What the auditor said

February 24, 2007

It can be interesting to read about the same story from more than one news paper. The San Antonio Express News reports about problems the state auditor found with Trans-Texas Corridor plan.

MySA.com: Politics

Although the state could receive $3 billion in concession payments from developers, such payments could be reduced if inflation, interest rates and other factors increase the developers’ costs, auditors said.”

Significant changes in the cost of financing each road segment could result in the department foregoing any concession payment,” they wrote. “Instead, if the department chooses to build the road segment, the state may have to pay a portion of the costs from available (state) resources.”

So there is this problem but it puts a different light on it when you find out that TxDot isn’t interested in addressing it:

Auditor scolds agency for corridor project

The report also says the $3 billion in payments from the developer that the state expects to get could be reduced to nothing if interest rates and inflation are higher than expected. The agency in its response did not address that assertion.

Then there is the following bit of information that appears in the Austin paper but is missing in the Houston and San Antonio versions.

Auditor scolds agency for corridor project

The department, in a response included in the 73-page audit, agreed with most of the auditors’ observations and recommendations. But the department defended its decision to withhold for more than a year portions of its contract with corridor developer Cintra-Zachry. And it said the auditor was wrong to conclude that the contract commits the department to guarantee Cintra-Zachry a 12 percent rate of return on what it spends building a 300-mile toll road alternative to Interstate 35.

“The 12 percent was merely a modeling assumption,” the agency’s response says.

The state plans to delete language about a “12 percent guaranteed return on equity” now in the master development plan, the audit says.

The following from the Express-News brings up some interesting issues.

MySA.com: Politics

Auditors recommended more legislative oversight of the Trans-Texas Corridor, the transfer of toll revenue projections from TxDOT to the state comptroller and increased public access to information about the project.

They also proposed that TxDOT officials provide regular financial forecasts to the governor, the Legislature and the comptroller and submit development agreement contracts of more than $250 million to the attorney general for review and approval.

How much of the state budget in general is based on projections by individual state agencies and how accurate are they? Do other agencies have to submit development contracts of more than $250 million to the attorney general? If so, why hasn’t TxDOT had to in the past. If not, maybe someone should starting taking a look these other contracts and see if such supervision is warranted. Let’s try to learn something from this process.

Technorati Tags: Trans-Texas Corridor, Texas, State Auditor, Texas Department of Transportation, TTC-35, Rick Perry, Cintra, Zachry, Kirk Watson