Sources of Revenue:

Other Fund Toll Road 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 in its present form would render the Parkways Authority and could also render the WVDOH without funds to operate the West Virginia Turnpike after February 1, 2020. This 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. In the scenario created by this version of House Bill 2559, the Parkways Authority would even be left without funds to accomplish the legislative mandate of removing the toll facilities, a task that would cost in excess of $20 million dollars.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2013 Increase/Decrease (use"-")	2014 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

Explanation of above estimates (including long-range effect):

Memorandum

There is a technical defect found in this bill under §17-16A-18(b) and (c) which mandate that, effective February 1, 2020, the Parkways Authority or its successors shall discontinue, remove and not relocate all toll collection facilities on the West Virginia Turnpike effective by February 1, 2020. In West Virginia State Code §17-16A-18(a), it states that when the “bonds secured by West Virginia Turnpike toll revenues have been paid … if then in good condition and repair to the satisfaction of the Commissioner of the State Division of Highways, (the Turnpike) shall be transferred to the State Division of Highways and shall thereafter be maintained by the State Division of Highways free of tolls.” The proposed changes to this Code section by the addition of a section §17-16A-18(c) removes any ability of the Secretary of Transportation/Commissioner of Highways to factor in the condition of the highway and funding available to the DOH when determining whether to accept the maintenance obligation of the West Virginia Turnpike. 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 in 2019, the State of West Virginia would not only lose in excess of $83 million annually in toll revenues now used to operate and maintain the 426 lane miles of interstate highway, 116 bridges, three travel plazas and one welcome center (Princeton, WV) currently operated and maintained by the Parkways Authority, it would also represent the loss of approximately 360 jobs (with State benefits) currently held by the various toll, maintenance and administrative personnel of the Parkways Authority. Most of the annual Turnpike toll revenue comes from out-of-state passenger and out-of-state commercial vehicles (approximately 76% of all Turnpike toll revenue). Without the toll revenue, the cost of operating the West Virginia Turnpike would shift to the taxpayers. The provisions of this bill state: “all the parkways authority employees dedicated to highway maintenance and upkeep shall be transferred to employment by the West Virginia Division of Highways” and “all employees of the parkways authority dedicated to toll collection and toll collection operations shall be given the opportunity to transfer to available employment within other departments and agencies of the State of West Virginia and shall have the first claim upon any job for which they are qualified”. As previously stated, transferring approximately 144 Maintenance Department employees to the DOH, without the benefit of toll revenues, would be costly to the State of West Virginia. Also, any suggestion that over 160 toll collectors could obtain employment within other state agencies is unlikely, especially given the fact that most work in the Fayette, Raleigh and Mercer County areas of the State where, unlike Charleston, there are many more State jobs upon which they can rely upon and be qualified for continued employment. Therefore, if the bill became law, the WVDOH appears to be mandated to maintain and operate the Turnpike with no toll revenues to support those operations. The exceptions in the bill are “all monetary assets, including cash and securities, of the Parkways Authority, in excess of $5 million…not to exceed $10 million per year, until those funds are exhausted” and “fifty percent of all toll revenue from the date of satisfaction of all bonded indebtedness until tolls are removed on February 1, 2020…and dedicated to the maintenance of the portion so Interstates 64 and 77 commonly referred to as the West Virginia Turnpike after January 1, 2035”. The bill calls for all obligations and responsibilities of the Parkways Authority for any part or portion of the West Virginia Turnpike to cease on January 1, 2035. Information is provided below on the cost to operate and maintain the West Virginia Turnpike. The stream of revenue provided to the DOH to maintain the Turnpike would not even be sufficient for the first year of operations much less to sustain it through 2035 and beyond. For example, the cost to the DOH after 2019, with no toll revenues, is as follows: • Annual Expenditures (in millions) • Pavement – Mill & inlay program $12 • Bridges – Average age of 40 years • Latex modified concrete (LMC) deck overlay 10 year program $10 • Painting and retrofit $ 6 • Bridge renovation $ 9 • Routine maintenance (snow removal and ice control, mowing, patching & litter) $ 5 • Non-routine maintenance $ 7 • Facilities Improvements $ 3 • Equipment replacement/maintenance $ 2 • Culverts/drainage $ 2 • Pavement striping/guardrail/signage $ 3 ANNUAL AMOUNT NEEDED FOR PRESERVATION OF THE TURNPIKE: $59 While operational consolidation and the potential benefits of economies of scale may produce staffing and resource efficiencies, the annual revenue reduction of approximately $80 million in toll revenue would be difficult if not impossible for the State to accommodate, absent a significant increase in the gas tax. The foregone toll revenue associated with the cessation of tolls equates to an increase of approximately 7.3 cents per gallon in the gas tax. Since there are no replacement revenue sources, the State Road Fund would likely be the only source of revenue available to the DOH to provide funding. The WV Secretary of Transportation has 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 in that Fund now 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 DOH would need an additional $700 million of funding on average per year to augment the revenue needed for statewide funding. West Virginia Secretary of Transportation Paul 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; Governor Tomblin has created the West Virginia Blue Ribbon Highway Commission to study the infrastructure needs of the State, methods of funding those needs and how to present their information to the citizens of West Virginia and the Legislature. The Parkways Authority’s General Manager made a presentation to the Infrastructure Committee regarding the operations of the West Virginia Turnpike on January 9, 2013 WV Turnpike tolls not only provide funds paid directly 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. The Turnpike and DOH have differing accounting practices making it difficult to compare total maintenance cost per lane mile. DOH allocates routine maintenance budget to interstate maintenance organizations which are separate from district and county maintenance organizations. Interstate maintenance orgs perform daily maintenance such as: patching; mowing; snow and ice control; litter pickup; and, minor drainage maintenance. Major maintenance activities such as bridges, signs, highway lighting, major drainage maintenance, other maintenance requiring heavy equipment, and courtesy patrol are performed by contract, district or statewide forces. In order to compare routine maintenance between the Turnpike and DOH, the following steps were applied: Step #1: Determine the DOH interstate maintenance cost allocation per lane mile Step #2: Determine the Turnpike’s total maintenance cost (about one-third is for maintaining its considerable inventory of facilities such as a Tourist Information Center, Travel Plazas and Toll Plazas) Step #3: Determine the portion of the Turnpike’s total maintenance that is roadway related: • All Maintenance Department is allocated between roadway (65%) and facilities (35%) functions. There are 144 permanent staff assigned to 16 different maintenance shops and functions: Three roadway maintenance sections Heavy equipment section Toll maintenance Utility Shop Sign Shop Carpentry Shop Mechanics/body/paint/welding shop Water treatment Landscaping Step #4: Determine portion of roadway staff dedicated to routine maintenance: • Turnpike has three road maintenance sections (55 personnel) that perform courtesy patrol, major bridge maintenance; delineator installation and maintenance; and rest area maintenance (the DOH does not perform these functions within their interstate maintenance orgs) • Comparing Turnpike and DOH activities, 35 positions (of the 55 personnel) are allocated to routine roadway maintenance functions Step #5: Determine the portion of roadway maintenance that is allocated to activities performed in the DOH interstate maintenance allocation • Many major maintenance activities are not performed by the interstate maintenance orgs but rather are performed by district, state or contract forces • Turnpike’s Heavy Equipment Section performs such work as major drainage maintenance and other activities requiring specialized equipment such as dozers and hydraulic excavators • Resources dedicated to “extraordinary” or major maintenance activities within the Turnpike’s maintenance budget are identified to arrive at a routine maintenance cost comparable to DOH Step #6: Based on the analysis in Steps #1 through #5, the lane mile cost for routine maintenance for both organizations is as follows: ROUTINE MAINTENANCE TURNPIKE: Lane Mile Cost $ 9,766 WVDOH: Lane