Texas pensioners could fund toll roads

| 4/4/2008

Texas state Senators have hatched a plan to invest state pension funds in new toll roads within the state.

Sen. Steve Ogden, R-Bryan, chairman of the Senate Finance Committee, floated the idea March 25 at a joint meeting with the Senate State Affairs Committee.

“We have private companies looking at and basically competing for the opportunity to invest in private toll road projects in Texas because they believe they are going to get a 12 percent return on investment,” Ogden told the committee.

“Why don’t we figure out a way to get that kind of return for our pension funds at the same time we’re building our highways.”

Committee members and panelists from the state Department of Transportation and the private sector said pension funds could directly finance the construction of toll roads or be loaned to private companies to do the same. Future toll revenue would be used to pay back a rate of return.

Private-sector panelists told the committee that pension funds in Canada and Australia receive 12 percent to 14 percent on public infrastructure including roads, independent power plants and water treatment plants. Subsidiaries of Macquarie Bank of Australia, for example, used pension funds to lease the Indiana Toll Road, panelists said.

Ogden said the Texas Legislature would have a better chance of selling the pension idea to residents who are skeptical of foreign investment.

“The political discussion is, why would we want a foreign country to benefit from our taxpayers because they can charge whatever rate they want to?” Ogden asked.

He said Texans would be more apt to pay tolls if they knew the revenue was going to pay back retired teachers and state employees.

Phillip Russell, assistant executive director for TxDOT innovative project development, said pension funds provide an alternative to traditional financing.

“In the case of pension funds we think, where appropriate, there is an opportunity for pension funds to invest in those toll roads and those public roadways in lieu of our state gas-tax dollars or in lieu of those local and county dollars,” Russell told the committee.

Population growth is a driving force behind the need to add infrastructure to Texas’ 80,000 miles of state highways, he said.

The U.S. Census Bureau shows four Texas cities in the top-10 fastest growing cities in the U.S., with Dallas-Forth Worth topping the list.

Plans for the pension funds and toll roads cannot move forward without legislation passing the Texas Legislature. The next scheduled session begins in 2009 unless the governor calls a special session.

– By David Tanner, staff writer