West Virginia Road Plan Includes Bonds, Gas Tax Hike

justice-jim-credit-wv-gov-office-357.jpg

DALLAS -- West Virginia will "go big" on highway projects if lawmakers and voters go along with new Gov. Jim Justice's plan to issue $1.4 billion to $2.8 billion of bonds for transportation needs.

Justice used his first state of the state speech last week to call on lawmakers to raise the state's gasoline tax, almost double the current vehicle registration fees, and add a $1 surcharge on the state's sole turnpike to support the new debt.

"If you'll do this, we can let every single road job that is on the books for one to three, and three to five years, tomorrow. We can let them all tomorrow. Think what this would do," Justice said.

"It will create 48,000 jobs in our state. It will complete the network that we have got to do. It will make tourism explode in this state," he said. "Honest to Pete. This is the 800-pound gorilla in the room. Not me."

Justice said he would insist that projects funded by his proposal be labor intensive.

"I want it to be our apprenticeship program," he said "I want it to be something that will absolutely put our displaced miners that find a job here, or our young people that learn how to do something here." Gov. Justice has clearly challenged us to go big. That's what we intend to do," state transportation secretary Tom Smith said on Monday. "We intend to push projects out in an accelerated fashion."

Justice's plan would raise the state's gasoline tax to 30.5 cents per gallon from the current 20.5 cents to raise $144 million per year of new revenues and boost the annual vehicle registration fee to $50 from the current $30 to bring in an additional $33 million per year.

The proposal would also extend tolls on the West Virginia Turnpike for an additional 20 years and raise the toll for passenger car to $3 from the current $2. However, state residents could drive for free on the turnpike by paying a fee of $8 per year.

The higher tolls would support up to $500 million of turnpike revenue bonds.

The governor's proposal would also raise the legislative cap on outstanding grant anticipation revenue vehicle (Garvee) bonds to $500 million from the current limit of $200 million. The bonds would be supported by a portion of West Virginia's annual federal highway funding.

The Legislature would have to raise the Garvee limit as well as approve the registration fee and fuel tax increases while voters would have the final say on $400 million of general obligation bonds that could be supported by the increased registration fees.

The financial plan is simple, Smith said.

"You find several what I call 'revenue buckets', you bond while rates are low and what you're doing is investing in infrastructure," Smith said. "You can pay now or you can pay more later, so this is an investment which has the added byproduct of producing immediate jobs."

The additional funding would allow completion of 16 highway projects and numerous bridge upgrades in the next three years at a cost of $1.4 billion, Smith said, with a second phase of projects totaling another $1.5 billion in the following two years.

West Virginia currently spends about $1.2 billion per year on transportation. A highway funding commission said last year that the state needs an additional $750 million per year to maintain its existing highway system and another $380 million per year for a network of new four-lane highways.

Justice said the bonds supported by the proposed new revenue would allow the state to complete road projects that have been on the books for years.

For reprint and licensing requests for this article, click here.
Infrastructure Transportation industry Washington West Virginia
MORE FROM BOND BUYER