STAFF:

MICHAEL W. BEHRENS, P.E., Executive Director
STEVE SIMMONS, Deputy Executive Director
RICHARD MONROE, General Counsel
ROGER POLSON, Executive Assistant to the Deputy Executive Director
DEE HERNANDEZ, Chief Minute Clerk

PROCEEDINGS

MR. WILLIAMSON: Good morning.

MR. WILLIAMSON: Good morning. It is 9:11 a.m. and I call the May 2005 meeting of the Texas Transportation Commission to order. It's a pleasure to have each of you here this morning

And please note for the record, public notice of this meeting, containing all items on the agenda, was filed with the Office of the Secretary of State on May 18, 2005, at 1:27 p.m.

Before we begin today's meeting, let's all take a moment to place our pagers, cell phones, the Berries and other electronic devices on the silent mode, please.

I know some of you think you already have, but it would be nice if you'd just go ahead and check it and be sure.

Robert, have you got your pager on the silent mode?

MR. NICHOLS: Yes. It's totally unplugged.

MR. WILLIAMSON: Thank you very much.

As is our custom, we will open with comments from each commission member, and we begin with the man with the plan for the western part of the state, Commissioner Houghton.

MR. HOUGHTON: Good morning. There were a lot of things happen last night, and if you hear a distant whistle in the background, it's a train coming. I think the Senate voted last night to approve the rail relocation program, and I think at the same time changed the name of the Railroad Commission, and we are now in the railroad business.

And I want to congratulate one of my fellow commissioners, Mr. Nichols, for his work on the rail relocation program.

MR. WILLIAMSON: Hear, hear, Robert Nichols.

(Applause.)

MR. HOUGHTON: He came bounding in this morning like a kid who had just gotten his report card and there was straight As. It was an amazing thing, but it's going to be a new day and that will go to a constitutional vote in November.

But congratulations to those who have worked on it. I'm the newbie on the board, so congratulations, Mr. Nichols.

And welcome to you all today.

MS. ANDRADE: Good morning. Welcome to everyone. Thank you so much for your interest in transportation and for what you do for us and with us.

We have some special guests. We have some representatives from San Antonio from our Alamo RMA. Good morning and welcome.

Also, we've got some representatives from our public transportation study group. Michael, thank you so much for being here.

This is a busy weekend. I wish you all safe travels, drive safely.

And I'd also like to thank Commissioner Nichols for all the work that you've done for us across the street. Thank you.

MR. JOHNSON: I keep saying when you bat third you see a lot of the same pitches, and so I guess you're going to see a lot of the same pitches.

It's a delight to see everyone here this morning. There are a lot of familiar faces, people who are involved and dedicated to making this state and its transportation programs the best and to improve upon that standard. And we appreciate what you do.

Clearly there are a lot of new paths that we are proceeding down, and as Ted mentioned, combining the responsibility for transportation into one area I think is a very appropriate step, and I salute Robert for his efforts and leadership in that area's interest was one of the probably key components in just having that seed germinate to start with.

Thank you for being here, thank you for what you do for this great state.

MR. NICHOLS: I'd also like to welcome everybody here. I know a lot of you came a long way to be here today to make comments regarding some of the issues that we're going to be talking about and voting on today, and we want you to know we look forward to your comments. We appreciate the fact that you've taken the time to come here.

I'm so excited about that rail relocation thing passing last night. It would not have happened without full support of this commission, everybody knows that, and it certainly would not have happened without the support of Governor Perry and Lieutenant Governor Dewhurst, and I think everybody knows that.

So they were on board and saw the need and it passed 31-0 late last night, and that is a big one for the state of Texas. And as time moves on and we move toward the November vote on that issue, I think the public is going to see the possibilities are boundless and open up so many new opportunities for rails and cars and movement of people and goods. It's unbelievable.

Thank you.

MR. WILLIAMSON: Thank you, fellow members, and I associate myself with the remarks. I welcome you here and I appreciate all of you who have come a long way to either watch or to offer witness to a particular position.

I want to take a few moments to talk to you about the events of the last 24 hours and the last six months.

Some sitting away and observing this process might assume or have assumed that the department and the commission are in some ways in an adversarial position with some of the leaders of the state.

I would like to make it clear, all of us would like to make it clear from our hearts that there is no leader in this state at the current time with whom we are adversarially balanced.

We owe a great deal of gratitude to David Dewhurst for the way he has approached transportation in the Senate over the past six months.

The lieutenant governor, I believe, is reflective of a new breed of leaders who will be elected in the state probably for the next 50 years, and that is an individual who has risen from poverty, made a lot of money, knows how things work, and does not automatically assume what someone tells him is the only way things should be.

Frequently, when you're sitting in Gordon's spot or when you're living in Texarkana and having to kind of watch from afar, you see things not working like they apparently should and you think: Well, somebody is gumming up the works.

I think in the case of this session for transportation, we've asked a lot of the governor and the legislature over the last six years, a lot in the way of cultural and behavioral change. And as my close friend Sam Russell -- with whom I served in the legislature -- knows, the scariest thing to an elected person is to be asked to do cultural and behavioral change without knowing exactly what's going to happen when the change occurs.

People who stand for election and represent us at city council and school board and in the legislature and at the state level want to know before they vote -- and well they should -- what is the probable outcome of the cultural or behavioral change they're going to support.

And over the last six years we've asked those men and women to change the law in ways that none of us really could know for sure what the outcome would be.

As a consequence, we've all got to hear or have the pleasure of listening to what we call the easy-way-out crowd and the don't-do-anything group, and those criticisms often hurt and are often threatening.

From San Antonio to Dallas, from Houston to Midland, there are those who either think there's an easier way out or somebody is going to send us some money from an unknown source, or if we don't do anything things will get better, and their criticisms have at times been bordering on the psychotic.

This is to be expected when major change occurs in a democratic society such as ours.

The record should reflect at the close of this legislative session that Governor Perry, Speaker Craddick, and Lieutenant Governor Dewhurst did not take the easy way out, they didn't follow the path of do nothing, they didn't promise something for nothing, as some elected officials choose to do.

The record should reflect that Todd Staples and Steve Ogden and Florence Shapiro and Gonzalo Barrientos on the Senate side, and Mike Krusee and Lois Kolkhorst and Jim Pitts and a whole host of other House and Senate members on the House side, went far beyond what was necessary to continue to give tools to the people to address their transportation problems.

I think all of us wish that we could figure out a same way to approach the other dilemmas that confront the legislature: public education, the tax system, the other things that are important in this state. Those perhaps are to be reserved for another day.

But it can be said this day, with one major bill left to pass, that the leadership of this state, and in particular David Dewhurst, have gone way beyond what would be expected of an elected person to take the hard-way-out and the do-something position and recognize that you don't get something for nothing, there is no road fairy waiting to give us money. And we should all be grateful for that, I think.

Having said that, it's time for us to proceed, and we need to approve the minutes, gang.

MR. NICHOLS: So moved.

MR. JOHNSON: Second.

MR. WILLIAMSON: I have a motion and a second. All those in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries, minutes are approved.

Michael.

MR. BEHRENS: Thank you, Chairman. We'll go to agenda item number 2 which is Aviation, and Dave Fulton will outline the projects for the month of May.

MR. FULTON: Thank you, Mike and commissioners. For the record, my name is Dave Fulton, director of TxDOT Aviation Division.

This minute order contains a request for grant funding approval for 19 airport improvement projects. The total estimated costs of all requests, as shown in Exhibit A, is approximately $4 million: approximately $2.6 million federal, $500,000 state, and $800,000 in local funds.

A public hearing was held on April 22 of this year. No comments were received.

We would recommend approval of this minute order.

MR. WILLIAMSON: Do we have witnesses?

MR. BEHRENS: No.

MR. WILLIAMSON: Members, you heard the proposal. Do you have questions or comments for Dave?

(No response.)

MR. WILLIAMSON: Do I have a motion?

MR. JOHNSON: So moved.

MR. HOUGHTON: Second.

MR. KING: I have a motion and a second. All in favor of the motion will signify by saying aye.

(A chorus of ayes.)

MR. WILLIAMSON: All opposed, no.

(No response.)

MR. WILLIAMSON: Motion carries.

MR. FULTON: Thank you.

MR. WILLIAMSON: Mike, let me take a minute to catch up with what I didn't do.

If you wish to address the commission, I need for you to fill out a speaker's card at the registration table in the lobby.

If you're going to comment on an agenda item, I need for you to fill out a yellow card such as the one in my left hand; if you're going to comment in the open comment period, I need for you to fill out a blue card, such as the one in my left hand.

Regardless of which color card you complete and where you wish to comment, please try to limit your comments to three minutes unless you're an elected official, in which case we'll stay forever.

(General laughter.)

MR. WILLIAMSON: Okay, Mike.

MR. BEHRENS: We'll now go to agenda item number 3 which is going to be a report on planning and public transportation. This is a result of a study group that was working on this, and to introduce that will be Bobby Killebrew.

