FISCAL NOTE
Date Requested: January 27, 2023
Time Requested: 01:29 PM |
| Agency: |
Parkways Authority, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2159 |
Introduced |
HB3071 |
|
|---|
| CBD Subject: |
Roads and Transportation |
|---|
|
FUND(S):
Toll Road Revenues
Sources of Revenue:
Other Fund
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, but the removal of the tolls would (i) eliminate substantial toll revenues realized by the West Virginia Parkways Authority, 76% of which are derived from out-of-state travelers and commercial vehicles, that are currently used to pay the operation and maintenance, renewal and replacement, and capital improvement expenses of the West Virginia Turnpike, (ii) shift the burden of such expenses to the State of West Virginia and its taxpayers and (iii) result in the layoff of a significant portion of Authority’s 429 employees. By way of example, for Fiscal Year 2023, the West Virginia Turnpike’s operation and maintenance expenses will be approximately $52,952,000, renewal and replacement expenses will be approximately $22,615,000 and capital improvement expenses will be $67,970,000, not including the toll and travel plaza expenses. Further, the Authority previously received a $750,000,000 estimate for the cost of removing the toll plaza’s and reconfiguring the existing roadways to conform to interstate standards without the toll plazas. All the expenses provided above would be expected to significantly increase due to inflation between now and the maturity of the outstanding bonds in 2051 and, because of the elimination of toll revenues, all such expenses would presumably be borne by the State and its taxpayers.
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 |
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 final Series 2018 Bonds will mature and be no longer outstanding on June 1, 2048, and the final Series 2021 will mature and be no longer outstanding on June 1, 2051, subject to redemption as set forth in the bond documents.
• House Bill 3071 proposes an amendment to subsection (m) of Section §17-16A-10 of Chapter 17, Article 16A of the WV Code, which amendment provides, in part, that “[e]ffective on the passage of the amendment to this section, no additional bonds may be issued under the provisions of this article without the approval of the Legislature and the Governor. Six months following the payment of all outstanding bond indebtedness or encumbrances, the tolls shall be removed.”
• As proposed in House Bill 3071, the blanket prohibition against issuing further bonds unless approved by both the Governor and the Legislature appears to prohibit refunding bonds in the event that the interest rates drop. The Authority conceivably would not be able to take full advantage of that change in interest rates by refunding the current bonds without increasing the principal amount owed, especially if the Legislature was out of session at the time.
• As proposed in House Bill 3071, the cessation of tolls and prohibition of future bonds without approval of the Legislature calls into question who or what will pay the cost of operations and maintenance and capital expenditures for an indefinite period beyond the removal of the tolls.
• For Fiscal Year 2023, the West Virginia Turnpike’s operation and maintenance expenses will be approximately $52,952,000, renewal and replacement expenses will be approximately $22,615,000 and capital improvement expenses (less toll and travel plaza expenses) will be approximately $67,970,000. The Authority’s five (5) year program recommendations for such expenses provided by its consulting engineers are set forth in the chart below:
WEST VIRGINIA PARKWAYS AUTHORITY 5 YEAR PROGRAM RECOMMENDATIONS
(in Thousands)
2023 2024 2025 2006 2007
Operation & Maintenance $ 52,952 $ 53,984 $ 55,150 $ 56,061 $ 57,228
Renewal & Replacement $ 22,615 $ 24,092 $ 26,783 $ 27,004 $ 28,413
Capital Replacements & Improvements $ 67,970 $ 39,310 $ 36,320 $ 48,410 $ 38,520
(less Toll System Upgrade & Travel Plazas redevelopment)
• The Authority’s consulting engineers projected that for Fiscal Year 2052 (when the Series 2021 Bonds would mature and be no longer outstanding), West Virginia Turnpike’s operation and maintenance expenses will be approximately $92,000,000, renewal and replacement expenses will be approximately $58,900,000 and capital improvement expenses will be approximately $82,100,000, adjusting for inflation. If tolls are not being collected at this time, presumably the State and its taxpayers would bear the burden of such costs.
• The Authority has received relatively recent estimates for the cost of removing the toll plaza’s and reconfiguring the roadways to conform to interstate standards without the toll plazas and that figure is $750,000,000.00. The work involved includes not only removing the visible structures but filling in the tunnels underneath that emanate from each Plaza Administration Building and go out to the far toll booths. If tolls are not being collected at this time, presumably the State and its taxpayers would bear the burden of such costs.
• At Barrier C, without the Toll Barrier, that curve will not meet the requirements and specifications of the National Interstate’s Highway System, it will have to be reconfigured which, because of the narrow passage of the roadway, will obviously require additional right of way be acquired by purchase or by condemnation. The toll barriers at Barrier B and Barrier A and North Beckley are elevated for drainage purposes so that water does not pool where the vehicles stop to pay tolls. As a result, those will have to be removed completely and the underlying right of way brought back down to roadway level. The widened areas where the toll barriers are currently located will have to be reconfigured to eliminate the extra lanes that now exist.
• There are at presently 429 employees of the Authority, most of whom live in the counties served by the West Virginia Turnpike, such as Kanawha, Fayette, Raleigh and Mercer County. The layoff of a significant portion of those employees will be necessary upon the elimination of the toll revenues.
• Eliminating tolls and then attempting to reinstate them is a complicated and costly undertaking, as evidenced by attempts made in other jurisdictions. Allowing the Authority to participate in the Roads to Prosperity Program for the 10 surrounding Counties required an amendment by Congress to amend Section 1012(e) of Public Law 102-240 by adding subsection (2), which allowed the Administrator of FHWA to modify the Original Tri-Partite Agreement that allowed tolls on the West Virginia Turnpike.
• The Authority maintains more than 100 bridges on the West Virginia Turnpike, a number of which have been replaced, but many of which predate the interstate upgrades that took place in the 1970s and 1980s. Many of these bridges are still viable because of the robust bridge maintenance program operated by the Authority. If the West Virginia Turnpike is turned over to the State Department of Transportation, Division of Highways (“DOH”), the DOH’s bridge replacement and maintenance program is not as intense as the Authority because it already has responsibility for many additional bridges statewide and has different budgetary constraints. As a result, many of the bridges which now are maintained will have to be replaced sooner than they would be if the Authority was operating the Turnpike. There are two original bridges remaining on the Turnpike, Bluestone Southbound (1952) with a total replacement cost of approximately $45,000,000 and Yeager Southbound (1952) with a total replacement cost of approximately $60,000,0000, without adjustments for inflation. The average bridge, depending on length, costs from $2,400,0000 to $13,200,000 to replace. These are just some of the significant extra costs that would be incurred by the DOH and eventually passed on to the taxpayers of West Virginia.
• Currently, 76% of toll revenues come from out-of-state and commercial vehicles. Individuals and commercial passengers who have accounts with the customer service center operated by the Authority currently enjoy a series of significant toll discounts available only to those account holders, including the Single Fee Discount Program that allows unlimited travel for Class I vehicles on the West Virginia Turnpike for a single annual fee that is currently $26.25. Ultimately, the West Virginia taxpayers will absorb the cost of removing the tolls from the West Virginia Turnpike.
Person submitting Fiscal Note: Robin Shamblin
Email Address: rshamblin@wvturnpike.com