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D Magazine on John Carona

Interesting profile, worth a read, on State Sen. John Carona, who’s become somewhat of a radical in his party for actually being old-fashioned enough to try to solve problems and make government work. I think he’s right about this:

With their mantra of no new taxes, the Republican-controlled Legislature does not have the money to build more roads. Suburban Republican representatives, whose communities are threatened with traffic strangulation, find themselves caught in a vise of their own making. The only solution they have is to outsource road building to private companies, which then make their investments back with tolls. Meanwhile, by 2012, when it runs out of cash, the state’s road-building agency, TxDOT, will sit idle. As Lt. Gov. David Dewhurst noted recently, TxDOT is one of the world’s largest engineering firms, with 12,199 employees, 1,120 of which are licensed professional engineers.

Does it make sense to outsource when TxDOT has the capability—but not the money—to meet the state’s exploding need for better transportation? Carona thinks outsourcing is financially reckless. “It costs the taxpayers 3.5 times more to outsource than to build,” he says, “because, unlike the state, private toll-road developers use equity from firms like Goldman Sachs, which command double-digit annual returns to their investors, and they require multiyear exclusive agreements so that out-year profits go to the private consortium rather than back to the state or its taxpayers.” He lays the blame squarely at the feet of his own colleagues. “Fiscal responsibility means nothing to them,” he says with disgust. “They only worry about the next primary.”

He goes further: “Republican office-holders once cared about the nation’s interests. Now they only care about self-interest and special interests.”

Carona figures that the cost of bringing the road system back into balance with a healthy combination of free and toll roads is a roughly 10-cents-per-gallon tax increase. The average driver might pay an additional $8 per month. By contrast, continuing to outsource road construction over the next decade could wind up costing North Texans $8 per day in unavoidable tolls. In July 2008, the average price for a gallon of regular gas in Dallas was $3.98. In January of this year, it was $2.61. Industry experts are predicting that the average price will rise back to $3.25 by this summer, due to a number of factors such as lower refinery production and investors buying oil as a hedge against inflation. And, of course, there’s always the prospect of an Israeli attack on Iran’s nuclear facilities, which would cause oil prices to soar. In the rough-and-tumble world of international oil markets, a 10-cent gas tax in Texas barely registers.

I’ve done toll road math many times in this space, so you know I agree with this. The choice here is really simple, and I think it will be a much easier sell than many of our current officeholders seem to believe. Roads don’t magically build themselves. The money has to come from somewhere. Increasing the gas tax will cost you a lot less than paying a toll. Any politician who can’t explain this to people really ought to consider another line of work. Obviously, one may believe there’s a better solution, and if you do then more power to you, as long as you’re honest about it. But if all you’ve got is reflex and fear, then please do us a favor and get the hell out of the way.

Where I disagree with Carona, and I daresay with D Magazine and its traditionally conservative viewpoint, is here:

Money is John Carona’s favorite subject, and how Republicans have handled it since their takeover of state government has left him deeply disillusioned. From the post-Civil War period until the rise of George W. Bush, the Republican Party was seen as the party of business and the economy. It stood for prosperity, balanced budgets, and fiscal responsibility. No more. Says Carona: “The Democrats are the party of overspending. The Republicans are also the party of overspending. The only difference is that the Republicans are hypocrites about it.”

Texas today, after 15 years under two Republican governors, is facing a $21 billion deficit in the next biennium (if sales tax collections continue to worsen, the hole could grow deeper). After applying $9 billion from the Rainy Day Fund (which the deficit will entirely wipe out), the state will be $12 billion in the hole. Deficits are the single most regular feature of Republican fiscal management. Last year, the state was saved from a $12 billion deficit only because of a grant from the federal stimulus package, which almost all state Republican politicians say—in public—they opposed. (In private, they nearly fainted with relief.)

The hypocrisy part, I agree with. But the problem right now isn’t overspending, it’s undertaxing. That ginormous 33% property tax cut, which the business margins tax hasn’t come close to offsetting, blew a huge hole in the budget. In the 2007 session, $14 billion was appropriated for public schools to make up for money lost to them by the property tax cut. About $8 billion of that was to be made up by the margins tax and the increased cigarette tax, though we knew from the beginning that the margins tax would fall short of projections. In the end, the gap was about $8 billion, or almost $2 billion more than originally expected. How much less dire would our situation look right now if we had all that money back, because we didn’t cut property taxes that much and/or because we created a better business margins tax?

We can go the 2003 route and take a chainsaw to the budget again, screwing the poor, the sick, the young, and the old as we did before, but the structural deficit will still be there, even if a return to economic growth papers it over a bit. Just as the 1991-era gas tax is insufficient to provide for the state’s 2010 transportation needs, the state’s tax system overall is insufficient to cope with our growing and increasingly needy population. We’re not going anywhere till we get our hands around that.

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3 Comments

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