MR. KILLEBREW: Good morning, commissioners, Mr. Behrens and Roger. For the record, I'm Bobby Killebrew, Public Transportation Division interim director.

Today I have the pleasure of introducing item number 3, a report from the regional planning and public transportation study group.

This study group, as it has commonly been called, is set up and functions under the office of Commissioner Andrade, and is chaired by Mr. Michael Morris, director of transportation for the North Central Texas Council of Governments.

Mr. Morris will be leading the presentation this morning, and at this time I'd like to turn the presentation over to Michael.

MR. MORRIS: Thank you very much, Mr. Chairman, commissioners, Mr. Behrens. It's very nice to see you again.

I was so proud of some of my colleagues from the study group this morning. I saw some of the public transit executive directors from the state. I said, That's really nice to come and support the chairman during the presentation. Then I looked down the agenda a little bit further and you have a funding allocation that very much impacts their lives.

(General laughter.)

MR. MORRIS: There are several members of our study group here today that represent the public transit interest, health and human service, and your colleagues on other commissions, and the Workforce Commissions of the state of Texas and their commissions.

We have staff members from those particular organizations; we have probably half a dozen or so members of the committee. If they would just stand up, I would appreciate that.

Now, those individuals from other health and human service, you do not have anything else on their agenda, so they are here supporting me, and I appreciate that.

The committee would very much like to recognize Commissioner Andrade who came to our particular meetings, formed this, came to me in the fall with this particular item, saw where the legislature was trying to go.

This isn't just the product of this particular study group, this is the product of one of your commissioners who has tremendous insight with regard to how to move forward with this.

And I'm very optimistic that great things will happen in this area to a group of people where great things need to happen to them.

This is the representation of the study committee that the commissioner formed. Please notice it's a cross-section of not only members from the whole state, but the functional areas in what I hope to describe to you as a pretty complicated situation.

We met only four times and developed a unanimous presentation that's before you today. I was anticipating several meetings to break down very defensive institutions: of course we're not doing anything wrong, everything is just perfect. These institutions were waiting for some process to come along in order to sit around the table and make it a better system.

I'm also thankful to the commissioner for getting the support of the Public Transportation Advisory Committee when she gave a presentation to them with regard to the findings of this particular study group.

In the last legislative session, 3588 -- which you're very familiar with and I'm also sure you're familiar with Article 13 which focuses on this transit initiative -- is calling for improvement in the delivery of transportation services.

Try to develop more efficiencies in its operation, not to reduce the exposure in Fund 6, but the legislature specifically said to increase the levels of service. This is an efficiency initiative for the purposes of increasing transportation services to these constituents.

Encourage cooperation and coordination. And remember, this is very critical because historically this has been implemented by several different commissions -- and I'll tell you why in a moment -- and of course, it requires the development of regional plans.

The commissioner called me and said, Well, we're going to get going in early January. And I don't know if we met before the first Mimosa after New Year's Eve or not, but we started very early in January. Less than 100 days later we stand before you with a recommendation.

What are some of the things that are important with the implementation of these legislative elements?

First of all, what the legislature did is move the dollars all under your authority here at the Texas Transportation Commission. I think that's what has needed to happen in order for there to be one integrated planning approach to see how we can work together.

When the dollars are split between commissions, it's very hard for some person to take responsibility with regard to an initiative.

I think there's a lot of improvements possible -- I'll give you a few examples in a moment -- but this will be evolution, not a revolution with regard to improvements in this particular area.

We have to be somewhat sensitive, but you should accept accountability in this particular process. And the reason is -- I'm going to use the term "client-based transit" -- for a lot of these particular programs the purpose is not the transportation system, it is the customer, it is a person seeking retraining, it is a person who has a medical problem, it's a person seeking chemotherapy.

Transportation is simply a means to some other objective or social need that these particular individuals have, and I think we need to underscore the importance of these clients. And I'll define some terms in a minute.

Public transportation. The important thing to point out to you is this is the conveyance of passengers either by a public sector entity or government money that is funding a private sector provider. So this is going to impact taxicabs and other private sector paratransit systems that you are using your transportation funds for the delivery of these particular services.

So we're going to be in a public-private sector coordination situation with this definition of public transportation.

The mission. This is a statement the committee developed; this isn't in the legislation, this is what our committee did.

But there are three dimensions that are important: we think there are issues with regard to planning and programming; we think there are issues that affect metropolitan, suburban and rural areas, so this is statewide; and we think this affects service delivery, customer service, efficiency and effectiveness.

So we're on three different dimensions here and we hope to seek improvements in all three of those particular dimensions.

Now, to me a lot of people say, "Boy, Michael, you find that pretty interesting, to the rest of us it's not all that exciting." But to integrate two completely different methods of transit planning, system-based planning which is what I'm trained in and TxDOT is trained in, you develop a transportation system, there aren't any specific faces of your users, you're developing a logistics system, it's customer service-driven, and you anticipate clients to be on your roadway, your toll roadway or your rail system or your bus system.

Client-based transit planning is you have an individual face, you have a customer of need. Transportation is just some means to provide the social service that that particular person is seeking, have it be retraining or chemotherapy or elderly service, have it be any of those particular elements.

So what we're going to do is take these historically separate approaches and integrate them into the same system of transit, and I'll show you some examples in a moment.

Let's talk about the funds that you have. In the 2004-05 biennium, you have in your Fund 6 $278 million. Two important points, probably.

First, notice the magnitude of funds, $166 million in client-based transportation. So a majority of the funds are going to the one philosophy of transit planning which is transportation as a means, but the real purpose is the identification of their specific social service.

Also, though, if you look at going east-west across the table, a significant amount of federal funds. So you'd say, Well, first of all, boy, this is going to be hard; I'm sure these federal funds come with a lot of federal requirements.

And that may be true, but Secretary Mineta -- and I think the timing of this is perfect -- came out last week with a desire of the federal government to address exactly the same efficiency and effective measures with regard to these federal transportation programs that are in the middle of that particular graph, the 55.3.

So I think the planets are aligning with the federal government who is looking to move in this direction and the state government who is wishing to move in this particular direction. So I think there is some opportunity. With accountability and a little patience on your part, I think we can make great strides with regard to this process.

Now, what is the process that is being proposed? A lot of the social agencies and a lot of the councils of government structures are somewhat simultaneously defined and tried to be represented in this particular map.

The way I would look at this map from your standpoint is 24 regional areas of the state. We're proposing to use COG districts but this does not mean to imply that COGs will be the developer of these transit plans, this is a geography of a statewide initiative that will be performed in 24 portions of the state.

Clearly this is not a one-size-fits-all initiative. In fact, you're going to hear me in our recommendations where you are going to request a lead agency from each of these jurisdictions to step forward and coordinate this transit planning effort.

In one part of the state it could be a COG, in another part of the state it could be an MPO, in another part of the state it could be a transit provider, in another part of the state it could be a health and human service provider, in another part of the state it could be a Workforce Commission.

This particular proposal suggests to you to move forward with 24 experiments that are developed in a bottom-up approach in each of these communities in which the participants have experience in the delivery of these services.

I want to underscore again it's not necessarily the councils of government that will be taking the lead in each of these particular areas.

I also want to point out -- and you see other color-coded systems where you see some of the colors not coinciding with the boundaries -- you already have rural transit providers that are not homogeneously providing service within COGs, they'll cross over COGs, called rural transit districts.

So we're going to have to not only develop a regional plan for each of our regions, we're going to have to coordinate with the boundaries of our system and make sure we're integrating those services because, of course, the user doesn't care about these lines or frankly any other lines on the map when they're trying to get their transportation services.

So the coordination of these rural transit providers in each of our particular plans is a little level of additional work but not too horrible.

What are some of the examples of success that we have seen within the state and the nation in this particular area?

One example from TxDOT in Johnson County -- this was performed inside your district with your public transit coordinators -- expanding a city service to a county service where it isn't just the residents of Cleburne that have transit needs but representatives of all of Johnson County, connecting that service to the rest of the regional transit system, leveraging TxDOT funds and MPO funds to develop cleaner transit vehicles and more transit vehicles to conduct this particular service.

In Houston you have a county judge and a commissioners court who saw a whole disaggregated approach of private non-profit organizations within the Harris County area. That district of TxDOT with that MPO, working closely with that county, developed a one-stop shop where the customer is not required to go find their particular provider, they have a particular need, there is a coordinated effort to do it.

It's a very successful program in Harris County, so successful they're now concerned about the revenue stream to continue to provide this service to these customers.

The classic example I like is often you'll have a social service agency provide taxi vouchers to provide transportation to a particular user. One early success may be to check the origin and the destination of that individual's home to their training needs. It may fall within a public transit provider in a particular community, and you could give that person a monthly transit pass for a year for the same amount of money you're giving them a taxicab voucher to go to training for five or ten days.

Coordinating these systems where that money goes and gives that person transit, improves the effectiveness of that particular individual where the revenue would go to the transit provider as a way to provide that particular service.

