FISCAL NOTE
Date Requested: February 15, 2023
Time Requested: 02:42 PM |
| Agency: |
Highways, Division of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3613 |
Introduced |
SB640 |
|
|---|
| CBD Subject: |
|
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FUND(S):
State Road Fund
Sources of Revenue:
Special Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense, Increases Existing Expenses
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.
Proposed Senate Bill 640 would require the West Virginia Division of Highways (DOH) to create a formula for to distribute all State Road Funds to districts and counties. This would severely limit the Division’s ability to procure, utilize available Federal Funds. State Road Funds are usually needed to provide a match up to twenty (20)% for the use of Federal Funds. Federal Highway Administration (FHWA) requires Department of Transportation's (DOT) to have a Transportation Asset Management Plan (TAMP) which utilizes a Pavement Management System (PMS) and Bridge Management System (BMS) to identify potential projects through analysis the assets' condition to make the best cost to benefit treatment recommendation. This process goes against a formula as described in this bill and could jeopardize our ability to meet requirements in order to keep our federal funding level. Furthermore, a large part of the federal funding available from the IIJA bill is through grants. This bill would make it tough to be
able to move money around the state in order for us to apply for and match those specific grants. Going through the process of setting a new formula including the interaction through public comment that is described in this bill would create some added expenses to the Division. The DOH has a funding formula to distribute the spending authority of the Maintenance Line Budget (237). This bill would increase the cost of doing that budget process due to the inclusion of all State Road Funds.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
1,000,000 |
500,000 |
500,000 |
| 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 |
-800,000,000 |
-800,000,000 |
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.
In FY23, the additional expenses would be the start up cost of labor costs of the DOH employees tasked with development of a new formula plus the costs associated with soliciting public comments. DOH estimates this to be $1M. The ongoing costs would be to utilize the formula each year to distribute to the Districts and then for the District to distribute to the counties. It would be the labor costs associated with that process which could be very complicated depending on what the final formula is. The estimated cost for DOH could be $500,000 a year.
The loss in revenue is the assumption that the new formula which would require public comment would cause us to not be compliant with FHWA requirements and thus we lose federal funding. DOH believes with the IIJA bill that is approximately $800M. How this new funding formula will work for federal funding is hard to predict, therefore, DOH must look at the worse case scenario.
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.
Proposed SB640 states that the DOH does not currently have a funding formula which is false and we disputed the finding of the audit report mentioned in the bill. For DOH's Maintenance Line (237) of the Budget and specifically the Annual Plan portion, we have had a funding formula since 1998. In 2020, we took steps to further institutionalize allocation of spending authority in the entire Maintenance Line by documenting the process further beyond the Annual Plan formula and then this year making that process an Administrative Operating Procedure. DOH has provided this process to the Legislators multiple times at their request. This bill would require DOH to allocate all state road funds to the Districts and then to the counties. DOH has a number of Division employees who are not directly associated with a District or county and provide support and at times charge to an overhead authorization in a number of ways including but not limited to engineering, technical, financial, legal, program management, programming, and procurement support. Keeping our ability to provide these services under a potential new funding formula as described in this bill could prove to be difficult and complicated especially at our Central Office level. DOH has already discussed with legislature issues caused by the current budget structure that includes
multiple lines that we cannot move the spending authority from one to another without Legislative approval. This bill would intensify those issue immensely. This bill doesn’t allocate any additional funds, but would redistribute the funds we already have. That just means some counties get more funds and others get less in a system that we do not have enough funds for any counties to provide for all their needs. Being locked in to using funds by formula would make it impossible for DOH to react appropriately to floods and other natural disaster like we saw back in 2016 where
entire roads and bridges were destroyed. Big expansion projects would be hard to do because they might not fit into a certain county’s formula budget. As the DOH and other DOT’s move toward better and more asset management principles and software, they require us to evaluate and make decisions on the whole network to ensure we are getting the best cost to benefit decisions. This type of management is not possible when you are trying to spend a certain amount in each county each year. Thus, you end up making bad decisions in order to stay with in your yearly budget amounts at a county level.
Person submitting Fiscal Note: Lorrie Hodges
Email Address: lorrie.a.hodges@wv.gov