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A Brief Review of Our Recent Letting History, and a Forecast for the Next Legislative Session

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Poised between the end of FY 2012 and the beginning of the next legislative session, I thought this would be a perfect time to review the Texas Department of Transportation letting figures over the past several years. Most of us recall that 2006 and the years preceding were excellent for highway construction in Texas. Then, in 2007, the contracts plummeted. The total statewide amount let by the commission was $2,785,000,000.

In 2008 that number fell to an even lower $2,492,847,000. Fortunately, because of a combination of revenue enhancements in 2009, TxDOT made its first motions towards an upward swing and let $2,830,000,000.

In 2010 that number climbed to a little over $3 billion, and in 2011 TxDOT went to contract in Austin for $3,968,933,000. The almost $4 billion letting was indeed a welcome sight. Calendar year 2012’s totals look to be around $3.8 billion and it appears that that number or possibly a little bit more will be available for bidding in Austin in calendar year 2013. When we look at the total amount of highway work under contract by TxDOT, we see that they currently have $10,616,000,000 under contract. Our back-log is running about 49%, which is not necessarily a healthy number for the industry. The state let maintenance numbers are $627 million under contract, and it also is a little over 50% earned out. The local let maintenance of $149 million is 55% earned out.

As a result of the outstanding effort by a lot of different people, the traveling public has been made aware of the shortfall in highway funds. There is a special awareness of our failure to maintain our system. The Highway Funding Task Force has done a superb job in developing specific figures showing the amount of debt that TxDOT currently has, which will require about $1 billion in debt service. Couple that with $1 billion in diversion and you are talking about a real impact on our available funds. More and more the citizenry recognizes that our first priority must be to maintain our current system. That has become apparent in the oilfields where roads are beginning to turn to dust, and there is a greater than $1 billion need just to bring the damaged oilfield roads back to their original level.

A number of statewide officials, as well as house and senate members here in Texas, have recognized the shortfall and are in search of meaningful solutions. Starting at the top, Governor Perry recently announced it was time to stop diversions from the Highway Trust Fund in the interest of transparency so the government can talk honestly with the public about spending money, in the way the public was told it would be spent when the taxes were collected. Lt. Governor David Dewhurst has and continues to be a champion, as has Speaker Joe Straus.

With the recent announcement of Senator Nichols as chairman of the Senate Transportation Committee, we can expect to have one of the most knowledgeable members of the Senate overseeing the future of the department’s activities. Senator Nichols’ years on the Texas Transportation Commission give him a unique advantage in developing legislation which will benefit the future of our industry.

One of the greatest supporters of increased funding for our program is Senator Tommy Williams, who this year graduates from chairman of the Senate Transportation and Homeland Security Committee to Chairman of the all-important Senate Finance Committee. It should be noted with special interest that Senator Williams will have a strong and meaningful voice on the future expenditures for TxDOT.

The department and members of the legislature realize that the last several years have depended on bonds and other methods of short-term financing in order to build the program to its current level. Those programs are no longer available, and the legislature will be required to address the problems head-on. There are several good solutions on the table, and hopefully through effective participation from our membership and other like-minded industries we will be successful in obtaining additional meaningful amounts of money for our construction program.

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