Our committee spent one day looking at success stories from across the country. Your public transit division has a new strategic plan that has a lot of these new initiatives in it.

We studied North Carolina, Maryland and Florida. You see a pattern that the states that we've seen who have crossed into this area are all on the East Coast, they've been in it somewhere between 10 and 25 years trying to do a similar thing.

The one mistake they made is their geography of their implementation was by county, it was too small in implementation. That's why you're hearing a recommendation of going to 24 regions. If they had to do it over again, you would have seen them take a much larger geography with regard to the coordination of these plans.

Let's look a little bit more now on specifics of schedule and what are we specifically making recommendations to do.

The committee has met from January until April to prepare for this particular presentation. We are seeking today direction from you, this commission, on how to proceed into the later phases of this particular initiative.

Phase 2 is suggested to begin on June 14. In fact, hopefully you're not too upset at us because we've already sent out invitations for entities from across the whole state to come to Austin to hear this new approach that is being proposed in response to the legislative initiative. We call it the work plan development phase.

We will kick off on June 14 the requirements of developing a work plan. We don't want people to go too far into the planning process until they report back how they're going to pursue this integrated transit plan.

But over the summer until September, each region would be working on the hard part of this process: getting to know each other, getting to understand the importance of the traditional public transit and the integration of client-based services, developing a work plan, developing a lead agency, and reporting back -- we propose in Phase 3 -- in October where each of the 24 regions would stand up and present how they're going to go about doing this particular task so we can all learn from each other.

Who are the customers that have to sit at the table; who are the providers that need to coordinate service. These are very complicated transit plans because they've been stove-piped over the years, and what we're going to do is try to cross-pollinate these particular initiatives with regard to efficiency and effectiveness.

The suggestion would be then to do an actual plan from October of this year to September of next year. We wish you to get these plans in advance of the next legislative session in case there's any particular legislative changes that seem to cross-pollinate across all the plans that could make improvements in this particular area.

We're asking your commission approval and policy direction which would be a year from this fall as a result of these 24 experiments that are going to occur within the state of Texas.

What are the specific action items?

First, we're asking you to approve the process in this schedule to meet these legislative requirements. We're asking you to approve the COG boundaries, not necessarily COGs to perform the work, and then ask a lead agency to come forward.

Now, you should say, Well, wait a minute, that's kind of a risky thing. That's exactly how you did the Texas Metropolitan Mobility Plan, and we're following that model where at least for the larger TMAs you said you come up with the boundary, you come up with the lead agency.

In this particular case, since the legislation is statewide, we can't have flexibility of boundaries leaving out portions of the state, so we're fixing the boundaries and asking each of the regions to come forward with a lead agency to coordinate these services.

The third item -- which we are mirroring the Texas Metropolitan Mobility Plan approach which focused on what we need to do and not how you should do this in each of your regions -- this date that we came up with is coinciding with the date for the next TMMP round in your TMA areas.

So you're going to have seven of the metropolitan areas updating their Texas Metropolitan Mobility Plans that are due to you in September of 2006 coinciding with the state of Texas developing transit plans in the same time frame.

If you remember the comments you made on the Texas Metropolitan Mobility Plan, you are hoping to see more intermodal elements to these plans, both in the goods movement freight side and in the public transit side.

Well, here is your opportunity now to tie these schedules together where each of the TMAs then can cross-pollinate the transit plans with these initiatives that are already occurring within their region.

We're asking you in number 4 to endorse the June 14 date. Because of federal requirements on planning funds, MPOs may not be able to flex their money all the way out to boundaries outside their area. We'll be requesting TxDOT to come up with planning funds to assist in this area.

By the way, that's no different than what you did in the Texas Metropolitan Mobility Plan. You offered planning funds to those TMAs that didn't have enough money to do the work.

And then we're asking you to listen to the results of these 24 experiments to see if there's any consistency in direction that either changes state regulation, changes TxDOT policy, changes division policy, maybe potentially changes state legislation. And by the way, if we discover some federal rules may be broken, you have not been shy in the past of suggesting to the federal government changes in federal legislation to make improvements to this system.

You have individuals in this state whose transportation system is very much dependent on this particular initiative. The Central Expressways, the Grand Parkways, those type of improvements don't necessarily impact their lives; this particular system does. And you have a group of people willing to improve the efficiency of that system in order to deliver more of that service in the state of Texas.

Madame Chair, I'll be happy to take any questions or directions or add or subtract from anything I said that you think may be misleading from our effort.

And Mr. Chairman, we're prepared to answer any questions the commission may have.

MR. WILLIAMSON: Hope, I think you've been so focused on this and done, by the way, such an excellent job, I think I would defer to you. Take it from here.

MS. ANDRADE: Mr. Chairman, first of all, I'd like to thank Michael. Thank you so much for your leadership, thank you for accepting this most important role.

I still remember our first meeting. I believe that we scheduled it on a Thursday afternoon when we sent out notices of invite, and that following Monday we not only had 100 percent participation but we had 110 because we even had people who were volunteering to come serve.

So thank you so much.

I'd also like to thank my fellow commissioners, and thank you, Mr. Chairman, for allowing us to move forward with this. House Bill 3588, Article 13 certainly gave us this opportunity.

I had served a short term on my local transit authority board and had recognized the much needed and limited funding. When I came to this position, I saw that it was statewide. So we needed to do something, and I certainly thank you for leading this.

I'd also like to ask our study group members to stand up one more time so that my fellow commissioners and I can give them a round of applause.

(Applause.)

MS. ANDRADE: We have a lot of work before us but I know that we will meet that challenge.

Also, Mr. Chairman, I'd like to ask if we could create a letter of support for this study group for their June 14 meeting.

MR. WILLIAMSON: That would be a letter from the commission?

MS. ANDRADE: Yes, sir.

MR. WILLIAMSON: I think that would be just wonderful. What do you think, guys? I think we'd like that.

MR. HOUGHTON: Absolutely.

MS. ANDRADE: And I'll also be asking the Texas Workforce Commission and the Health and Human Services to send a letter of support also.

Thank you so much, Michael.

MR. MORRIS: Thank you.

MR. WILLIAMSON: Questions, members? Mr. Nichols?

MR. NICHOLS: First of all, I'd like to thank Hope for having the idea of putting this whole group together.

We all recognize that one of our goals around the state is to try to improve that which relates to transit, but the combining and pulling health and human services and how do you coordinate the two -- because they're totally uncoordinated, mostly uncoordinated right now -- is a very difficult process which impacts a lot of people, I'm going to say most of the people in this room, and we're going to have a lot of support from the commission to working to get there.

And you are just an ideal person to chair this thing and the work that you've done, and I want to thank you very much for not only what you do up in the Dallas-Fort Worth area but the impact this will have statewide. Thank you.

MR. MORRIS: Thank you.

MR. WILLIAMSON: Who's next? Mr. Houghton, Mr. Johnson, anything?

MR. JOHNSON: Well, the only thing that I have to add, if it's anything at all, and it's pretty obvious, is this is clearly an area that has a lot of loose strings, dangling participles, et cetera, and to bring it all together is a monumental task.

Hope, I salute your organizational efforts, and Michael, your leadership efforts. It doesn't go unnoticed outside of the Metroplex all the things that you do for the state, Mike, and I want to salute you and thank you for this.

I'm comforted by the fact that we're headed in the appropriate direction, that we will have something that is a rolling mass somewhat organized, and I think that's a great step because it's complex, and to bring it all together is going to be a challenge. But I'm confident that between the two of your very capable leadership that it will get done.

MR. HOUGHTON: Well, I just want to know if you added hours in the day. I mean, there's 24.

(General laughter.)

MR. MORRIS: I was not familiar with Title 13 and when the commissioner came to me in the fall she didn't say, Well, we've got this legal responsibility in Title 13, do you think you could help? She came to me and said, Don't you think there is a need or an opportunity to integrate these elements?

And just so the rest of you don't get too many ideas, it was this topic that I felt was very important to me. So if you're all thinking of, well, let's draft Michael to lead another group --

MR. HOUGHTON: We've got this rail relocation program.

(General laughter.)

MR. MORRIS: I've been here when you're talking about what you do with the soil when you dredge the Gulf and stuff. This particular topic is important to me.

MS. ANDRADE: Ted, I'm sorry, he's fully committed to me.

MR. HOUGHTON: Is he fully committed?

MS. ANDRADE: Yes.

MR. HOUGHTON: You said one thing that made it personal and that's putting a face where we talk about systems a lot and we talk about track railroads, but putting the human element to it is very profound.

I salute both, Hope, thank you, and yourself for doing that. Because it does, you have to put the face on it and not lose that. And thank you very much, Mike.

MR. MORRIS: Thank you.

MR. WILLIAMSON: Michael, you always do a good job and we do appreciate the time you put into things. And I think Mr. Nichols probably just signaled to you the next thing that we were probably going to ask you to put your time into.

Let me just say that I appreciate your work, Hope, I appreciate the work of the staff and the volunteers.

