April 2, 2009 / 8:44 PM / 11 years ago

Texas House eyes budget, Senate mulls privatization

NEW YORK (Reuters) - The Texas House of Representatives Appropriations Committee will review the two-year $181 billion budget plan, which was approved on Wednesday by the state Senate, sometime next week, a spokesman for Republican Speaker Joe Straus said on Thursday.

The entire House could get the bill around the beginning of the week of April 13, but “I want to emphasize those are tentative and expected dates,” spokesman Fred Guerra said.

Texas’s new budget plan increases spending by 7 percent over the last two-year budget if the $11 billion of federal stimulus money is included — though Republican Governor Rick Perry has already rejected hundreds of millions of this aid to extend unemployment benefits.

States are divided on whether they should include stimulus money in budget calculations.

Governors, including New York’s David Paterson and New Jersey’s Jon Corzine, both Democrats, say the federal aid should not count in measuring spending hikes.

Spending increases look smaller if only the state’s general fund — the money it raises itself — is counted.

Texas Republican Lt. Governor David Dewhurst made that point on Wednesday, saying the “actual spending” of state money will rise only 2 percent a year.

The Texas House Appropriations Committee is likely to get the budget plan sometime around April 7, which is Tuesday.


Separately, two senators have proposed privatization bills that may revive what was the biggest U.S. road privatization plan. Concerns that the deals benefited developers at the taxpayers’ expense led lawmakers to enact a moratorium that will result in a ban if lawmakers fail to act by September 1.

Privatizations often involve long-term leases for new or existing roads that companies run and collect tolls on. Banks and private equity funds have raised hundreds of millions of dollars for these investments.

But the upfront payments that states get are often too small, and the leases are too long and fail to protect states from the risk that a developer will go bankrupt, the Public Interest Research Group Education Fund, a Boston-based public advocacy group said on Wednesday. For more details, please click on:.

Texas Republican Senator John Carona, a critic of some public-private partnerships, has proposed a bill that requires legislators to vote on whether the state should permit or bar them.

Separately, Senator Robert Nichols, another Texas Republican and a former state transportation commissioner, proposed a bill to safeguard the public in any new deals by ensuring that they are first offered to localities, then to the state, his aide said.

“Private companies can’t come in and compete directly with them or usurp them or jump over them in the line of primacy,”

aide Steven Albright said.

While developers, in their contracts, often require the state to pay “fair market value” if it wants to buy the road back, such clauses could cost Texas billions of dollars and setting that price could invite litigation, Albright said.

Nichols’ bill requires developers to spell out both the upfront cash payment and the repurchase price Texas would pay in five-year periods for the life of the contract.

Texas can wrest roads back if maintenance is poor or “rates go through the roof,” Albright said.

Developers also often demand that states promise not to build nearby competing roads for the term of the lease; Nichols’ bill would free the state to add any links envisioned in the 30-year plans that local authorities devise.

Editing by Jan Paschal

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