capital-intensive projects without affecting smaller projects. For example, GARVEEs could provide funding for the I-69 Corridor project, which would add another interstate route along the Gulf Coast, connecting ports of entry at Brownsville, Beaumont, Corpus Christi, Freeport, Galveston, Harlingen, Houston, Matagorda, Orange, Port Arthur, Port Lavaca, Port Mansfield, and Texas City. From these ports, ships carrying international trade make deliveries to ports around the world. Since Texas has many large, capital-intensive projects that need immediate funding, GARVEEs and Texas are a good match.

2. Increase Use of TIFIA and Toll Roads. Texas plans to build more toll roads. TIFIA funding for State Highway 130 has been approved. TxDOT officials report the $800 million loan will advance the completion of the turnpike project by as much as 25 years.[43] SH 130 is to be built between Seguin and Georgetown paralleling I-35, and should relieve traffic on I-35 considerably.

Texas cannot presently take full advantage of toll roads, however, since the Texas Constitution, Article III, §52-b, requires that state highway money spent on toll projects be paid back to the state from the tolls generated. If toll authorities were no longer required to remit these funds to the state, TxDOT and regional and turnpike authorities would have the freedom to spend toll road earnings directly for roads.

Robert Nichols, a member of the Texas Transportation Commission, is convinced that toll roads are the best means of accelerating needed highway projects. He argues that infusing state funds into toll road projects would reduce both the time and cost involved in completing highway projects. In this way, the state could leverage its money at a 5:1 ratio, Nichols says, and put more money into other projects.[44]

Border Focus. This study recommends that the Texas Department of Transportation make better use of the Texas Turnpike Authority’s flexibility and ability to accelerate project delivery. In December 2000, the Comptroller of Public Accounts requested an Attorney General’s Opinion to clarify the state’s legal authority to borrow under the TIFIA program for non-turnpike projects. One potential TIFIA project is the proposed outer-loop Northeast Parkway in El Paso, Texas mentioned above.

3. Expand Use of the Texas State Infrastructure Bank (SIB). Texas was a pioneer in establishing an state infrastructure bank. The Texas Legislature created the SIB in 1997 to:

  • encourage public and private investment in transportation facilities;
  • expand the availability of funding for transportation projects and reduce direct state costs; and
  • improve the efficiency of the state transportation system.[45]

As of August 1, 2000, the Texas SIB had disbursed about $39 million and made additional commitments of $26 million. On that date the SIB had a cash balance of about $171.5 million not yet committed to projects.

Border Focus. Among other concerns regarding local access to the program, some uncertainty has arisen as to whether counties have the authority to borrow from the Texas SIB. For the time being, counties are forced to issue tax anticipation notes to the SIB rather than enter into direct loan agreements. The result is added costs to counties for the use of the SIB—a cost which poorer counties cannot afford. This study recommends that state law be amended to give counties the authority to borrow via direct loan agreements with the SIB.

4. Improve Cash Flow Management. As in many other states, TxDOT has a cash balance that is greater than intended and more than adequate as a cushion against a potential deficit. While TxDOT’s cash balance has been brought down in recent years, it continues to represent an opportunity for more aggressive fiscal management. These extra balances represent underutilized resources.

Border Focus. TxDOT could make better use of its cash resources and lower its cash balance through improvements in project readiness and project delivery. Large cash balances represent underused resources earning interest rather than funding sorely needed construction projects.

5. Increase Discretionary Funds Received. Texas receives federal transportation funds through a combination of formula-based apportionment and discretionary funding programs. TxDOT maximizes federal formula funds and has taken advantage of resources made available by other states’ periodic under-utilization of their highway funds. TxDOT has fared poorly in obtaining discretionary funds. For example:

  • in 1999 and 2000, TxDOT submitted applications for $348 million under the Borders and Corridors program and received $32.2 million of a national pool of $280 million.
  • despite applications in 1998-2000 of $525.7 million, TxDOT received no funds in Interstate Maintenance funding.
  • TxDOT also received no funding against $67.2 million in applications under the Bridge Discretionary program in 1999 and 2000.
  • TxDOT recently submitted an application for more than $18 million under the Borders and Corridors Program to fund construction of one-stop border inspection stations and received only $1 million.

For the years 1998 and 1999, Texas received discretionary funding equivalent to 0.75 percent of its apportioned funding of $2.1 billion. Texas ranks 34th among all states in its ratio of discretionary to apportioned funding.

Border Focus. The need for additional funding for border projects is great. Texas border crossings handle about 80 percent of all US-Mexico truck traffic. Texas shares the largest land border (1,200 miles) with Mexico and has the highest number of border crossings in the nation.[46] Therefore, this study recommends that TxDOT increase its share of discretionary funds to 3 percent of apportioned funds, to increase funding for borders and corridors. If this goal is not met, TxDOT should make up the difference from its administrative funds, that will be applied to highway construction.