As the commission knows, Governor Perry's interest in transportation is broad and deep, it's not just about building roads. He's committed to a commuter rail system in this state that makes sense; he's committed to public transit in a way that's efficient and reaches the most number of Texans.

The recommendations you made comport with his long-term vision for the transportation system of the state, and I can't imagine that we'll do anything but proceed.

MR. MORRIS: Thank you, sir.

MR. WILLIAMSON: Thank you very much, Michael, we appreciate it.

(Applause.)

MR. BEHRENS: Moving to agenda item number 4 which will be our rule for final adoption this month involving public transportation, and Bobby.

MR. WILLIAMSON: A very non-controversial matter.

MR. KILLEBREW: I'm hoping I get the same applause when I finish my introduction, I don't know.

MR. WILLIAMSON: Wait. I've got my hard hat someplace. Go ahead.

(General laughter.)

MR. KILLEBREW: Again good morning, commissioners, Mr. Behrens and Roger. Once more for the record, I'm Bobby Killebrew, Public Transportation Division interim director.

Before you for consideration is a minute order which adopts amendments to public transportation funding formula rules. The formulas detailed in the minute order are for the distribution of state and federal funds to rural and small urban public transportation providers.

By way of background, on June 24, 2004, the commission adopted rules establishing a formula for the distribution of state and federal funds. It was understood at that time that further adjustments would be needed to continue to provide for fair and equitable distribution of public transportation funds.

On March 31, 2005, the commission adopted draft rules as adjustments to the formula adopted in the previous year. Following the commission's approval on March 31, 2005, to release the draft rules for public comment, we held three hearings around the state: in Austin, Corpus Christi, and Mesquite.

A Public Transportation Advisory Committee meeting was held, and we accepted public comments by mail until May 16.

The department received comments from 316 individuals or entities. Four indicated that they were in favor of the proposed rules, 17 indicated they were opposed, the remaining commenters discussed both advantages and disadvantages to them to different elements of the formula, or they commented in general about local transit services and the importance of these services to the community.

There is no entity, of course, that wants to experience a reduction of funds and be faced with the potential of cutting service, and many comments received detailed this very sentiment.

At this time I'd like to refer you to the flow chart that will illustrate the proposed changes.

Starting at the top of the diagram for state appropriation, the first proposed change is the initial split between small urban and rural providers. Instead of having a split on the factors of population and land area, the split would revert to a more historical 35 percent for small urban providers, 65 percent for rural providers.

Moving down the left-hand side, the small urban allocation, the next change is that any urbanized areas with a population of 200,000 or greater would be adjusted on a pro rata basis to reflect a population level of 199,999.

Again moving down that side of the chart for performance criteria, these criteria would also be adjusted on a pro rata basis to reflect a population of no more than 199,999.

The changes in formula performance criteria for the small urban providers include: changing local funds per capita to local funds per operating expense; changing the inverse of the change in operating expense per mile to miles per capita; eliminating vehicle revenue miles; and all small urban performance measures would be calculated on the basis of comparing system to system.

Moving down the right side, the changes in the formula performance criteria for the rural providers include: changing local funds per capita to local funds per operating expense; changing the inverse of the change in operating expense per mile to operating expense per mile.

And if I could add a clarification on this particular one, there was some earlier correspondence that went from my office to your aides which I'm sure trickled down to you, and we also had discussions.

In that correspondence and in those discussions, I may have used the term "cost." In this particular thing when we got to the legalese part of drafting the rules, we determined that "cost" is not defined, "cost" is used synonymously with the term "operating expense," thus it was proper to use the term "operating expense" and that's what's reflected on the chart today, as well as in the rules.

The next one: changing the change in ridership per capita with operating expense per passenger; and eliminating vehicle revenue miles. All rural performance measures would be calculated on the basis of comparing system to system.

The federal rule apportionment is allocated the same way as the state rule apportionment. The Public Transportation Advisory Committee had previously recommended pretty strongly that the breakdown would mirror each other so that there's not a totally different formula breakdown, federal funds versus state funds for the rural operators. Therefore, the same changes in the formula performance criteria applies.

In addition, for all of these formulas, 2004 is set as the base year for the 2006 formula allocations, and the upper level cap on growth has been removed.

Also, if available funding exceeds the allocations received in fiscal year '04-05 for state funds, and fiscal year '04 for rural federal funds, additional funding will be awarded by the commission on a pro rata basis, competitively, or a combination of both.

Consideration for the award of these additional funds may include, but is not limited to: coordination and technical support activities; compensation for unforeseen funding anomalies; assistance with eliminating waste and ensure efficiency; maximum coverage in the provision of public transportation services; and reductions in air pollution.

These additional awards, if made, are not subject to the transition funding allocation process in succeeding fiscal years.

All of these proposed changes that I've just described have been recommended by the Public Transportation Advisory Committee.

The rules have changed from the approved March draft version. At the recommendation of the Public Transportation Advisory Committee, several performance measures were changed, as I previously mentioned. Let me go over these once again, the changes.

Under the small urban state: changing the inverse of the change in operating expense per mile to miles per capita. Under the rural formulas, both state and federal: changing local funds per capita to local funds per operating expense; changing the inverse of the change in operating expense per mile to operating expense per mile; changing the change in ridership per capita with operating expense per passenger; eliminating vehicle revenue miles.

The department has also added fiscal year references to clarify the provision if available funding exceeds the allocation, additional funds will be awarded by the commission on a pro rata, competitively or a combination of both basis.

In addition, the Public Transportation Advisory Committee recommended further changes which have not been included as recommendations as these recommendations might have a disproportionate impact which could be felt in too short a time frame by some recipients negatively affected.

The rules presented are not perfect, are not intended to be in place forever, and are not expected to address all the public transportation funding needs throughout the state. They are intended to be another small step in the right direction toward greater funding equity, to initiate the concepts of need and performance funding consideration, and to move toward greater accountability to all systems.

The Public Transportation Advisory Committee reiterated its intention to revisit the formula.

With a great deal of appreciation to the members of the Public Transportation Advisory Committee, to the advocates and providers who have invested a great deal of time in this process that we've just completed, and with the understanding that this is just a small step and we have a great deal of work before us, the staff does recommend approval of the proposed rules.

MR. WILLIAMSON: We have a lot of witnesses but the commission might want to ask you some questions before we hear from the witnesses.

Members, you heard the layout and the proposal. Do we have questions at this time?

MR. JOHNSON: I have one. Bobby, first of all, thank you for spending time with me yesterday to walk me through a lot of this. I missed one thing, though, and I needed a little bit of hand-holding, if you will, for my better understanding.

You mentioned that in both the urbanized areas with populations of greater than 200,000, calculation is made whereby the assumption we move the population to 199,999. Do we use that as a base in all areas? In other words, whether you're higher or lower in the calculation, the population then becomes a non-factor because everybody is weighted equally?

MR. KILLEBREW: The Public Transportation Advisory Committee, this was a recommendation that came from the group, and their intent, sir, on this is that in the small urban pot for the state funds that are administered by this commission we have some systems who are in that pot who are typically over what's considered a small urban system: they're greater than 200,000 in population. A small urban system is between 50,000 and 200,000 in population.

Using the population at an 80 percent needs in the formula would give those systems a great weight in the formula. Therefore, the recommendation was to revise those systems not to get credit for any population greater than 199,999.

It doesn't use it as a base factor but it does put them in the same ballpark, if you will, as the rest of the systems that are in this group.

MR. JOHNSON: Is that assumption made only on the calculation of the performance-based portion of this?

MR. KILLEBREW: It's throughout the whole urban side. The 80 percent needs which is based strictly on population.

MR. JOHNSON: So there's no rounding there, obviously.

MR. KILLEBREW: Pardon me, sir?

MR. JOHNSON: There's no rounding or moving to a constant when we're using population.

MR. KILLEBREW: That's correct, sir. And in the performance part of the formula, since we have some measures that are also per capita, it's also used there as the 199,999 not to give an unfair advantage.

MR. JOHNSON: Thank you.

MR. NICHOLS: I'll reserve my comments or questions till after we hear the other comments.

MR. WILLIAMSON: Okay. We have witnesses, and the first is a good friend of this commissioners, Stephen Rosales, longtime great state employee.

MR. ROSALES: Some say too long.

Good morning, commissioners, Mr. Chairman, Director Behrens. My name is Stephen Rosales; I'm deputy chief of staff for State Senator Eddie Lucio.

And I'd like to make a few personal comments, if you don't mind because I may not get another chance.

MR. WILLIAMSON: Oh, sure, absolutely.

MR. ROSALES: I'd like to thank Director Behrens and Amadeo and Steve Polunsky on your staff. I'm head of constituent services for Senator Lucio and any time we have a constituent service problem, they're right on it, they respond immediately.

You know, I worked for Lieutenant Governor Bullock for 23 years, and of all the agencies I deal with, they do the best of really responding. I mean, that's coming from my heart, that's not from Senator Lucio -- of course, he'd say the same thing.

