Experts talk about ways to raise state highway money
CHARLESTON, W.Va. -- A panel charged with finding a way to come up with the $1.13 billion a year West Virginia needs to maintain and upgrade its 36,000-mile highway system heard a pair of highway finance experts outline a wide range of revenue-raising possibilities Thursday.
"Today, there's not a [state] department of transportation in the country that's adequately funded," said Pete Rahn, former transportation director for both Missouri and New Mexico and now national transportation practice leader for the engineering and architecture giant HNTB Corp.
Rahn was speaking to members of the Governor's Blue Ribbon Commission on Highways' revenue subcommittee, formed last year to come up with a plan to finance the gap between maintenance and construction needs and current levels of funding income.
State highway construction and maintenance costs, once covered in large part by funds raised through the 18.4-cent per gallon federal gas tax, have risen more than 30 percent during the past 20 years, while the tax rate has remained flat and gas consumption has recently begun to decrease.
"Most states now believe the federal highway program won't ever be what it has been. It won't be riding in on a white horse to provide funding," Rahn said. "Looking at the political environment, it's certainly questionable whether Congress will be willing to borrow billions more" to keep the federal Highway Trust Fund funded at or near current levels for years to come.
While all 50 states have fuel taxes of their own, Rahn said, some have begun indexing them to inflation, or making them a percentage of sale price. Pennsylvania and New York have also imposed franchise taxes on petroleum distributors, and nine states have added a sales tax on fuel.
Five other states now channel a portion of vehicle-safety inspection fees into their highway funds. Drivers' license and vehicle registration fees are also possible targets for diversion into highway programs, according to Rahn.
New funding initiatives taken by other states include channeling lottery and personal property tax income to highway construction, and selling the naming rights to roads and bridges.
Among potential funding sources yet to be implemented, Rahn cited service fees that could be charged to patrons of drive-through businesses, state taxes on tires, payroll taxes for regional highway projects, and a tax on vehicle miles traveled, based on odometer readings taken during annual safety inspections.
Rahn said states that have allowed tolls to expire after construction bonds have been paid off have regretted the move, because it removes a stream of revenue that could be used to maintain the former toll road, or to pay off construction bonds on other projects.
"A renaissance is happening in tolling," said Jim Ely, the former director of Florida's turnpike system and now HNTB's vice president of toll services. "One third of all new limited access highways are paid for with tolls. <t40>...<t$> In some states, it's the toll road or no road."
On the other hand, imposing a toll on a freeway segment that had previously not been tolled "is one of the most challenging things you can do," Ely said.
While the national average cost per mile for vehicles traveling on toll roads is 8.3 cents per mile, Ely said, the cost of traveling the West Virginia Turnpike averages 6.8 cents per mile.
Whatever new funding sources the subcommittee comes up with, the need for new taxes or fees, and the rationale used to recommend them, must be thoroughly explained to the public, said Rahn and Ely.
"People don't want new taxes or tolls," Rahn said, "until their roads and bridges start to crumble."
Subcommittee member Fred Burns, owner of a Marlinton-based trucking company, said those in his industry would prefer a fuel tax increase to fees based on load weight and miles traveled, or increases in Turnpike tolls. Burns said his company annually pays the equivalent of about 17 percent of its gross revenue in fuel and road use taxes, tolls, excise taxes on tires and other fees, or about $22,000 per truck.
Burns also suggested conducting an efficiency audit on the state Department of Highways to help assure the public that any new taxes and fees are being prudently spent.
With Gov. Tomblin now entering lame duck status and legislators not immediately facing re-election, "this is the year to make proposals and get something done," said subcommittee member and Delegate Margaret Anne Staggers, D-Fayette.
Brenda Nichols Harper of the West Virginia Chamber of Commerce wondered whether she and other subcommittee members should focus on finding ways to pay for the maintenance of existing roads and bridges, and defer action on building new ones.
"I'm concerned that we may have been tasked with coming up with a funding goal that's impossible to meet," she said. "We're talking about squeezing out the equivalent of 25 percent of the general revenue budget on an annualized basis."
"Whatever tax or fee increases we come up with to produce what we need should be realistic," Burns said, "but we need to take care of our infrastructure." Putting off needed repairs and improvements would end up being much more costly in the long run, he said.
"Finding a solution is going to be a process," said Delegate Ron Walters, R-Kanawha, and a member of the subcommittee. "I think it will end up being a series of things, done incrementally, and not just one approach. But I think it will happen."
Chairman Bob Orders, CEO of Orders Construction Co., asked subcommittee members to present what they consider the best funding approaches during a Feb. 28 meeting.Reach Rick Steelhammer at email@example.com or 304-348-5169.