FISCAL NOTE
Date Requested: January 28, 2016
Time Requested: 10:30 AM |
| Agency: |
WV PARKWAYS AUTHORITY |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1953 |
Introduced |
SB397 |
|
|---|
| CBD Subject: |
Roads and Transportation |
|---|
|
FUND(S):
Toll Road Revenues
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.
If West Virginia State Code, Article 16A, §17-16A-18, Cessation of Tolls, language is removed, tolls will remain on the West Virginia Turnpike and the West Virginia Parkways Authority will be allowed to continue collecting tolls after the bonds are paid in full on May 15, 2019. Tolls will remain as a vital transportation funding source providing in excess of $85 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). Most of the annual Turnpike toll revenues come 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 entirely to funding sources supported by the taxpayers of West Virginia. See Memorandum below for additional impacts to state government.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2016
Increase/Decrease
(use"-") |
2017
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 |
85,000,000 |
85,000,000 |
85,000,000 |
Explanation of above estimates (including long-range effect):
With approximately $85 million per year collected in tolls, during a 30 year period over $2.5 billion in toll revenues will be collected, of which over $2 billion comes from out-of-state users of the Turnpike.
Memorandum
Passage of this bill would relieve the State of the burden of operating the 88-mile West Virginia without the toll revenue. If not, the cost of operating the West Virginia Turnpike would shift entirely to the State Road Fund and other tax revenues.
As it is currently configured, the West Virginia Turnpike represents a $1 billion asset owned by the West Virginia Parkways Authority. That asset consists of 88 miles of the West Virginia Turnpike representing 426 lane miles of roadway, 116 bridges, 18 interchanges, 4 toll plazas, 3 travel plazas, 1 welcome center, 2 rest areas, 300,000 square feet of facilities, 6,248 culverts, 4,070 signs, 900 roadway lights and 595 acres of area mowed within the right-of-way. Of the operating revenues collected (Fiscal Year 2016 Budgeted Highway Operations) in the amount of $84.8 million, $30.7 million will go to operating expenses that include maintenance, toll collection and customer service; $3.8 million will repay the State Police for the operation of Troop 7 and its radio operation center on the West Virginia Turnpike ($4.3 million with vehicles and equipment); $5.3 million will go toward administration, tourist information center operations, insurance, professional engineering and other non-specific departmental expenses; $10.8 million will pay debt service on the bonds; and $34.2 million will be allocated to capital expenditures for roadway, bridges and facilities. Following the first toll increase in 28 years in 2009, a ten year paving program began to address essential deferred maintenance and capital improvements. This program included $242 million for paving needs.
In 2013, the West Virginia Legislative Auditor’s Performance Evaluation and Research Division (PERD) provided a performance review report to the Parkways Authority. In that report there were findings that concluded with the loss of tolls an estimated $9 million of local economic impact would be felt associated with the loss of up to 231 Parkways jobs, the impact of the loss of funding for State Police Troop 7, an estimated $23 million for the cost of dismantling the Toll Plazas and its attendant highway reconstruction, lack of funding for courtesy patrols and loss of funding for Tamarack. The estimates included in the report (2013) and the Parkways Authority’s response set out a detailed estimate of maintenance and costs that range between $30 million and $59 million per year. PERD used a methodology not based on how much will be needed as determined by the Parkways Authority, but rather on a cost derived from what the WVDOH has indicated its current costs are for the interstates it currently maintains. At the time of the report, the Authority concluded that it will cost $59 million per year based upon engineering analysis which reflects proactive and needs-based maintenance in order to maximize full life-cycle benefits of the highway and bridge assets. This proactive approach obviously saves money in the long term due to extending the life of the bridges and road surfaces rather than having to replace them before the end of their life-cycle. The $30 million cost identified by PERD and the WVDOH is based more on a “funds available” criteria. Based on the current report and the woefully underfunded State Road Fund, WVDOH would only have available to it approximately one-half (½) of what is currently being spent on maintenance of the Turnpike in the event tolls are removed and the Parkways Authority is abolished.