MR. WILLIAMSON: Appreciate it, Stephen.

MR. ROSALES: First of all, he asked me to apologize for not being here this morning. He was in the Senate last night till 2:00 in the morning making sure you got all your funding and stuff, and today I think he gets to vote on the confirmation of the commissioners, or maybe it happened yesterday.

But he wanted me to apologize for not being here, and also express his pride that it was his legislation that expanded the board to five members and what great selections Governor Perry made in Commissioner Andrade and Commissioner Houghton from my hometown of El Paso, and he wanted me to express that.

Now I'm going to read the statement from him, if you don't mind. For the record, I'm reading this for Eddie Lucio, state senator for District 27.

"Thank you for allowing me the opportunity to offer some of the comments regarding the proposed rules relating to public transportation.

"As you know, for many people public transportation is their only means of mobility, for access to work, the grocery store, pharmacy, medical treatment. For others it's a matter of choice which means fewer vehicles on our roads and less pollution.

"Under the proposed Appropriations Bill which is being considered in conference committee, the Department of Transportation will see a budget increase of about 45 percent for the next biennium over the current biennium, yet the amount requested and appropriated for public transportation will remain the same.

"The rules you are considering for adoption would decrease funding to the Brownsville system as well as a number of other systems. That is unacceptable to me in light of the fact that TxDOT's budget is increasing by $5 billion.

"The Brownsville system supports the position that has been offered by the Texas Transit Association which would prevent those systems that are proposed to receive cuts from being cut under your formula proposal.

"We all know that funding cuts translate into service cuts, and service cuts go against the legislative intent of Chapter 46 of the Transportation Code that was added by House Bill 3588 last session; Generating efficiencies that will permit increased levels of service and furthering the state's efforts to reduce air pollution.

"It is my understanding that approximately $10 million would take care of the funding problems for both the rural and small urban systems. Surely in light of the budget increase your department received for the next biennium and increased federal funding that will result from the Federal Transportation Reauthorization Bill, you will be able to prevent cuts to any system, while allowing those systems that are scheduled to gain funds to receive them.

"I am proud of the services provided by our Brownsville transit system. Brownsville transit patrons are just as important as patrons of any transit system in the state.

"Use whatever tools are available to you, including budget transfer authority, to assure that no transit system in Texas receives a cut in funding."

Thank you.

MR. WILLIAMSON: We thank you, Stephen, and it's always a pleasure for you to be with us.

Members, any dialogue with Stephen?

(No response.)

MR. WILLIAMSON: We wish for us that you would express our appreciation to Senator Lucio for his support of transportation. He's always been a good friend.

MR. ROSALES: Thank you for what you do.

MR. HOUGHTON: Let me just say Stephen is from far west Texas, far west Texas.

MR. WILLIAMSON: The western outpost of our continuing expansion in that direction.

MR. HOUGHTON: And we are protecting the rest of the state from the invasion.

And Steve did relay to me, announce that in five days he's leaving state government.

MR. WILLIAMSON: Oh, no.

MR. HOUGHTON: And hopefully coming back to El Paso.

MR. ROSALES: I hope so.

MR. WILLIAMSON: I hope it's good for you but that's bad for us.

MR. ROSALES: Well, I have a six-year-old and a three-year-old that want a daddy, so it's time.

MR. WILLIAMSON: We understand that.

MR. ROSALES: Thank you and God bless you all.

MS. ANDRADE: Mr. Chairman, I have a comment.

Also, please tell the senator that I have spoken to Norma in Brownsville, and I'll be visiting with her and see how we can help out there.

MR. ROSALES: Thank you. I know he'll appreciate that.

MR. WILLIAMSON: Good luck on your stuff.

MR. ROSALES: Thank you, Chairman.

MR. NICHOLS: The next witness is Bettie Kennedy, the Reverend Bettie Kennedy from Lufkin.

REV. KENNEDY: I am Bettie Kennedy, representing the rural community.

The Texas Transportation Commission is considering a rule that will result in a 10 percent reduction in the funds to the Brazos Transit District and which will negatively impact the transit program in Lufkin, Nacogdoches, and East Texas and other counties.

I have pictures here which I thought maybe you would understand. These are some of the reasons. One is the access to medical services will have to be reduced for those persons going to doctors, hospitals, for medical treatment, for tests and clinics, and that kind of thing.

In social services there are persons who are having the chance to go to pay their bills, and here I have a lady who is going shopping. She's 85 years old and rather than to try to pay a taxi, she gets on the transit system to go to pay her bills and also to go shopping for her groceries at 85.

Other people have access to shopping, and I was very interested in this, that not only the grocery stores, the shopping centers and the malls, but they go to get their hair fixed. And some are mentally challenged and they feel very proud to be able to shop independently.

One of the drivers mentioned that 85 people had gone one day to Wal-Mart for shopping.

Access to educational facilities will have a reduction. Those that are going to school, the children, those that are going to college locally at Angelina College and SFA, but there are parents that do not have means if a child becomes sick at school to go pick up a child other than on the transit system.

Those who have access to jobs and job training and job search, many who do not have jobs that are seeking to find jobs use the transit system for interviews and for training to better their conditions.

Many who are seeking to be independent, to go to and fro about their daily tasks without consulting or having to remain home because of the lack of services. Here you will see the person in this picture is very independent, a lady of 85 years old, very independent.

If this should happen that we are cut, there will be many persons who work for the transit system who will lose their jobs. Then that will have an effect and place stress on the family and the children of the community.

The reduction in funds will have a negative impact on our local economy. So many are hurting and will even hurt worse if they are cut. They will become homeless and on the streets, they will become jobless.

The fixed routes of the transit system allow many citizens to be independent and do not have to rely on relatives or friends or neighbors to come for transportation.

There is a component about the transit system in which it allows persons to call in if they need particular services of the system to go to a desired place in the community.

The most dependent will suffer. In the county of Angelina, 14 percent are African-American, 12 percent are Latino-American, 28 percent are 18 years of age, 29 percent are the elderly.

The transit program in Lufkin has been in place since 1988, the transit system in Nacogdoches has been since 2000, and in the neighboring counties have been since 1994.

The transit program in Lufkin needs the service in the neighboring rural areas. I do characters and they placed me on one of the buses as Rosa Parks -- and I'm throwing this in for good measure -- and I rode through the Lufkin area in character. And Rosa Parks was on a transit system that changed the city, that changed the state, that changed the nation, and consider what I've just said.

Thank you.

MR. NICHOLS: Did you have any questions?

(No response.)

MR. NICHOLS: Thank you, ma'am.

Next witness, Sam Russell.

MR. RUSSELL: Thank you, Mr. Chairman, members of the commission. For the record, I'm Sam Russell, general counsel for the Texas Transit Association.

Thank you for allowing me the opportunity to make some final comments on the proposed rules relating to public transportation.

On several occasions I have advanced the association's position which would freeze at their 2004 funding levels those systems that lose funds under the proposed formulas and allows those systems that gain funds to receive them.

The association has estimated that this proposal would require $9.6 million, $7-1/2 million for rural and $2.1 million for small urban.

We had hoped that the Appropriations Conference Committee would accept the House funding levels which would have completely covered this proposal. Unfortunately, the conference committee appears to have decided to accept the Senate funding numbers which do not include the additional $10 million.

We do know that additional federal funds will be available under the Federal Transportation Reauthorization Bill, so with a little ingenuity, perhaps, this proposal is still capable of being accomplished by using additional rural federal funds and perhaps the department's ability to transfer funds between strategies for the difference for small urban systems.

What I've observed during this rulemaking process is: number one, that most transit systems oppose the proposed rules; number two, that there's been compelling testimony from many individuals in opposition to the proposed rules; number three, that state and local officials have submitted written comments in opposition to the proposed rules; and number four, that now PTAC offers an alternative to the rules that have been proposed.

I implore each of you to make the TTA proposal work. I believe the money is there to make it happen. This is a real opportunity to do something really good for public transportation in Texas and its patrons, so let's not let this opportunity pass us by.

It's a win-win situation for everyone, the department, the transit systems, and particularly the patrons of the transit systems. Thank you very much.

MR. NICHOLS: Thank you. Did anybody have anything?

MR. JOHNSON: I've got a question.

Sam, the numbers that you mentioned, back to the $9.6 million which would be additionally required to be appropriated to make everybody whole at the 2004 level plus the increases that are calculated in the new formula, what was the breakdown between small urban and rural in the $9.6-?

MR. RUSSELL: $7.5- for rural and $2.1- for small urban.

MR. JOHNSON: So assuming that under the federal reauthorization bill that we get $7-1/2 million more, we could take care of the rural out of that pool, but that still leaves $2.1 million unappropriated or that we have to find from somewhere else to take care of the small urban.

MR. RUSSELL: That's correct.

MR. JOHNSON: Another question, I think I understood you to say that PTAC had some concern or wasn't in full support of the rules as proposed or the calculations as proposed. Can you embellish on that a little bit? Maybe I misinterpreted what you said.

