FISCAL NOTE

Date Requested: February 21, 2017
Time Requested: 01:08 PM
Agency: Parkways Authority, WV
CBD Number: Version: Bill Number: Resolution Number:
1544 Introduced HB2606
CBD Subject:


FUND(S):

Toll Road Revenues; WVDOH

Sources of Revenue:

Other Fund Toll Road Revenues;WVDOH

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 West Virginia 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.
    The passage of this bill would eliminate this language in the current statute and the Parkways Authority would maintain the “status quo” of collecting tolls on the Turnpike once the bonds are paid in full in May 2019. If approximately $90 million per year in tolls are eliminated, this would reduce future revenues from tolls over the next 30 years by over $2.7 billion, of which over $2 billion comes from out-of-state users of the Turnpike.
    Currently, the Parkways Authority has a Tri-Partite Agreement with the Federal Highway Administration and the WV Division of Highways with regard to the operation and maintenance of the West Virginia Turnpike. This Agreement would need to be modified in order to provide maintenance and upkeep of the Turnpike and place excess revenues in a special revenue account for counties where the West Virginia Turnpike is located (Kanawha, Fayette, Raleigh and Mercer). This fund could only be used for Title 23 projects.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
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 Memorandum below for information regarding the fiscal impact of this bill on the State of West Virginia.



Memorandum


    The passage of this bill would eliminate the cessation of tolls language in the current statute and the Parkways Authority would maintain the “status quo” of collecting tolls on the Turnpike once the bonds are paid in full in May 2019. The Parkways Authority receives no funding from the State or the Federal government for maintenance, operation or capital repairs. Tolls (“user fees”) provide the funds for maintenance, operations and capital repairs of the West Virginia Turnpike and free up tax dollars to be used by the WV Division of Highways for all of the other highways and bridges in West Virginia. If the Parkways Authority is restricted to the use of only $55 million of the revenue that it collects it will have no way to finance maintenance of its day to day operations or its own capital needs. Replacement of bridge decks, painting the large bridges, for example, would overwhelm any amount of revenue available. The Parkways Authority likely could not issue bonds to finance its needs since it would not have the revenue to cover its debt service and the reserves required for bonds. The fact that the Legislature controls the amount of funds that can be available to pay bonds would likely render any bonds with a very poor rating by the rating agencies. This could also reflect poorly on the rating of bonds issued by the State of West Virginia. See below for further explanation.
    
    The cost to the WV Division of Highways after 2019, if tolls are eliminated, is estimated to be as follows:
    
    Annual Expenditures (in millions)
    
    • Pavement – Mill & inlay program - $14
    • Bridges – Average age of 40 years: Deck replacements - 80% replaced over 30 years - $22; Painting - excludes $50M for Truss Painting - $2; Bridge deck overlays/sealing & retrofit - $3
    • Routine maintenance (snow removal and ice control, mowing, patching & litter) - $5
    • Non-routine maintenance - $7
    • Equipment replacement - $2
    • Culverts/drainage - $2
    • Pavement striping/guardrail/signage - $3
    
    ANNUAL AMOUNT NEEDED FOR
    PRESERVATION OF THE TURNPIKE: $60
    
    Additional impacts to state revenues with the removal of tolls are as follows:
    
    • Extensive painting of Yeager & Bluestone Bridges ($53 million)
    • Dismantle and remove toll plazas ($23 million)
    • Tamarack operations funding
    • State Police (4.1 million) & Tourist Information $1.2 million) funding
    • Widening project – Beckley from I-64 to North Beckley (Rt. 19) ($60 million)
    • Unemployment – Approx. 374 employees – Civil Service vs. At Will
    • Over 30 years, tolls generate $2.7 billion in revenue for WV and $2.0 billion comes from out-of-state users
    • Loss of independent bonding authority
    • Without tolls, fuel taxes may have to increase by 5 cents per gallon just to maintain the WV Turnpike
    • Travel Plaza operations
    • Current unfunded pension obligation ($4.444 million) and Other Post-Employment (health care) Benefits (OPEB) ($10.923 million)- Future obligations unknown
    
    In Fiscal Year 2016/2017, the budget for toll and other revenues is $89 million. These funds are used for capital improvements on the Turnpike such as highway, bridge and facilities repairs and annual operational and renewal and replacement expenses.
    
    In 2009, the Parkways voted to approve the first across-the-board toll increase on the West Virginia Turnpike in 28 years. Toll revenues had decreased over the years and, coupled with an increase in the costs to repair, rehabilitate and reconstruct the Turnpike’s aging bridges, roadways and facilities, this resulted in a significant backlog of essential deferred maintenance and capital needs which are the repairs necessary to operate and maintain the Turnpike in good repair, working order and condition in future years. With these additional funds, the Authority pledged to spend $335 million for essential deferred maintenance and capital costs, including $242 million for paving needs. As of 2016, this pavement program has been successful and is on target. Currently, 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 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. If this bill were to pass with the provision to spend only $55 million per year on the West Virginia Turnpike, placing the rest of the toll revenue proceeds in a special revenue account, there would not be adequate funds to maintain current operations on the Turnpike and or perform capital repairs on its road, bridges and facilities.
    
    Based upon the Parkways Comprehensive Annual Financial Report for the Fiscal Year ended June 30, 2016, approximately 76% of toll revenues come from out-of-state passenger and commercial vehicles ($71.1 million). Commercial traffic accounts for 46% of toll revenues ($42.2 million). In Fiscal Year 2016, there were 37.0 million toll transactions with patrons on the Turnpike. The average daily transactions are approximately 101,000 per day (78% are privately owned vehicles and 22% are commercial vehicles). Approximately 16% of toll revenues come from West Virginia passenger cars ($15.0 million) and 8% from West Virginia commercial vehicles ($7.5 million).
    
    



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