Mile Cost $ 5,534 NOTE: This calculation was based on FYE June 30, 2005. The comparison criteria as of June 2012 is: Turnpike Lane Mile Cost - $12,060 and WVDOH Lane Mile Cost - $8,598. The Turnpike’s main areas of increased cost per lane mile for its routine maintenance are: Snow and Ice Control; Pavement Crack Sealing; Pavement Patching; and, Emergency Services. The Turnpike is still in the process of overlaying original concrete in order to achieve a mill and inlay program by 2019 like the WVDOH. Mill and inlay requires less asphalt and results in less cost. If the Turnpike tolls were terminated, DOH would immediately be faced with maintaining and fully funding one of the most heavily used (and most costly to maintain) sections of interstate in West Virginia without the ability, now provided by statute, to exercise discretion to keep from further depleting the State Road Fund by refusing 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 broken down into three major areas: Roadway/Facilities Maintenance (routine and non-routine); capital improvement; and, renewal and replacement. To broaden the scope and magnitude of the cost to maintain the Turnpike, the following more detailed 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; upkeep of the four 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. $17.1 million annually ($11.1 roadway/$6 facilities – this includes salaries for approximately 144 maintenance employees) Capital Improvement Pavement rehabilitation and preservation; bridge deck replacement; and, facilities rehabilitation. TOTAL ANNUAL COST: Approx. $22 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/under sealing of roadways; and, drainage pipe rehabilitation. TOTAL ANNUAL COST: Approx. $11 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 was 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 was in fair to poor condition (1/3 was 20 to 35 year old concrete); average bridge age was 29 years; the then current condition of deck spalls graded out at level of service “D”; many culverts were original 1950’s construction (35% substandard); and, 30% of the guardrail was defective. In addition to all of the above, the Authority continues to absorb the costs of a 31 member State Police detachment that provides patrols and protection on the Turnpike, including radio communications and two Public Service Commission officers, at a cost of $3.5 million annually. Therefore, if this bill became law, those costs also would have to be paid out of either the DOH Budget or 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, many full-time and part-time Parkways employees 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. It is important to note that in 2009, a new discount program for the less frequent Turnpike traveler was implemented. Customers who drive the Turnpike only 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 rate for a car is reduced from a $2.00 cash rate to an E-ZPass discount rate of $1.30 per plaza). 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. Also vital to the State of West Virginia’s transportation network, in April 2012, the Parkways Authority Board approved the final Incident Management Plan which includes provisions for various detours in the event the Turnpike needs to be closed for any reason. When a detour is put into place, motorists will be assisted onto the detour via the use of overhead and portable message signs, traffic control, flaggers, police officers, media reports and the toll plaza personnel. As they are traveling on the detour route to reach their destination, the permanent detour signs will assure them that they are traveling in the right direction. These detour routes have to be able to accommodate tractor trailers and have amenities, such as food, gas and lodging. Since the snowstorm of December 18, 2009, other provisions to handle emergencies have been put into place on the Turnpike, with the assistance of the WV Division of Highways (DOH) and the Federal Highway Administration, such as new radio towers, median wall gates, dynamic overhead message boards, cameras and the integration of the Turnpike and DOH’s Traffic Management Centers. Two meetings took place in 2012 with regard to the new Incident Management Plan: A meeting was held on October 16, 2012 with stakeholders of the Plan, such as county offices of emergency services, Parkways and DOH and State Police and a more in-depth meeting was held on October 23 and 24, 2012 with the actual on-scene respondents from the Parkways and State Police to review the protocol for setting up detours. An interagency meeting will be held in 2013 with other agencies and emergency services providers such as fire departments, wrecker services, DOH, city and county police, etc.

Person submitting Fiscal Note: Gregory C. Barr
Email Address: gbarr@wvturnpike.com