Texas Gov Perry headed for more PPPs with close associate Phil Wilson new head of TxDOT

September 29, 2011

Gov Rick Perry seems to be laying the ground for stepping up tollroad concessioning or PPPs in Texas. Today the state's Transportation Commission - a body which generally does the Governor's bidding - announced selection of a longtime Perry political confidante and associate Phil Wilson as the new executive director of the Texas Department of Transportation. That position has normally been filled by a transportation professional.

Wilson, aged 44, comes immediately from head of public affairs at a large electric generation company Luminant.  

Previously Wilson was Perry's Secretary of State. However Phil Wilson was no Hillary Clinton. In Austin TX that position is less far-ranging than here in Washington DC.

But it does involve representation of Texas with Mexico!

Also it involves supervision of elections and assorted other highly political jobs delegated by the governor. Wilson chaired the governor's Competitiveness Council and various economic development committees so he is well known to top businessmen in the state.

Before the secretary of state post Wilson spent time on Perry's personal staff and got in some DC experience working for the prominent Texas US senator Phil Gramm.

Statements today

Ted Houghton, Texas Transportation commissioner and chair of the commission's executive director search committee is quoted in the announcement today: "Phil (Wilson)'s experience as a public servant and member of the Texas business community has prepared him well to lead the department as it continues to modernize. While TxDOT is certainly a national leader in transportation infrastructure development, there are opportunities for Phil (Wilson) to guide the department through this period of transition, emerging a more responsive and efficient organization."

Wilson himself is quoted: "I am honored to be selected as the next executive director of TxDOT. This is an agency with a rich history in successfully building for our future with dedicated employees. I look forward to working with the agency, Commission, Legislature and local communities on the most efficient and effective ways to build infrastructure for Texas."


That last sentence looks like a proposal to enlist investors and private enterprise more heavily in transportation in the state - to do more tollroads with public-private partnerships or concessions ('comprehensive development agreements' (CDAs) is the favored Texas term.)

Earlier this year Texas DOT was reorganized to separate concessions out from operations within the Turnpike division. They are getting separate managers, we're told, which would also seem designed to allow a greater focus on PPPs or CDAs.

In most jurisdictions where a state toll agency coexists with a policy of privatization the work of privatization is conducted by a separate agency.

In Ohio Governor Kasich's proposal to privatize the Turnpike is being conducted by the Office of Management and Budget. In Puerto Rico tollroad privatization (and other privatizations) are being conducted by a Puerto Rico Public Private Partnerships Authority. In Indiana the same is true.

By contrast in Virginia where the Virginia DOT conducts P3s almost nothing ever gets to financial close. There is study after study and multiple procurements in glacial slow motion.

The Norfolk/Hampton Roads area is in its second decade of P3s being "in process" with nothing ever coming out of the pipeline.

The problem with having the state toll authority conduct the privatization is that it has a huge conflict of interest. It is being asked to execute its own dismemberment, if not a death sentence. Its natural tendency is to go through the motions.

Non-viable projects for which no state money can be raised can usefully be passed off for P3 procurements, the protracted procurement process itself being a convenient response to constituencies asking what's being done for their problem corridor. The real problem is toll projects that the state sees as financial duds are also likely to be P3 duds.

Odd record - from Mussolini & Mao to markets

Governor Perry has an odd record in transportation.

Early in his term Perry promoted the most grandiose statist planning with so-called Texas Transportation Corridors (TTCs) crisscrossing the state gridlike. Within thousand foot-plus rights of way 4,000 miles, 6500km of TTCs were seen as catering separately to cars and trucks, separate freight and passenger rail, with oil and gas pipelines and electric transmission lines. The concept was a financial absurdity - more akin to authoritarian and monumental planning in China or fascist Italy than to a market oriented economy and a democratic polity.

Practical civil servants in TXDOT and the Turnpike Division attempted to extract something useful and positive from the TTC concept by focussing attention on "early priorities" (I-35, I-69) and slimmed down "first stages"  - but the political damage was done. Texas' legislature saw bipartisan opposition develop.

All the TTC concept achieved was to mobilize a powerful anti-roads political backlash. Naysayers were given a whole armory of weapons to bludgeon every TXDOT proposal.

The disastrous TTCs were quietly buried in 2009.


Texas under Perry has seen much effort to develop P3s. Again the state's credibility in P3s was heavily damaged when the Governor failed to weigh in against North Texas Turnpike Authority's late takeover of the north Dallas area Route 121 (now Sam Rayburn Tollway) P3 project in the first half of 2007. Perry's failure to back his department saw last minute withdrawal of a $2.8b P3 contract with Cintra.

EDITING: the initial version painted this too starkly as "a breach of contract." A TXDOT official says it was "close" but the contract was not executed so there was not a legal issue. And Cintra were compensated for their work on the project. He agrees however the whole 121 affair created a credibility problem for the P3 program in Texas, and slowed it down. He says the department took its time with new P3s such as 35E and the Grand Parkway precisely to be sure there wouldn't be a repeat of the 121 chaos (our word.) He says the program is now has a sounder political and legal framework in SB1420 and SB19.

Despite Perry missteps

Despite these missteps Texas under Perry has seen major improvements in highways through TxDOT's embrace of tolling, and most of all through regional and county initiatives - "regional mobility authorities."

Texas' is clearly the most dynamic economy in the country, attracting people and business, and generating jobs like no other state, so one way or another there's lots of road work there.

Stickin' around Austin

His presidential prospects rapidly evaporating as the Tea Party crowd move to the more promising Herman Cain, Perry seems likely now to be "stickin' around" Austin, making the Wilson appointment more important.

Wilson succeeds Amadeo Saenz, a consummate professional engineer-manager who retired in August. Wilson brings important PR and political skills, it is said, to a job where they can be more important than engineering or management.

The transportation commission today voted Wilson a salary of $292.5k, which must be one of the highest salaries for the head of any state agency, and should also encourage him to stay around. Saenz was paid $100k less.

TOLLROADSnews 2011-09-29 EDIT: 9-30 13:30

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