The population of the Lone Star State passed the 26-million mark this year, according to the U.S. Census Bureau. The 3.6% year-over-year growth rate shows no sign of slowing. While new arrivals are welcomed, the problem, as Texas officials wryly note, is that they "don't bring new roads with them."
The Texas A&M Texas Transportation Institute estimates the state faces a $4-billion funding gap to meet the transportation needs of the growing populace. To make ends meet, the Texas Dept. of Transportation has turned to public-private partnerships (P3s) to finance and build billions of dollars' worth of new highway infrastructure.
"We are the leader with P3s because we have had to be," says TxDOT's outgoing executive director, Phil Wilson. "If you have 1,000-plus people moving into Texas every day, then how do you take those available sources of funding and build a project in a smarter, faster and more efficient way?"
Across the state, more than 300 miles of roads are being built or upgraded using $18.8 billion worth of P3 processes. According to TxDOT, only $5 billion in state funds are being used as part of those efforts. In some instances, this works out to a 4:1 ratio of private to public funds.
Nowhere is this more evident than in north Texas, one of the fastest-growing areas in the fast-growing state. Of the $11.3 billion in major road projects currently under way in the Dallas-Fort Worth (DFW)area, $9.5 billion of the projects are classified as P3s by TxDOT. By contrast, in FY2013, the state budgeted about $7 billion for construction and maintenance. The budget gap is still significant: $5.8 billion is slated for 2014, although the Legislature passed on a proposal to give TxDOT $1.6 billion more a year while allowing a stopgap measure to make up the difference.
"In some places, P3s can be somewhat controversial, but in the DFW area, it has really clicked well, and there is a true acceptance of the delivery methodology," says Russell Zapalac, TxDOT's chief planning and project officer whose department oversees P3 projects.
Along with a few other states such as Virginia and Florida, Texas is considered a P3 trailblazer. All three have redoubled their commitment in recent years by creating dedicated divisions within their transportation departments for the development and oversight of P3s. An example is Zapalac's TxDOT position, created in 2012 to "ensure the entire life cycle of projects are managed from a risk and critical-path perspective."
"A dedicated unit can take every proposal and go from concept to completion to oversight," says Richard Norment, the executive director of the National Council for Public-Private Partnerships. "It allows the agency to constantly evaluate what is being done and look for how to do it better."
Historically, Texas used a traditional pay-as-you-go method of funding transportation infrastructure, using moneys derived from vehicle registration fees and motor-vehicle fuel taxes. Increasingly, it's not enough. Texas' 20¢-a-gallon fuel tax hasn't increased in almost a quarter-century, while increased fuel efficiency has slashed the amount it collects.