Increase the Equity of the Highway Funds Allocation System

The federal government and state and local transportation agencies throughout the country continually struggle to allocate funds in a manner that is fair, equitable, and addresses strategic priorities.

TxDOT’s current planning, programming, and fund allocation approach is extremely complex and is driven by several interrelated processes and considerations. Although TxDOT and the Texas Transportation Commission have continually revised and improved their allocation methods, room for improvement clearly exists; state and local leaders, transportation officials, business organizations and everyday citizens find the processes complex and confusing, and as a result question their results. Another result is a convoluted funding framework composed of 34 funding categories—several with sub-allocations—and a maze of formulas and project ranking mechanisms.

6. Establish a New, Straightforward Approach to Allocating Funds. The agency should eliminate its current program planning and funding allocation processes and establish a straightforward allocation formula that funds both strategic priorities and regional needs in a predictable, equitable, and understandable manner.

7. TxDOT should establish transportation planning regions with logical geographic boundaries. Planning regions that work as partners with TxDOT to develop short and long-range transportation plans would have several benefits.

  • They would provide greater input from local officials about regional priorities, particularly in areas that do not belong to a metropolitan planning organization and lack formal public roles in project selection;
  • They would help ensure that funding goes to the highest priorities, not just the highest priority in a given funding category.
  • Finally, they would help local officials and citizens gain an appreciation for TxDOT’s funding and process constraints.

8. These regions, in conjunction with a Statewide Advisory Committee, should establish a 10-year statewide mega-project transportation program. Considerations that should guide the list include:

  • cost—projects should cost at least $250 million
  • system contribution—projects should focus on linking areas of the state and improving inter-regional, interstate and international trade.
  • congestion/air quality—projects should help to eliminate the largest causes of pollution and traffic delays.
  • intermodal connectivity—project should focus on improvements to freight and passenger intermodal connections.
  • economic benefits—projects should focus on maximizing economic development and trade, such as NAFTA investment needs.
  • existing commitments—the most important projects currently planned for construction, along with their designated funding, should be migrated to the mega-projects list to expedite their completion.

9. TxDOT, with the help of advisors including elected officials and private citizens, should develop a simplified formula to fund regional programs and mega-projects. TxDOT should abandon all non-mandatory funding categories and manage its funding through two primary funding pools: one that combines all statewide funding categories and focuses on mega-projects throughout the state, and another combining all district bank balance programs into a single one allocated by formula and programmed based on district and regional planning committee consensus. This recommendation addresses critical issues identified in the review, by:

  • providing a way to expedite completion of the state’s most critical projects.
  • reducing the complexity and mistrust associated with TxDOT’s current funding allocation and project selection processes.
  • providing for more input by TxDOT’s customers in the planning process and more certainty about future allocation levels.
  • ensuring that limited resources are spent on the highest regional priorities.
  • garnering greater support for future transportation funding initiatives by providing information about actual transportation costs and available resources.

10. TxDOT should establish a new allocation formula over all construction, with a minimum guarantee funding level for planning regions equal to 90 percent of a region’s estimated highway fund contributions. The allocation of funds should be determined by the regional planning advisory committees.

  • The recommended minimum guarantee level provides a starting point and serves as a guideline for the development of new formulas, as needs warrant.

11. TxDOT should prioritize a list of projects and make a report to the Legislature to ensure compliance with these priorities. TxDOT districts and regional planning advisory bodies should work together to establish annual performance goals and then report on how their selection and implementation of regional funds contributes to attaining these goals.

  • This approach gives planning regions maximum flexibility in how they use their funds, but holds them accountable to the Texas Transportation Commission, the Texas Legislature, and the public.

12. The Legislature should increase the number of transportation commissioners to provide for broader representation. The Texas Transportation Commission has consistently had representation from the Houston and Dallas-Fort Worth regions. In the last two decades, there were only three years when either Houston or Dallas-Fort Worth lacked a commissioner; for 60 percent of the time, there was a commissioner from both regions. The ubiquitous presence of commissioners from the state’s two most populous areas has limited the number of commissioners from other areas of the state. This is especially true for the border region, which was represented for only 12 months in the last 22 years.

