Are we really sure this is a good idea?

With highway construction slowing because of red tape and budget woes, Texas' top three leaders -- Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick -- on Thursday proposed sweeping policy changes to jump-start and pay for new road projects.

In a letter to Texas Transportation Commission Chairwoman Deirdre Delisi, the three proposed significant changes in how Texas pays for the roads it builds and said they have "agreed to work together" to make changes.

Otherwise, they said, the state's "ability to fund needed transportation projects in the future is limited," due to cutbacks in federal highway funding, limitations of existing state funding programs and population growth that continues to outpace infrastructure planning.

One prong of the plan would create a Transportation Finance Corporation to allow state investment funds -- including the state employee and teacher retirement systems, among others -- to directly invest in state transportation projects. Combined, the two state systems manage $135 billion in assets.

State pension officials took a cautious view of investing in state projects in testimony this year before the Senate Finance Committee, saying a mandate to invest in Texas infrastructure could conflict with their duty to find the best return on investment for retirees.

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Britt Harris, the chief investment officer of the Teacher Retirement System of Texas, said infrastructure investing could make sense if the deal was "equal to or better than something we can get in another (investment) vehicle."

The pension fund's "ultimate loyalty is to the members," Harris said, not to target investments based on geography or politics.

[T]oll road projects are risky investments. They are risky for two reasons. One is that they are subject to economic fluctuations that affect people's driving habits, such as the price of gasoline or the pace of development. The second reason is that, when government is involved, they are vulnerable to political pressure and favoritism. Google "toll road defaults" and you will find a trove of stories with unhappy endings. The Camino Columbia toll road in Laredo, which was rife with political intrigue over which landowners would benefit from having a road go through their property, opened in 2000 and defaulted in 2004. Cost: $90 million. Auctioned off for: $12 million. Tx-DOT bail out acquisition payment: $20 million. The Dulles Greenway toll road to Washington's Dulles Airport defaulted on its bonds within a year of its opening in 1995. The private owner, Toll Road Investors Partnership II, have lost money every year since the road opened. When toll roads lose money, tolls go up-in this case, to $4.80 by 2012. That works out to an astronomical 35 cents per mile. There are similar stories in Orange County, California (where the state had to buy failing toll lanes), and along Florida's west coast, and near Richmond, Virginia, where the 8.8-mile Pocohantas Parkway, financed with tax-free bonds, has suffered around a 50% shortfall in projected toll receipts; the state has had to maintain the road because the private owners don't have the money. Bond ratings have been lowered to below investment grade. To pay off the bonds, the toll was increased by 50%.