The Parkways Authority receives no funding whatsoever from the State of West Virginia or from the Federal Government for any maintenance, operation or capital repairs needed by the West Virginia Turnpike. Tolls (“User Fees”) provide all the funds for the maintenance, operations and capital repairs needed and performed on the West Virginia Turnpike. This permits the use of other revenue and state tax dollars by the WVDOH for all the other highways and bridges in West Virginia. Each year, the West Virginia Department of Transportation (“WVDOT”) applies for and receives funds for the maintenance and upkeep of its interstate highway system, as do all other states that have interstate highways serving their taxpayers. The WVDOT is allowed to count the 426 lane miles maintained by the West Virginia Parkways Authority within its application to the Federal Highway Administration (“FHWA”) for yearly maintenance and repair funds, although none of those funds received by WVDOT are allocated to the maintenance of the West Virginia Turnpike. This formula allows WVDOT to maximize the use of such funding on the portions of the interstate system in West Virginia that are not subject to user fees. Removing tolls from the West Virginia Turnpike will not serve to increase the amount of the funds received by WVDOT from FHWA.
The West Virginia Blue Ribbon Commission on Highways in its May 2015 report concluded that West Virginia needs an additional $750 million a year simply to preserve and improve its other roads and bridges. Another $380 million a year is needed to provide for needed expansion of the existing system. It appears from the report that the annual shortfall with which the WVDOH is currently contending exceeds $1.13 billion.
Of the 116 bridges on the West Virginia Turnpike, it is estimated that 80% of its bridge decks will need to be replaced over the next 30 years with the first bridge deck replacement taking place in the spring of 2016. By 2020, the average bridge deck age will be 38 years, 23% of the bridges will exceed their expected deck life of 40 years and 94% of the bridges will be over 35 years old. At the end of the 30 year planning period, if no further bridge decks are replaced, 81% of the Turnpike bridge decks will be over 60 years old. That tremendous cost adds significantly to the current deferred maintenance amount facing the West Virginia Division of Highways.
If tolls are removed from the Turnpike, in addition to losing the $85 million in annual toll revenue, there would be an immediate loss of over 160 jobs related to tolling and uncertainty for the remaining 200 maintenance and other jobs, all of this coming at a time of rising job losses associated with the reduction of coal related jobs in West Virginia. Due to the uncertainty of the future of the WV Turnpike, morale and retention of its employees have become a pressing issue within this agency. There are approximately 360 full and part-time Parkways Authority employees who receive state benefits and a living wage from their employment. Of those employees, 160 represent employees of the Toll Division of the Parkways Authority (132 full time; 28 part-time). None of these employees are currently in the classified service of West Virginia, all of them being “at will” employees. There are 145 employees in the Maintenance Department and with salaries and benefits this would be an additional cost to state taxpayers in excess of $10 million. It should be noted that with 76% of all toll revenues coming from out-of-state traffic, the out-of-state users are paying for 3 out of 4 (110) of these jobs. The PERD report states that 231 people could be laid off from the Parkways Authority resulting in a direct loss of income to the local economy of over $9 million.
By preventing the Parkways Authority from being abolished and removing tolls from the West Virginia Turnpike, the State of West Virginia will keep an important independent bonding authority that can issue bonds for various authorized purposes that do not represent obligations of the State of West Virginia (and do not require balloting for approval). It should be noted that the existing Turnpike bonds are the direct and general obligations only of the West Virginia Parkways Authority and payable solely from toll revenues; none of the bond debt is the debt of the State of West Virginia.
In summary, tolls represent a vital funding source for transportation in West Virginia. The removal of tolls from the existing toll facilities is the exception rather than the rule on a national basis. Tolls continue to help fund transportation needs across the country. In 2012, Ohio renamed its turnpike the Ohio Turnpike and Infrastructure Commission and issued $1.0 billion in bonds backed by future tolls (specifying that 90% would be spent on projects north of U.S. Route 30) which provide the state with up to $3 billion for new projects by taking advantage of additional bonding and federal and local matching funds. Connecticut removed tolls from its Turnpike in 1985 and is currently discussing how to reinstate them. The FHWA may require the State of Connecticut to repay $2.6 billion in federal highway funds that Connecticut received for its Turnpike construction projects following the abolition of tolls in order for the reinstatement of tolls to be considered.
Person submitting Fiscal Note: Gregory C. Barr, General Manager
Email Address: gbarr@wvturnpike.com