All available evidence indicates that the TTC has been and continues to be as fair as possible in setting statewide priorities, and attempts to make sure TxDOT provides the best possible transportation system for the citizens of Texas. However, the small size of the commission does present problems. The TTC’s small size virtually guarantees that large metropolitan areas will be represented while other regions are usually excluded. The size of the state, moreover, makes it difficult for only three individuals to be well schooled in the needs of every region in the state. As a result, commissioners rely heavily on TxDOT staff for policy development since they are unable to become expert in all areas of interest. In addition, no two commissioners can even speak to each other about TxDOT policy without violating open meetings laws, since two out of three constitutes a quorum.

There are some obvious benefits to having a larger commission, particularly for a state the size of Texas:

  • Greater regional representation and awareness. Regardless of whether commissioners are selected at large or to represent specific areas, a larger commission with members from various areas of the state is more likely to understand regional priorities and communicate them to other commission members.
  • Specialization. Commissioners in states with large commissions are able to specialize in critical areas such as privatization, intermodalism, finance or intelligent transportation systems.
  • Broadened perspective. A state transportation department has a broad range of customers that can be defined by region, demographic group, industry, and interest groups. A larger commission is better able to both understand and provide access for a broad range of interests.
  • Increased accessibility. An expanded TTC would make individual commissioners more accessible to the public and allow them to hear, first-hand, more citizens’ concerns, issues and interests. This expanded input would bring a better-informed perspective to the development of transportation policy and solutions.
Border Focus: The recommendations modifying the highway funds allocation processes and the transportation commission would provide better representation for the border region. Specifically, local officials in the border region would have input into the planning and funding of highway construction projects through the identification of regional needs and prioritization of projects based on economic development and NAFTA. Rural areas that are not part of a metropolitan planning organization would be brought into the project planning and prioritization process. The regional planning boards could include representatives from the Mexico border cities as non-voting members. In addition, the border region could ask for more input into Mexican transportation planning.

Transportation in the border region is synonymous with economic potential. The roads and bridges of the region have become a lifeline for the economies of two nations, and they demand increased attention if the state and nation are to succeed in the global economy.


Endnotes

[1] “Remarks by Bush and Designees to Lead Energy, Labor, and Transportation,” New York Times (January 3, 2001), p. A-12.

[2] Texas A&M International University, Texas Center for Border Economic and Enterprise Development, “Border Trade Data,” Laredo, Texas, January 1, 2001 (http://www.tamiu.edu/coba/bti/bridge/vehicle/vhsthyr.htm.). (Internet document.)

[3] US Department of Transportation, “Transborder Surface Freight Data,” (http://www.bts.gov/transborder/reports/97/pv_99imp_mex_trk_r.html). (Internet document.)

[4] Texas A&M International University, Texas Center for Border Economic and Enterprise Development, “Border Trade Data”; and US Department of Transportation, Transborder Surface Freight Data.”

[5] Texas Department of Transportation, District and County Statistics Report (Austin, Texas, November 1999), p. 15.

[6] US Bureau of Census, Statistical Abstract of the United States, “Table 48: Cities with 100,000 or More Inhabitants in 1996” (Washington, D.C., 1998), pp. 47-49.

[7] David E. Lorey, ed., United States-Mexico Border Statistics since 1990 (University of California, at Los Angeles, UCLA Latin American Center Publications, 1993), pp. 7-13 and pp. 25-38; and INEGI, “XII Censo General de Poblacion y Vivienda, 2000,” December 2, 2000 (http://www.inegi.gob.mx/difusion/espanol/bvinegi/cpyv/indice.html). (Internet document.)

[8] CIEMEX-WEFA, Maquiladora Industry Outlook, (Eddystone, Pennsylvania, May 2000), pp. 3.1.3.

[9] CIEMEX-WEFA, Maquiladora Industry Outlook, p. 5.2.

[10] Texas Department of Transportation, Texas-Mexico International Bridges and Border Crossings (Austin, Texas, March 1999), pp. i-iv.

[11] Texas Department of Economic Development, BIDC Texas Exports Database, “Texas Exports to All Countries 2000-Q1, 2000-Q2, 2000-Q3, December 31, 2000” (http://www.bidc.state.tx.us/exportdb/query2.cfm), (Internet document.)

[12] U.S. Department of Commerce, Bureau of the Census, County Population Estimates 1990 to 1999, (Washington, D.C., March 9, 2000).

[13] David E. Lorey, ed. United States-Mexico Border Statistics since 1990, pp. 7-13 and pp. 25-38; and INEGI, “XII Censo General de Poblacion y Vivienda, 2000.”

[14] CIEMEX-WEFA, Maquiladora Industry Outlook, pp. 3.1.3.

[15] CIEMEX-WEFA, Maquiladora Industry Outlook, p. 5.2.

[16] “Maquila Scorecard,” Twin Plant News (August 2000), pp. 54-55.

[17] CIEMEX-WEFA, Maquiladora Industry Outlook, p. 5.9.

