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ON MARKET VOLATILITY

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I recently had a discussion with a stockbroker about the volatility of different markets and industries. The broker claimed there is nothing more volatile than the stock market, which swings widely from day to day, upwards of 500 to 600 points. There seems to be no basis for either upswing or downturn other than speculation about what the government may do or what individuals would decide to purchase or not purchase in a given quarter.

It got me thinking, so I went back ten years to look at the letting schedule and the volatility of our own market. I found several things of interest. The first time TxDOT ever had a monthly letting exceeding $500 million was in August of 1999, when the department went to contract with $544 million. The annual total for 1999 was $2.96 billion. In 2000, August again exceeded $500 million, and again in 2003. In 2003, the calendar annual letting was $3.87 billion. In 2004 the high month was again in August at $624 million. In 2005 and in 2006 the department hit the $600 million threshold again; however, in 2006, they also had a July that amounted to $745 million. That, incidentally, happened to be our all-time calendar year high of $4.89 billion. In 2007, the annual dropped to $2.7 billion, and 2008 was the low for the decade at $2.49 billion.

In 2009, the August high was $393 million and the calendar annual was an unspectacular $2.8 billion, though it did initiate an upward swing. In 2010, we had two months exceeding $500 million and a calendar year total of $3.09 billion. July of 2011 was a record high for TxDOT at $780 million. The first seven months of 2011 totaled $2.4 billion, an indication that the calendar year letting will be something over $4 billion, a very respectable number.

As we look at this funding we begin to take note of our federal funds. The fuel tax is scheduled to expire on the last day of September. In the past, Congress has automatically extended the tax; however, this year it is highly possible there will be nothing “automatic” about it. We hope that each of our members will be in contact with their congressmen and senators and express the importance of extending the fuel tax and the highway program, if we are to make any sort of inroads in maintaining our system and in answering our mobility problems.

In addition to the need to extend our federal fuel tax, Congress must determine whether or not they will continue funding the highway program at the current level. There has been one proposal that would reduce the overall federal funding to match fuel tax that enters the highway program. It is far too early to determine what Congress will do; however, it is anticipated by many that we will continue to operate on continuing resolutions at the current level of expenditures.

In the meantime, the chapter is working with the Texas Transportation Institute (TTI) in College Station, which was given $3 million to identify the major congestion areas of the state and also provide the legislature and the citizens of the state with different solutions to address those congested areas. We are very fortunate that Lt. Governor Dewhurst was successful in taking a very strong leadership role to make sure we have a strong highway program during the next two years while long-term solutions are being developed. In past years, there was a tendency to hold off any expansion of funds until long-term solutions were developed. Our industry received a little more vitality from the full authorization of the Proposition 12 bonds.

Another very positive point is that Lt. Governor Dewhurst is making a run for the United States Senate, and his strong highway position will help encourage others to view the development and maintenance of our infrastructure more favorably.

Right now, a key effort is taking place to educate the public on water bonds. Our Texas water bonds are unique in that they are a provision to loan money to entities that will then take their water programs and repay the loans. They are one of the few bonds issued by the state of Texas with a payment schedule based on water use.

The chapter scholarship program is well and alive. The associate division of the chapter decided that they did not want to hold a trade show this year, and it was during that venue that the members raised the needed money for our scholarship program. As a result of discontinuing the trade show, Chapter President Bob Lanham appointed a special task force that developed a new funding mechanism, which turned out to be in the form of a gala at the Four Seasons Hotel featuring a live and silent auction of key items and entertainment by Ray Benson and his famous Asleep at the Wheel band. The comments from all that attended were that it was a very enjoyable evening. We were extremely pleased with the financial results achieved at the gala. The amount of money raised for scholarship was $417,579, which is roughly $200,000 more than was raised last year at the fish fry. As the chapter board of directors continues to review this issue for next year it will be extremely difficult not to build on what proved to be a very positive and rewarding program enjoyed by all.

As we look at this funding we begin to take note of our federal funds. The fuel tax is scheduled to expire on the last day of September. In the past, Congress has automatically extended the tax; however, this year it is highly possible there will nothing “automatic” about it.

During the next several months, politics will be on the front burner as all state senators, congressmen, and state representatives’ offices are up for grabs and campaigns will be in full swing. Check in at your area and statewide meetings for up-to-date information regarding politicians and their moves. Our industry is at the precipice of a funding chasm, and who we elect into office has a very real and immediate effect on the future of our industry and our member companies. I cannot stress enough how important it is for our membership to participate in our public affairs updates and calls to action.



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