FISCAL NOTE
Date Requested: January 10, 2024
Time Requested: 09:48 PM |
| Agency: |
Parkways Authority, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1355 |
Introduced |
HB4493 |
|
|---|
| CBD Subject: |
|
|---|
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FUND(S):
Toll Road Revenues
Sources of Revenue:
Other Fund Toll Road Revenues
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
This bill does not affect the general revenue of the State of West Virginia. The West Virginia Turnpike is operated and maintained by the West Virginia 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.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
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):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
See Fiscal Note Summary above for information regarding the fiscal impact of this bill on the State of West Virginia.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The following contains the Authority’s concerns with the amendment contained within this Bill.
• On August 14, 2018, the West Virginia Parkways Authority (the “Authority”) issued its $166,370,000.00 Senior Lien Turnpike Toll Revenue Bonds, Series 2018 (the “Series 2018 Bonds”) in connection with the Roads to Prosperity highway program.
• On June 23, 2021, the Authority issued its $333,630,000.00 Senior Lien Turnpike Toll Revenue Bonds, Series 2021 (the “Series 2021 Bonds”, and together with the Series 2018 Bonds, (the “Bonds”) in connection with the Roads to Prosperity highway program.
• Collectively, the issuance of the Bonds resulted in deposits of over $594 Million to the State Road Construction Account that financed the construction, maintenance, improvement and repair of certain parkway projects in southern West Virginia as part of Governor Justice’s Roads to Prosperity program.
• The Bonds are secured by and payable solely from net Turnpike toll revenues, which accordingly are very important to the holders of the Bonds. Net Turnpike toll revenues are thus pledged to secure the Bonds.
• Specifically, in connection with the issuance of the Bonds, the Authority and United Bank, as Trustee, entered into a Master Trust Indenture dated August 1, 2018 (the “Master Trust Indenture”), under which the Series 2018 Bonds and Series 2021 Bonds are issued, containing a number of contractual obligations for the benefit and protection of the holders of the Bonds.
• Importantly, and understandably, some of these contractual obligations are specifically for the protection of net Turnpike toll revenues.
• Other related contractual obligations specifically require the Authority to operate the Turnpike at all times in an efficient manner and to keep it in good repair and working order at all times.
• These contractual obligations of the Authority for the benefit and protection of the holders of the Bonds are also very important to the rating agencies that rated the Bonds.
• Thus, any violation, erosion or impairment of any of these contractual obligations and protections may be viewed negatively by the rating agencies. Any negative rating action, in turn, would likely have a material impact on existing holders of the Bonds and could negatively impact the Authority’s future borrowing costs and reduce its future bonding capacity, potentially by millions of dollars.
• The Bonds were approved and issued under existing West Virginia law, which vests sole legal authority to set tolls, rents, fees and other charges in the Authority, and the resulting independence of the Authority on such matters affecting new Turnpike toll revenues and safe operation of the Turnpike is an issue of significant importance to rating agencies and holders of the Bonds. This issue likewise is the focus of some of the contractual obligations for the benefit and protection of the holders of the Bonds.
• House Bill 4493 proposes an amendment by amending and reenacting §17-16A-6 of the Code of West Virginia, 1931, as amended, relating to exempting school buses with students on board from paying West Virginia Turnpike tolls.
• House Bill 4493 expands free passage beyond the express text and intent of the restrictive covenants set forth in the Master Trust Indenture and would violate and likely materially impair a number of the Authority’s contractual obligations for the benefit and protection of the holders of the Bonds. Specifically, Section 511(a) of the Master Trust Indenture states that “[t]he Authority covenants that it will not allow or permit any free use of the toll facilities of the Turnpike except to officials or employees of the Authority and/or WVDOH engaged in official business of the Authority and/or WVDOH, or law enforcement officers or emergency vehicles while in the discharge of their official duties, or in the event of an emergency which is temporary, free passage is required in order to assure the health, safety, and security of customers on the Turnpike.”
• In effect, passage and enactment of House Bill 4493 would put the Authority in the untenable position of having to choose between (i) violating State law or (ii) violating its contractual obligations to the holders of the Bonds.
• Passage of House Bill 4493 would violate the (i) United States Constitution, Article I, Section 10 prohibiting the impairment of contracts, stating in relevant part that “[n]o State shall . . .pass any Bill of attainder, ex post facto Law, or Law impairing the Obligation of Contracts . . .” and (ii) West Virginia Constitution, Article III, Section 4 prohibiting laws that would impair existing contracts, stating in relevant part that “[n]o bill of attainder, ex post facto law, or law impairing the obligation of a contract, shall be passed.”
While we can appreciate the well-intentioned purpose of House Bill 4493, we are legally compelled under the circumstances to oppose its passage for the foregoing reasons.
Person submitting Fiscal Note: Robin Shamblin
Email Address: rshamblin@wvturnpike.com