Date Requested: January 21, 2015
Time Requested: 02:35 PM
Agency: Highways, Division of
CBD Number: Version: Bill Number: Resolution Number:
1655 Introduced HB2193
CBD Subject: Bonds


FUND(S):

Toll road revenues; bill does not define type of funds

Sources of Revenue:

Other Fund unknown revenue source

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


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


    Under existing statutory provisions (§17-16A-18(a), Cessation of Tolls), tolls on the WV Turnpike shall cease after the final pay-off of the bonds, currently scheduled for 2019, if the Turnpike is determined to be in “good condition and repair” to the satisfaction of the Commissioner of the State Division of Highways and transferred to the WV Department of Transportation, Division of Highways, and be maintained by the Division of Highways free of tolls.
    
    It is assumed from the language in this bill that revenues collected from tolls on the existing West Virginia Turnpike would not be pledged to support the new bond sale of $500 million to finance the construction of the King Coal Highway. Therefore, the only method that would allow the Parkways Authority to finance a bond sale would be to collect tolls on the King Coal Highway and pledge those toward the debt service on the bonds as well as maintenance and rehabilitation of this road. Based on a 30 year bond with 5% interest, the annual debt service would be approximately $33 million per year. Also, before any bonds could be sold, traffic and revenue studies would have to be done by professional engineers in order to certify to the bond market that sufficient pledged revenues would be available to pay the bonds off in a timely manner and cover maintenance and operation costs for the asset generating the revenues.
    
    With regard to the effect on state government (specifically the West Virginia Division of Highways), if the Turnpike tolls are eliminated after re-payment of the bonds in 2019, the State would lose in excess of $80 million annually in toll revenues (the net collected after all toll discount programs are applied) now used to operate and maintain the 426 lane miles of interstate highway, 116 bridges, three travel plazas and one welcome center (Princeton) on the West Virginia Turnpike. Most of the annual Turnpike toll revenues come from out-of-state passenger and all commercial vehicles (approximately 84% of all Turnpike toll revenue). Without the toll revenue, the cost of operating the West Virginia Turnpike would shift entirely to the taxpayers of West Virginia.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
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):


    See Fiscal Note Summary for information regarding the fiscal impact of this bill on the State of West Virginia.



Memorandum


    Parkways Authority Bond Counsel was consulted about the contents of House Bill 2193. They responded that without the identification of a specific revenue source and more specific revisions addressing the Parkways Authority’s bonding authority, there is no way of executing the intent of the legislation.
    
    On July 1, 2010, Senate Bill 427, renaming and reorganizing the WV Parkways Economic Development and Tourism Authority became effective. This bill restored the Parkways Authority’s ability to sell bonds for new road projects. The bill states that once a parkway project 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. Prior to final approval of a parkway project, the county commissions of the counties in which a parkway project is located shall by resolution approve the parkway project. This does not give local advisory committees or county commissions the power to approve toll rates, but only the concept of a toll project. It should be noted that the legislation stated that bonds sold for new toll road construction cannot be used for the West Virginia Turnpike pursuant to Section §17-16A-10(a) which states that “the Parkways Authority is authorized to provide by resolution for the issuance of parkway revenue bonds of the state for the purpose of paying all or any part of the cost of one or more parkway projects: Provided, That this section shall not be construed as authorizing the issuance of parkways revenue bonds for the purpose of paying the cost of the West Virginia Turnpike…”. The aggregate amount of the West Virginia Turnpike’s outstanding principal amount of bonds cannot exceed $200 million.
    



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