Date Requested:February 01, 2011
Time Requested:04:23 PM
Agency: Parkways, Economic Development & Tourism
CBD Number: Version: Bill Number: Resolution Number:
2011R2272 Introduced HB2964
CBD Subject: TERMINATING TOLLS
FUND(S)
Turnpike Toll Revenues
Sources of Revenue
Other Fund Toll & General Revenues
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    Adoption of this legislation would render the Parkways Authority without funds to operate after February 1, 2010 which would not only affect the missions and functions of the West Virginia Parkways Authority, but also, have a profound effect upon all the assets and funds of the Authority and upon the obligations of the State of West Virginia. At present, the West Virginia Turnpike is operated and maintained by the Parkways Authority with Turnpike toll revenues paid by the users of the highway. Thus, no State tax or general revenue dollars are used in the maintenance or operation of the Turnpike or in paying debt service on Turnpike bonds issued by the Authority. The Parkways Authority would even be left without funds to accomplish the legislative mandate of removing the toll facilities, a task that would cost many millions of dollars.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    The Parkways Authority does not receive any gas tax revenue or any other federal or state tax revenue to assist with maintaining or operating the West Virginia Turnpike.
    
    If the Turnpike tolls were eliminated after re-payment of the bonds, as suggested by this bill, the State of West Virginia would not only lose in excess of $90 million annually in toll revenues available to operate and maintain the 415 lane miles of interstate highway, 116 bridges, three travel plazas and one welcome center currently operated and maintained by the Parkways Authority, it would also represent the loss of approximately 387 well-paying jobs (most with benefits) currently held by the various toll, maintenance and administrative personnel of the Parkways Authority. Most of this annual toll revenue comes from out-of-state passenger and out-of-state commercial vehicles (approximately 76% of all Turnpike revenue).
    
    Therefore, if the bill became law, the West Virginia Division of Highways (DOH) may be mandated to maintain and operate the Turnpike with no toll revenues to support those operations. The already State Road Fund would likely be the only source of revenue available to the DOH to provide funding. The WV Secretary of Transportation recently addressed the Senate Transportation and Infrastructure Committee. He reported that the State Road Fund is funded primarily by the gas tax and revenues from that source are currently stagnant and in danger of dwindling even further as people drive less and use more fuel-efficient cars. In terms of buying power, the same dollars buy 30% less than they did in 1998. Meanwhile, federal funds are also dwindling. To return from a 31-year repaving schedule, the current situation, to a more ideal 12-year rotation, the Division of Highways would need an additional $700 million on average per year. Mr. Mattox also reported the following:
    • The state has 36,000 miles of roads (only 27% of them are eligible for federal funds; while gas tax revenues increased by just over $100 million during a 10-year period (from $280.8 million in FY 1999 to $388.1 million in FY 2008), the wholesale fuel tax disappeared in FY 2006; at its peak it added $85 million to the fund
    • State Road Fund revenues have increased by less than $13 million since 1999 (from 656.9 million then to $669.2 million in 2008);
    • Federal funds have dropped from $438.6 million in 2005 to $342.9 million in 2008;
    • The new Congress has placed a moratorium on earmarks;
    • Congress is considering a reduction in highway funding and if that happens the DOH stands to lose $79 million (about 20% of its yearly federal-aid construction budget);
    • The federal highway authorization bill is on its sixth temporary extension through March 4, 2011.
    
    WV Turnpike tolls not only use funds provided by the roadway users to maintain the Turnpike, but in the process free up scarce state transportation dollars to maintain other roads and bridges in West Virginia. The Interstate system, authorized in 1956, is approaching the end of its useful life and is in need of massive rehabilitation and rebuilding.
    
    If the Turnpike and tolls were terminated, DOH would immediately be faced with maintaining and fully funding one of the most heavily used sections of interstate in West Virginia without the ability, now provided by statute, to refuse to accept the West Virginia Turnpike (after the bonds are paid) if it is not in “good condition and repair” (referred to below).
    
    The WV Turnpike, a $1 billion asset, consists of the following:
    
     Roadway
    
    • 88 Linear miles of roadway
    • 415 lane miles of roadway
    • 116 bridges
    • 1,711,900 square feet of bridge deck
    • 99.6 miles of guardrail
    • 6,248 culverts
    • 4,070 signs
    • 900 roadway lights
    • 80 lighted signs
    • 595 acres of mowing
    • 59 impact attenuators
    
    Facilities
    
    • 8 maintenance facilities
    • 3 travel plazas
    • 2 rest areas
    • 4 toll barriers
    • 4 toll offices
    • 600 site lights
    • 20 security systems
    • 2 water treatment facilities
    • 2 sewage treatment facilities
    • 5 roadway weather information stations
    • 3 radio towers
    • 5 salt storage buildings
    • 4 equipment maintenance garages
    • 1 headquarters administration building
    • 3 state police offices
    
    The cost to operate and maintain the Turnpike can be defined in three areas: Roadway/Facilities Maintenance (routine); capital improvement; and, renewal and replacement. To broaden the scope and magnitude of the cost to maintain the Turnpike, the following information is provided:
    
    Roadway and Facilities Maintenance
    
    Snow removal and ice control; pavement patching; courtesy patrol and emergency patrol response; bridge maintenance; equipment cleaning and maintenance; litter pickup; mowing; travel plaza maintenance; maintenance areas; equipment repairs and maintenance; toll plaza maintenance; water and wastewater treatment; concrete barrier wall repairs; and, overhead message boards and closed circuit television camera maintenance.
    
    TOTAL ANNUAL COST: Approx. $16 million annually (which includes salaries for approximately 141 maintenance employees)
    
    Capital Improvement
    
    Pavement rehabilitation and preservation, bridge deck replacements and facilities rehabilitation.
    