[18] CIEMEX-WEFA, Maquiladora Industry Outlook, p. 3.8.

[19] CIEMEX-WEFA, Maquiladora Monthly Monitor (August 2000), p. 8.

[20] Lucinda Vargas, “The Binational Importance of the Maquila Industry,” Southwest Economy (November/December 1999); and Federal Reserve Bank of Dallas The Economy in Action, November/December 1999 (http://www/dallasfed.org/htm/pubs.swe.11_12_99.html) (Internet document.)

[21] “NAFTA Works for Mexico-US Trade,” NAFTA Works Newsletter (Fall 2000), pp. 1-4. (Newsletter.)

[22] Texas Department of Economic Development, Highlights of 1999 Texas Exports: Trends, Statistics, Analysis, 1999 (Austin, Texas, June 2000), p. 2-1.

[23] Carole Keeton Rylander, Texas Comptroller of Public Accounts, “Transportation for Texas in the 21st Century,” speech presented at the TxDOT Review/e-Texas Transportation Hearing in Laredo, Texas, August 24, 2000, p. 2.

[24] Carole Keeton Rylander, “Transportation for Texas in the 21st Century,” p. 3.

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

[26] US General Accounting Office, US-Mexico Border: Better Planning, Coordination Needed to Handle Growing Commercial Traffic (Washington, D.C., March 3, 2000), p. 41.

[27] US Department of Transportation, “Transborder Surface Freight Data” (http://www.bts.gov/ntda/tbscd/reports/97/pp_99ex_mex_trk_r.html) (Internet document.)

[28] 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.)

[29] Texas A&M International University, Texas Center for Border Economic and Enterprise Development, “Border Trade Data.”

[30] Texas A&M International University, Texas Center for Enterprise and Economic Development, “Truck Crossings into Texas from Mexico, 1990-99,” September 19, 2000 (http://www.tamiu.edu/coba/bti/bridge/trucks/tksthyr.htm). (Internet document.)

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

[32] US Department of Transportation, Federal Highway Administration, “NHS High Priority Corridors Description,” Washington, DC, September 9, 1998 (http://www.fhwa.dot.gov/hep10/nhs/hpcor.html#20). (Internet document.)

[33] US Department of Transportation, Federal Highway Administration, “National Highway System - High Priority Corridors,” Washington, DC, August 14, 1998 (http://www.fhwa.dot.gov/hep10/nhs/nhsfacts.html). (Internet document.)

[34] Texas Comptroller of Public Accounts, Forces of Change: Shaping the Future of Texas (Austin, Texas, November 1993, p. 72.

[35] Annual construction and maintenance expenditures, vehicle miles traveled, vehicle registrations, and population figures for 1985-1994 were grouped for the counties comprising the Laredo district to create a “virtual” Laredo district. The analysis for the period 1985-1999 includes data from the counties within the Laredo engineering district as if the district existed from 1985 through 1994.

[36] While there is a lower correlation between population and needs than facility usage and needs, per-capita spending does provide a useful assessment of funding allocation equity.

[37] Since DVMT reflects facility usage levels, it can serve as a loose substitute for facility depreciation and additional capacity needs

[38] Texas Department of Transportation, Design Division, Letting Management Office, Letting Volume reports for construction and maintenance projects 1989 through 2000.

[39] Texas House of Representatives, House Research Organization, “Highway Funding: Toward a New Fiscal Roadmap,” Focus Report, (Austin, Texas, August 3, 2000), p. 1.

[40] US Department of Transportation, Federal Highway Administration, “Federal Innovative Finance Tools Fact Sheet,” Washington, D.C.

[41] US Department of Transportation, Federal Highway Administration, “The GARVEE Gold Goldrush: Tracking the States’ Use of Debt,” a presentation to Transportation Research Board Innovative Finance Conference, Scottsdale, Arizona, August 20, 2000.

[42] Carole Keeton Rylander, “Transportation for Texas in the 21st Century,” pp. 4 & 6.

[43] Texas Department of Transportation, “$800 Million Loan Granted to Texas Turnpike Authority for Central Texas Turnpike Project,” Austin, Texas, November 21, 2000. (Press release.)

[44] Texas House of Representatives, House Research Organization, “Highway Funding: Toward a New Fiscal Roadmap,” Focus Report, August 3, 2000, p. 17.

[45] Texas Department of Transportation, Budget and Finance Division, State Infrastructure Bank Applicant Handbook, Version 1.0 (Austin, Texas, October 1997). pp. 7-8.

[46] Texas Department of Transportation, “Border and Corridor Funds,” Austin, Texas, June 12, 2000. (Press release.)