In adopting a set of interim reports on Wednesday, the Senate Committee on Finance issued recommendations that will likely play important roles in the upcoming legislative session.

Transportation

"Transparency" was committee member Sen. Florence Shapiro’s (R-Plano) watchword for reforming the state’s transportation agency. "Legislators have a duty to our constituents to know what’s going on," she said, noting that she is often unable to answer questions from constituents, particularly about details of planned public-private partnerships such as Trans-Texas Corridor 35.

Proposed reforms to the Texas Department of Transportation are "basically an effort to make TxDOT look more accountable," said Chairman Steve Ogden (R-Bryan)

Committee recommendations included: integrating the Trans-Texas Corridor with the Texas Trunk System, requiring tolls on toll roads to be eliminated or reduced once a road is paid for, reducing TxDOT’s dependence on Comprehensive Development Agreements (CDAs), and establishing a transportation finance corporation to assist in funding projects.

Ogden said areas such as Harris County are "flush with money" due to the ability of regional toll authorities to borrow funds. He

urged the state to jump in the same business that investment companies have in funding toll road projects through the purchase of bonds."If it’s so lucrative that other companies fund them," he said, "then why don’t we use our own money?"

Sen. Kevin Eltife (R-Tyler), preferring the former pay-as-you-go system of road project financing, said he opposed establishing a state transportation finance corporation (or finance authority) as it would "borrow the state into oblivion."

"The conservative thing to do," Eltife said, "... is to raise the state gasoline tax (by about 5 cents) and index it to the rate of inflation."

The current method of borrowing to pay for road construction he likened to giving "more heroin to the addict."

Whether bond markets will hold up enough to fund private-public partnership roads was a question on some committee members’ minds.

Williams noted that whereas the Teacher Retirement System reached $110 billion in funds a year or so ago, the stock market plunge sump has left only $80 billion.

Shapiro said a big issue in the upcoming session would be the way charter schools are regulated and funded. The committee recommended rewarding high-performing charter schools with increased facilities funding and state-issued bonds.

Other education-related recommendations included establishing a separate track of facilities funding for "rapid growth" public school districts, and prohibiting future lease-purchase agreements for independent school districts (while grandfathering old agreements).

How education will continue to be funded was another topic that commanded attention.

Sen. Tommy Williams (R-The Woodlands) said in approaching statewide ad valorem tax evaluation standards for appraisal districts "there should be more emphasis on evaluation and more on the process." He said any change in the way taxes are assessed would require a constitutional amendment approved by voters in a referendum. He said such changes would produce not a statewide tax but "a statewide standard."

Sen. Eddie Lucio (D-Brownsville) said he worried that reforms to property tax appraisals might burden the state sales tax, hence negatively affect the poor, who might not see "proportional sales tax relief."

Williams replied that property taxes are more regressive than an increased sales tax.

In other tax-related discussion, the committee reviewed a charge to determine whether assets such as the Texas Lottery reached the "highest and best use possible in the interest of taxpayers of Texas."

Sen. Kip Averitt (R-Waco), noting extensive committee consideration of a possible lottery sale to a private corporation, said the U.S. Justice Department had determined there was no legal authority for such action. He said the opinion had yet to be challenged.

The state’s Driver Responsibility Program, which lays surcharges and penalties on drivers who commit certain offenses, was recommended for overhaul or total cancellation. The report said the program has led to an increased level of driver’s license suspensions and low collections.

"At the end of fiscal year 2006," said the report, "the program’s overall collection rate is at approximately 28 percent, and the program’s overall compliance rate (full collection plus compliance with installment plans) was approximately 32 percent. Of the surcharges billed, over 50 percent of surcharge assessments have led to license suspension rather than payment."

Revenues from the surcharges sit in a fund until authorized for expenditure by the Legislature. The practice has led to criticism of the money’s not going to support hospital trauma centers, as intended under the authorization bill.

The committee recommended revising the franchise tax to replace health care deductions with health care credits, as well as revising how Medicare rates are calculated.

The panel further recommended allowing the Office of Inspector General (OIG) to create a free-standing agency to check the criminal history of Medicaid providers.

The committee called for establishing a new system of Medicaid hospital reimbursements, under which hospitals would report "uncompensated care," such as services provided non-paying patients.

Medicare costs are rising "in a way that will eat up our entire budget if we don’t do something," said Sen. Jane Nelson (R-Flower Mound). In the 2006-07 biennium health and human services spending totaled $48.2 billion, or 35 percent of appropriations.

Lawmakers neither discussed nor recommended action on proposals to levy a fee on out-of-state wire transfers. According to the executive summary of the report, the fee could prove to be a large source of revenue. An estimated $3.1 billion was transferred from Texas to Central America in 2004 and $5.2 billion in 2006.

A bill in the 79th Legislature, filed by Rep. Dan Patrick (R-Houston) proposed a 50-cent per $100 fee, with a cap of $5 per transaction. The bill was left pending in committee in 2005. Sen. Judith Zaffrini (D-San Antonio) objected that such a tax would target low-income immigrant laborers.

An opinion on plan from the Texas Attorney General is pending, according to the report.