MR. RUSSELL: I think it would probably be more appropriate for one of your PTAC members, who are here in the audience, to tell you what happened at the PTAC meeting on Friday, I believe it was.

I wasn't able to be at the meeting so I don't know exactly what they did, but I do know they changed some of the performance measures, I believe, or suggested a change in some of the performance measures.

I think they were in support of the concept of using the rural federal dollars to accomplish what we've suggested on the shortfall there, and there was another recommendation for the small urban and there were two or three components of that that I don't recall offhand what those were.

MR. JOHNSON: Utilizing your best guess method, what is your opinion as to the amount of the increased federal money available to Texas under the reauthorization?

MR. RUSSELL: The numbers that I had, oh, maybe three weeks ago, under the House version of the reauthorization bill, rural systems stand to receive an additional $5.9 million for FY '06 and '07 plus an additional $1.6 million for FY '08.

Now, under the Senate which was before they adopted the one that had even more money in it, and I think which the president has said he may veto -- hopefully he won't -- rural systems would have received an additional $11.3 million for FY '06 and '07 plus an additional $2-1/2 million for FY '08.

Now, on the small urban side, under the House version, for FY '06 and '07 they would receive an additional $3 million plus in '08 an additional $2.4 million.

Under the Senate version the small urban would receive an additional $3.3 million in '06 and '07 plus an additional $5.3 million in FY '08.

Now, I don't have the specific numbers for the revised Senate bill that was approved.

MR. JOHNSON: So if the House version comes out as the version that results from the conference, the $5.9 million extra for Texas is not enough to cover the $7-1/2 million under your calculation which would be necessary for the rural areas.

MR. RUSSELL: Not in the '06-07 biennium. It would take, I guess, working it over a three-year period rather than trying to do it within a two-year biennium time frame.

MR. JOHNSON: Thank you.

MR. RUSSELL: Yes, sir.

MR. WILLIAMSON: Other questions of Mr. Russell, members?

MR. HOUGHTON: Bobby, what was the vote that you mentioned regarding the formula?

Sam, don't leave. I'm confused on the vote. Sam, you said that the majority of the people at PTAC are not for this change, and Bobby, you had mentioned a vote earlier.

MR. KILLEBREW: Yes, sir. Bobby Killebrew again, for the record.

PTAC took up individual elements one at a time so they didn't do the whole formula change in one fell swoop. Individually, as things were progressing, everything for the members that were present, every vote they took was unanimous with the exception of two items, and on those two items each of those had one "No" vote.

MR. HOUGHTON: So Sam, what vote are you referring to or what are you talking about as far as the group is not for this change?

MR. RUSSELL: Well, I think the vote was seven to one.

Is that what it was, Bobby?

MR. KILLEBREW: We had how many members present? We had six members present, so it would have been a 5-to-1 vote.

MR. HOUGHTON: That's a pretty heavy majority.

It seems like, Sam, there's an issue with money versus formula. We're not sure what the money is. Is the objection to formula?

MR. RUSSELL: Well, I think our position all along has been, in light of the fact that we thought there may be an additional $10 million in the state budget -- which apparently there's not going to be -- but beyond that, the additional federal funds, that there was really no reason for any system to be cut, because all that did was result in cuts in service which meant somebody who is depending on public transportation is going to be out of some transportation.

So our position was to freeze those systems at their '04 level who were under the proposed formulas to receive their 10 percent cuts, and go ahead and let those other systems who are to gain funds gain the funds that they're expected to gain.

MR. HOUGHTON: But at a smaller rate.

MR. RUSSELL: No.

MR. JOHNSON: The $9.6- would take care of it.

MR. RUSSELL: The $9.6- would take care of what has been proposed for a five-year period within two years.

MR. JOHNSON: And we're talking about fiscal year '06 which starts in four months -- or less, three months and a week.

MR. WILLIAMSON: Sam, is it accurate to say that if you reduce Brownsville with the cut, there's a net reduction in service in the state? Or is it more accurate to say if you shift money from Brownsville to one of the newer or higher growth transit systems, the same number of people get served but they just get served in different parts of the state?

MR. RUSSELL: That may be true, but what makes a dialysis patient in one area less important than a dialysis patient in another?

MR. WILLIAMSON: I'm not asking that question, Sam, I'm asking, you made the statement that if you reduce Brownsville services will be reduced.

MR. RUSSELL: In Brownsville.

MR. WILLIAMSON: But what you mean to say is in Brownsville, but I know you, being a fair and balanced guy, you would want to say and services might be increased in Mount Pleasant.

MR. RUSSELL: They may be increased in Mount Pleasant.

MR. WILLIAMSON: Or someplace else in the state. And isn't that really the nut of this problem is figuring out how to allocate resources between the state fairly?

MR. RUSSELL: I think that's what the process is about. But I think what we have to look at is whether the result of that process is what we want to see achieved.

MR. HOUGHTON: What I see, Sam, is the analysis that I have in front of me is that under the rural state funding formula, 19 lose, 20 gain; under the urban state funding formula, 14 lose, 12 gain. That's balanced.

MR. RUSSELL: Again, I know it may be balanced in the approach but the ultimate result is when you have patrons who no longer have public transportation available to them, have we really accomplished what we need to in making sure adequate public transportation is available to all people.

MR. HOUGHTON: Statewide.

MR. RUSSELL: Statewide.

MR. HOUGHTON: And that's, I think what we're trying to achieve here.

MR. RUSSELL: But the system in Amarillo is of no benefit to the system in Brownsville.

MR. WILLIAMSON: Nor is the system in Brownsville any benefit to the system in Amarillo.

MR. RUSSELL: I mean, you've got to look at the area that you're serving and the people that you're serving.

MR. HOUGHTON: I think that's what we did by trying to balance.

MR. JOHNSON: But isn't one of the difficulties here the timing of all of this? We've been waiting on reauthorization for two years, so the federal funding is unknown. We've been operating on continuing resolutions, and so it makes this process more difficult.

I think the process is good, I think the conclusion is logical where you want to be, but I also think that when we're talking about cutting services, that's not a desired result. And if we knew what reauthorization said, I think we could deal with this issue not equitably but more logically because we can put finite numbers to what we're trying to do and where we're trying to go with it.

MR. RUSSELL: I think that's been a lot of the problem, but we're a lot closer now on reauthorization than we've ever been before.

MR. JOHNSON: We hope to be. Well, things are more like they are today than they've ever been before.

(General laughter.)

MR. RUSSELL: I think you're probably right.

MR. NICHOLS: If we go back in time in two-year increments, like sessions -- first of all, when you say we, you're speaking on behalf of the Texas Transit Association

MR. RUSSELL: The association.

MR. NICHOLS: Okay. If you go back in time two years ago, four years ago, in those time periods, and if you define fairness -- I think one of the objectives is to try to be fair and I think everybody wants to be fair -- if you define that basically by how much population, taking into consideration your geography -- obviously if you have a population spread over a larger area, your costs are higher -- if that is fair and you go back two and four years ago and look at the funding, it's pretty apparent that we had some areas of the state proportionately dramatically underfunded while some areas of the state proportionately were dramatically -- I almost want to say overfunded but still providing a good service and a needed service, but on the fairness line they were receiving more.

Two years ago and four years ago, as we got more money into transit, it would seem reasonable that you would put that money into the ones that were dramatically underfunded and try to bring them up to a more equitable basis.

Do you understand what I'm saying so far?

MR. RUSSELL: Absolutely.

MR. NICHOLS: But the Texas Transit Association, as a body, dramatically resisted and opposed that in the legislative process, and that was the official position. And correct me if I'm wrong. As new money came in, they wanted not only to put money in some of these that were dramatically underfunded but also proportionately raise those that were being overfunded.

Was that the position you had two years and four years ago?

MR. RUSSELL: Yes. It was based on the statutory formula that the legislature adopted in '94.

MR. NICHOLS: Which the Texas Transit Association fought to change, resisted changing, opposed changing that formula that continued to do that.

It would have seemed much more reasonable to me, and I still do not know why the Texas Transit Association did not support, at those times as new money came in, funding those who were desperately short and unequitably funded and helping bring them up and rising all the ships.

MR. RUSSELL: Well, I'm not so sure that they resisted that because at that time the discretionary program was still in effect.

MR. NICHOLS: Ten percent.

MR. RUSSELL: Of $100 million, that would have been $10 million set aside in the discretionary program.

But I think, Commissioner, what you have to do, you've got to go back maybe 20 years and see what the industry was facing when it was completely discretionary. And I think over a period of time the legislature, with transit systems and people tugging on them, said, Well, the way to cure this is let's just put a formula in the statute and get rid of this headache.

MR. NICHOLS: And unfortunately, as new providers came onboard into geographic areas of the state that had no transit service, because of that formula, there basically was no funding or minimal, and they up until this point pretty much stayed that way.

I don't think there's anybody on the commission -- and I didn't mean to get into too much of this because there's a lot more witnesses.