    TOTAL ANNUAL COST: Approx. $30 million annually
    
    Renewal and Replacement
    
    Bridge painting; bridge deck overlays; bridge/facilities retrofit; guardrail replacement; slope reconditioning; culvert repair/replacement; vehicle/equipment replacement; facilities renovation and repair; sign replacement/overlays; roadway lighting; pavement striping and markings; full depth repairs/undersealing; and, drainage pipe rehabilitation.
    
    TOTAL ANNUAL COST: Approx. $10 million annually
    
    It should be noted that even with the additional funds from a toll increase that went into effect in August 2009, there remains a substantial amount of deferred maintenance costs associated with the operation and maintenance of the Turnpike. In 2009, the Authority’s Consulting Engineer, HNTB, projected that $335 million needed to be spent on the Turnpike through 2019, $242 million of which represents the cost of paving. HNTB further concluded that this amount was the bare minimum essential deferred maintenance and capital needs to ensure the Turnpike could be properly maintained and at the same time its overall condition improved, as needed, over the next 10 years. In 2009, a summary of the Turnpike’s infrastructure condition assessment indicated that: 45% of the pavement is in fair to poor condition (1/3 is 20 to 35 year old concrete); average bridge age is 29 years; deck spalls graded level of service “D”; many culverts are original 1950’s construction (35% substandard); and, 30% of the guardrail is defective.
    
    As a part of strategic planning, HNTB also identified other future projects for WV Turnpike upgrades that may be needed beyond 2019 that are currently not in the deferred maintenance program. These projects are:
    
    • Turnpike widening in Beckley between mileposts 40.2 and 47.9 in Raleigh County.
    • Turnpike widening between Chelyan and Kanawha City in Kanawha County.
    • Increase parking at milepost 69 southbound Rest Area.
    • Increase truck parking at Beckley Travel Plaza.
    • Consolidation of maintenance facilities at Beckley.
    • Development of the Rest Area at milepost 18 southbound or provide access to Bluestone Travel Plaza from southbound lanes.
    
    Under existing statutory provisions, tolls on the West Virginia Turnpike can be removed after the final pay-off of the bonds, currently scheduled for 2019, if the Turnpike is determined to be in “good condition and repair” by the WV Secretary of Transportation, and turned over to the West Virginia Department of Transportation, Division of Highways.
    
    In addition to all of the above, the Authority continues to absorb the costs of the State Police detachment that provides patrols and protection on the Turnpike, including radio communications, at a cost of $3 million annually. Therefore, if this bill became law, those costs also would have to be paid out of the Department of Public Safety budget with the possibility that patrols and protection on the WV Turnpike would have to be eliminated or decreased significantly.
    
    Finally, as indicated above, 387 full-time, part-time and temporary Parkways employees (many of whom have benefits) would be unemployed, thereby increasing the drain on already strained unemployment benefits and adversely impacting the related State and county tax base associated with that payroll. Eliminating those jobs also would eliminate the direct and indirect economic benefits to the state, especially southern West Virginia.
    


Memorandum
Person submitting Fiscal Note:
Gregory C. Barr
Email Address:
gbarr@wvturnpike.com
    The Parkways Authority currently has approximately $77 million dollars in outstanding Turnpike Toll Revenue Bonds. These bonds are scheduled to be paid off by May 2019. The term of these bonds is a matter of contract, not a matter of statute.
    
    Other potential risks are exposing the state or general tax revenues to tort or other Turnpike related liabilities and basically abolishing the wall of separation created by the bond trust indenture. The indenture now provides that the only agency obligated to oversee this roadway and repay the bonds is the West Virginia Parkways Authority, not the State of West Virginia, which is separated and removed from financial and tort liability for the roadway (which were purposes of creating the original Turnpike Commission as an independent state agency to begin with).
    
    On July 1, 2010, Senate Bill 427, renaming and reorganizing the WV Parkways Economic Development and Tourism Authority became effective. This bill added two Board Members from the first Congressional District (eventually transitioning to two from each Congressional District). The purpose of this bill was to: restore ability to sell bonds for new parkway (road) projects (other than the WV Turnpike) such as Route 35; discontinue $10 refundable deposit for passenger car E-ZPass transponders and requires the refund of existing deposits; conduct annual informational sessions promoting E-ZPass in each of the four counties bordering the WV Turnpike; and, eliminate the prohibition of building motels within five miles of the WV Turnpike. Once a parkway project which will charge tolls is identified by the Authority, the Governor shall appoint, with the advice and consent of the Senate, two persons from each county where the parkway project is located to serve on a local advisory committee to provide recommendations and suggestions to the Authority on all matters regarding the local identified project. The local advisory committee shall also report any of its findings to county commissions of the counties in which the parkway project is located. The county commissions of the counties in which a parkway project is located shall approve the concept of tolls on the parkway project. The purpose of the passage of this bill (SB 427) was to provide alternate funding solutions to the WV Department of Transportation for transportation and infrastructure needs of the state.
    
    In 2009, a new discount program for the less frequent Turnpike traveler was implemented. Customers who drive the Turnpike occasionally can sign up for a WV E-ZPass® at a cost of $5.00 per year and then pre-pay funds via credit card into their account ($20.00 minimum account balance). This plan provides customers of the WV Turnpike a 35% savings on their toll rate. The toll is automatically deducted from the pre-paid account as they drive through the toll plazas. Frequent users of the Turnpike, such as daily commuters driving to and from work, school, church, etc., can enroll in an E-ZPass plan that costs $95/year, per plaza (or $25/quarter, per plaza) for unlimited travel. This plan provides up to a 90% savings in toll rates for the high frequency user and the cost may be eligible for deduction from WV income for tax purposes. The WV E-ZPass is available to anyone, regardless of state or country of residence.