MR. RUSSELL: Sure. The only other comment I would make is, and I think the rider in the appropriations bill is still there, that suggests that an inventory be conducted of all of the providers in the state and the types and levels of service that they're providing.

You've got systems that provide public transportation, you've got systems that provide client-based transportation, you've got systems that provide both types of transportation. And I think really that is critical that we determine who is providing what type of service across the state.

I don't know how we ever get to coordination without knowing that as a basic building block, and I would certainly hope that that kind of a study goes forward.

MR. WILLIAMSON: Any other questions, members?

(No response.)

MR. WILLIAMSON: Sam, I have been told -- in fact, I've been given a report or a written transcript or something, I can't remember what it is -- that you've been quoted as indicating the association will litigate the formulas if we adopt them. Is there any accuracy to that?

MR. RUSSELL: I have not said that to anyone.

MR. WILLIAMSON: I didn't think that you did, but I wanted to give you the opportunity to --

MR. RUSSELL: If I'm asked to at some point in time in the future, I would probably certainly take a look at it, but I have not made any statement to that effect, Mr. Chairman.

MR. WILLIAMSON: Would it be your instinct that these formulas ought to be litigated if we have to move forward?

MR. RUSSELL: Well, I would certainly hope that this department and this industry could certainly agree short of any kind of litigation and work something out.

MR. WILLIAMSON: The reason that I asked you that is after we listen to all the witnesses, I'll have some information to provide you and your association members and the public in general about the governor's and the lieutenant governor's viewpoint about all of this which might make us all feel a little better. But I don't want to share that information if I'm going to be sued.

MR. RUSSELL: I've certainly not made any type of accusation like that, Mr. Chairman.

MR. WILLIAMSON: Okay, Sam. Anything else?

MR. RUSSELL: That's it.

MR. WILLIAMSON: Thank you, Bud, we appreciate it.

MR. RUSSELL: Thank you.

MR. WILLIAMSON: David Blackmon, representative of a great oil and gas company active in the Barnett Shell in North Texas.

MR. BLACKMON: Yes, sir. We're the second most active producer up there, in fact, 425 wells, I believe.

MR. WILLIAMSON: Burlington Resources.

MR. BLACKMON: Yes, sir. And I'm here actually today representing the Texas Oil & Gas Association. We really appreciate the opportunity to offer just some brief comments related to this proposed rules change.

Texas Oil & Gas Association is the state's largest oil and gas association. We represent about 92 percent of the oil and gas produced in this state and about 95 percent of the refining capacity.

I'm sure you're probably aware that over the last 20 years really the world's oil and gas industry, at least the nation's oil and gas industry has pretty much consolidated itself in Houston. A lot of major companies have headquarters downtown, large offices of employees downtown.

And we apologize that we're kind of late getting into this. We really were not aware of this proposal until about ten days ago and didn't have an opportunity to submit written comments.

What we have found is that we have a lot of employees that live in The Woodlands and commute downtown and back, using The Woodlands Express bus service that is operated by the Brazos Transit District which I guess is one of the services or districts that would lose funding under this formula change.

We're told by folks at the transit district that the formula change would at least curtail this bus service and possibly eliminate it over time.

The Woodlands Express is used by about 1,200 riders every day. I guess in a year's time that translates to more than 200,000 passengers. This means more than 1,000 cars that are not on the I-45 corridor every day that would be if this service was eliminated.

The concern we have is twofold. Number one, probably half these riders are our employees, employees of oil and gas companies in downtown Houston. The second thing is the city of Houston is, of course, an area that has periodic attainment problems under EPA clean air standards, and the concern we have is putting these 1,000 cars back on the road every day would exacerbate that problem.

Another concern is that we've been informed that the change to the funding formula would postpone and possibly eliminate construction of a proposed new park and ride facility that would potentially remove another 1,000 cars from the I-45 corridor each day.

The population in these areas along 45 north of Houston is growing rapidly. These kinds of services are going to be vital for Houston's future economy and its continued ability to meet these clean air quality standards that seem to get stricter every year, as we're all aware.

Listening to the testimony today and talking with people about this, it appears to us that this particular problem is an unintended consequence of this rules change. We don't think that the rules change, as you are considering, was really intended to cut back funding to this particular bus service.

We hope you can find a way to change the rule or at least figure out a way to meet your stated goals, your goals of increasing funding to the underfunded systems, that doesn't affect this bus service in the future.

And that's really all I had to offer today.

MR. WILLIAMSON: Members, questions or comments for Mr. Blackmon?

MR. HOUGHTON: What does it cost to ride that transportation system from The Woodlands, your employees?

MR. BLACKMON: It amounts to several dollars a day. I'm not sure of the exact amount, but the employees pay a fee. They can either pay it by the month or on a daily basis, is my understanding, but I'm not sure of the exact amount. But it's not real expensive.

MR. HOUGHTON: And your understanding that with this change in funding that that service would go away?

MR. BLACKMON: No, sir, I don't think it would go away immediately. In fact, I just had a conversation with a fellow from the district this morning and they have some contingency plans. They believe it would be curtailed initially, but if funding is not restored over time, it could eventually go away.

But no, I don't think it would be entirely canceled.

MS. ANDRADE: So your employees do pay a fee for riding this bus service?

MR. BLACKMON: That's what I'm told. Now, I don't use it personally but yes, but it's not a heavy expense.

MR. HOUGHTON: I'm glad you're here because I've been curious about that. So if you knew that this was going to affect your employees, would you as a private business be interested in partnering up with that transit service to help them?

MR. BLACKMON: Yes, absolutely, I'm sure we would. We do a number of things like that in the community, and certainly Burlington and I know our other major members would certainly be willing to sit down and try to develop something like that.

MR. HOUGHTON: I'm happy to hear that, I've been talking about that. You know, it's great that we bring the employee to the workplace but if you're not going to be able to, then the employer should be willing to do something.

The same with medical facilities. We bring a patient there but we should hold them somewhat accountable for that. And so I've been encouraging people to talk to the private sector and see if they'd partner up and help with those services.

MR. BLACKMON: Yes. In fact, our companies already do help employees to some degree.

I just talked to a lady with Total Fina yesterday, and they are moving their large office there in Houston. They've been out at Greenspoint which is near Intercontinental Airport; they're moving downtown 400 employees, and they're offering their employees an incentive to use the bus service, because so many of them live in The Woodlands, a very high percentage of their employees do because their office has been so near to that area over the last several years.

So they're offering incentives to their employees to do that and now they're concerned about the service being curtailed.

MS. ANDRADE: Thank you.

MR. WILLIAMSON: Other questions?

(No response.)

MR. WILLIAMSON: Say, this is pretty remarkable: we have a Republican governor who is focused on public transit, we have a Republican lieutenant governor who is focused on public transit, and we now have the oil and gas industry of the state focused on public transit. There may be hope for public transit in the state.

MR. BLACKMON: I was just sitting out there thinking you probably don't get a lot of testimony from TxOGA at your regular meetings like this, be we thought this was an important issue.

MR. WILLIAMSON: We value it and we actually think it's a valuable thing for corporate Texas to be focused on this.

MR. HOUGHTON: Absolutely.

MR. BLACKMON: Well, it is. In the corporate community these kinds of things are getting a higher profile as time goes on. You know, 20 years ago you didn't see a lot of concern in the oil industry about things like this, but times change.

MR. WILLIAMSON: Times change, they do.

David, I do thank you for taking the time to participate in government.

MR. BLACKMON: Thank you. We really appreciate the opportunity.

MR. WILLIAMSON: And I appreciate my industry being interested in this. Thank you a lot.

Joe Brannan.

MR. BRANNAN: Mr. Chairman, members of the commission, I'm Joe Brannan, the executive director of the Golden Crescent Regional Planning Commission in Victoria. We're also the managers/operators of the Victoria transit system.

I promise not to sue you and I'm going to fill up with gas on the way home, so hopefully everybody is happy.

(General laughter.)

MR. BRANNAN: I want to congratulate the commission and leadership in the agency for the process that you've undertaken. Having lived through several of these in different places around the country, this is a nightmarish task when you take some from one and give some to the other.

And really, I'm a latecomer to this process. In fact, about four o'clock yesterday afternoon my staff came to me and said read this, so that's how late a comer I am.

The draft recommendations that the commission promulgated in March, we don't have a problem with. And again, this is a situation where we don't lose. I'm not going to lie to you. The best thing you could possibly do is put all the money in Victoria forever. We'd do a good job, we wouldn't sue you, and we'd buy gas on the way home.

I do, however, have a concern, and it was expressed to me by my board of directors yesterday afternoon as well, there are a number of additional things that were added to the plate at the last minute in the PTAC recommendations. I think we need some time to digest those before there's action taken, particularly as they reflect to match and consideration of match.

We got a bunch of paper put in front of us at the last moment, and I know you guys did as well, and would welcome the opportunity to at least see what the impacts of those are going to be.

But I would caution that we need to be wise and considerate as we move forward with those considerations. And with that, I'd be happy to answer any questions.

MR. WILLIAMSON: Questions of this witness?

(No response.)

MR. WILLIAMSON: I was going to wait till the end to say this, but since you focused on it, I need to say it now.

The problem the commission faces is we have to execute contracts effective September 1. We have a known amount of money and then we have an unknown; we hope for a larger amount of money. We don't have the luxury of waiting till June to adopt a formula because if you back it up in time, how long it takes to negotiate the contracts, get them signed and in place and get our accounting system set, this is it, we have to make a decision today.

So while we appreciate always the admonition that we should think a little bit more about things because we believe in thinking about things around here, the truth is we can't do that today. We're going to have to decide how we're going to do this today in order for our legal staff and the contracting community to move forward.

MR. BRANNAN: If I could just quickly respond to that, Mr. Chairman.

The commission's draft recommendations, draft rules in March received a substantial amount of public input, and that's the process, that's the right process. I guess my concern is when we have further recommendations that arrive on the table from a meeting last Friday, the overall process I have no concern with whatsoever, I think it's just those additional items that arrived that we do have some concern with.

MR. WILLIAMSON: I appreciate your being willing to share those concerns. Anything else?

(No response.)

MR. WILLIAMSON: Thank you so much, Joe.

MR. BRANNAN: Thank you.

MR. WILLIAMSON: Ann Sheets.

MS. SHEETS: Good morning. My name is Ann Sheets and I'm from Bastrop, Texas, and I am here today to talk about the CARTS service because it does provide independence, and independence is a key ingredient to the dignity of the aged and disabled.

Independence is what made America into the country it is today. It should not be diminished or eradicated by the application of rules and formulas which result in a one-dimensional picture of the needs of the CARTS service in Bastrop.

The bus riders in the area are the aged and the disabled, since those that are able-bodied travel to and from Austin by their own private vehicles. Therefore, the bus uses is limited.

Bastrop is a decentralized bedroom community built around Highway 71 and 290. Due to the nature of Bastrop, facilities required by the aged or disabled are obtainable only with the aid of bus transportation.

I've spoken to many of the riders of CARTS, and many of them have arranged their lives and living around the existence of CARTS routes. To remove such routes will result in many riders becoming virtual prisoners in their own homes, faced with the prospect of assisted living or nursing home living.

For instance, my husband fell at work and experienced a tremendously horrible workman's comp injury. He broke his neck, his back, he tore his shoulder and has a severe head injury.

This injury requires travel to Austin every 15 days for pain management appointments and prescription refills. Pain management is not available in Bastrop County and the prescription my husband is on is Paladone, a Class R narcotic, which will not ever be carried by a pharmacy in Bastrop due to security concerns, limited population access, and the extremely high cost of the drug.

Additionally, my husband must travel to Austin on a weekly or biweekly method to obtain medical treatments which are not available in Bastrop due to low reimbursement workman's compensation rates.

My husband cannot drive due to seizures and I do provide him with transportation to Austin; however, I cannot provide him with what CARTS provides him: the independence which allows him to feel like a worthy member of society and not a burden.

Facing the reduction or elimination of CARTS service under the proposed rules and not taking into account the human side of each and every bus environment, is in my opinion a true travesty.

Due to the nature of the bedroom community such as Bastrop and their specialized transportation requirements, I ask that consideration be added to the formula and rules which would address the specialized needs of the bedroom community.

Thank you.

MR. WILLIAMSON: Wait. Questions for this witness?

MR. HOUGHTON: What's the name of the service in Bastrop?

MS. SHEETS: I'm just here by myself talking for my husband and those that ride the bus in Bastrop.

MR. WILLIAMSON: CARTS, I think, Capital Area Rural Transportation Service.

MR. HOUGHTON: Thank you.

MR. WILLIAMSON: Any other questions?

(No response.)

MR. WILLIAMSON: Thank you very much for taking the time to be here.

Oh, Glenn. Did you ride your motorcycle to work today?

MR. GADBOIS: No, sir. It's going to rain.

MR. WILLIAMSON: You're failing the clean air test, Glenn.

MR. GADBOIS: I did car pool. Does that work?

MR. WILLIAMSON: Got me.

MR. GADBOIS: My name is Glenn Gadbois. I'm the direct of Just Transportation Alliance, a project of Texas Citizens Fund.

Today you have stolen most of what I wanted to say and already said it, but I'm just going to kind of go back and cover a couple of things.

First, this has been hard and I have watched you all struggle with this, the transit agencies struggle with this, the people that will be affected struggle with this, and I don't think anybody is taking this decision lightly.

I do appreciate the process you have allowed this to go through, and I do support the proposed formula as it came out, especially after the chairman's addition to it two meetings ago.

I would like to talk to a couple of, I guess, corrections or misstatements.

The first is ours. In some of our comments we indicated that Medicaid services and medical services were paid for by Medicaid, and that people with disabilities got transportation from 5310 which is all true.

But what was pointed out to me, and I think is worth pointing out for a larger reason, a lot of the money that we are talking about today develops the core system that provides medical trips and that provides trips for people with disabilities beyond what they might get -- if they do -- from either of those two pots of money.

I think that's worth pointing out because part of this fight or struggle is that this money is the core of a system. Providers may have pulled in other pots of money from the human service programs or from other programs that you all provide, but this provides the core.

Now, having said that, there is another correction that I also want to build off of. The impression from the Texas Transit Association and some transit providers during some of the heated language that we have had over consideration of this formula have indicated to the community, to elected officials, and more importantly for me, to their riders that this commission has not been supportive of public transportation and, in fact, is engaging in penalizing public transportation and that this formula represents a cut.

I want to deal with the first first. As you all have pointed out, reallocation, looking at how we distribute money fairly is not a cut. It may be a reduction to one service area or system, but the objective is to provide that more fairly or equitably or rationally where the population is, and therefore, that service increases elsewhere.

In addition to that, I want to publicly go on record saying this commission has been incredibly supportive of public transportation. It did not start with, but certainly as far as my memory goes, from mid- to late '90s when you pulled money out of STP for capital replacement, certainly in your support of House Bill 3588, and your willingness to invest even more money out of a portion of your budget into public transportation and health and human service transportation, certainly in your use of toll credits for public transportation.

As a consequence, I don't want to leave the public with the impression that this focus is not very focused on and very supportive of public transportation because I think it is.

And indeed, it is my impression that as we move forward with this formula and you all can look your constituents and elected officials squarely in the eye and say, Yes, we think this is a good return on our investment, we think this is as equitably distributed or at least getting there, we think this is actually achieving the kind of levels of performance we want, when you can do that, I am confident that you will walk hand in hand with the transit industry and us for additional new money.

In fact, you have already been engaged in looking for additional new money for public transportation that has not even been recognized yet, I think, by the public transportation industry, and since the legislature hasn't finished its business, I won't thank you for that now but I'll thank you for that a little later.

And so I just simply want to make sure that this commission gets the appreciation and recognition that it warrants and to not take the heated language too seriously. We can all understand where that comes from. Thank you.

MR. NICHOLS: Thank you.

Candice Carter.

SPEAKER FROM AUDIENCE: She had to leave.

MR. NICHOLS: Jason Sabo, director of public policy, United Way. Did I mispronounce that?

MR. SABO: Actually you did mispronounce it but you came closer to the accurate Hungarian pronunciation, so my grandfather would be pleased.

My name is Jason Sabo and I'm the vice president for public policy of United Ways of Texas, and we're here in support of the proposed rule change.

And I think that I need to be very clear in why we're supporting this and say that you all are in a very unenviable position, and I would consider the position that you find yourselves in to be somewhat analogous to the position of many of my member local United Ways.

I think that it was Commissioner Andrade who said earlier that there's much need and limited funding, and I think that we all recognize the central importance of public transit to the ability of Texans to work, to the ability of Texans to access medical care, et cetera. And I don't think any of us can debate that nor the importance of the human element in the conversation that we're having today.

However, my members represent 67 Texas communities from one side of the state to the other, from the north to the south, and I can tell you that some of my member communities will gain from this, some of them will lose.

And I think, however, the important message that the United Way system at large can convey is that akin to what you're talking about here, United Way has gone through a very similar transformation in terms of moving away from a funding mechanism based upon historical means to one based upon performance measures and accountability.

We did this not because we were being told by the legislature to do it, but United Way chose to move in this direction because the public demanded it. Without these kinds of performance-based measures, United Way would simply cease to exist.

And I think that as you are moving in the direction that we are, towards increased scrutiny and increased accountability coming from, in my case, donors, in our case, taxpayers, I think that the kind of measures you are talking about today are only going to become increasingly important.

And as you promulgate these formula and as you move forward, I want all the commissioners and staff of TxDOT to know that United Way and our members at the local and state levels will be happy to assist you as you walk across 11th Street in next session and subsequent sessions to ensure that you are accessing the revenue that you need and the dollars that you need to provide the kinds of transportation services that all Texan