West Virginia needs higher tolls - report to Governor

Gov Joe Manchin Green bits show improvements torpedoed by toll rollback

West Virginia must make more use of tolls for financing its road needs, and the Parkways Authority which looks after the state Turnpike should concentrate on its core function and divest itself of arts, tourism and economic development functions. Also toll rates on the Turnpike need to be substantially increased. Those are the central themes of a major review of the West Virginia Parkways Economic Development and Tourism Authority (WVPEDTA) which derives its income almost solely from the West Virginia Turnpike, but has been drawn into myriad other activities.

The WV Turnpike has been the subject of enormous rancor in the past year over toll increases which were rolled back by a court, and aggressive legislators who stripped it of borrowing authority, threatened to abolish it, and subjected its manager Greg Barr to serial inquisitions.

The "Independent Review and Analysis of the West Virginia Parkways Economic Development and Tourism Authority" (PRAG report) was written by Public Resources Advisory Group (PRAG) financial consultants based in Philadelphia for the state governor Joe Manchin.

Manchin almost completely stood aside from the swirling controversies surrounding the Turnpike last year but has said the PRAG report makes sense to him and he sees the case for toll increases.

The report urges the Turnpike to adopt a more aggressive public hearing process for toll increases, using them to lay out the case in detail, and showing in detail the consequences of allowing toll rates to stagnate.

(In late 2005 weeks before the toll increases took effect the Turnpike had public hearings which minimally conformed with legislative requirements but this generated a backlash as i was charged they had been "sneaked through.")

PRAG's major findings:

- 64% of the Turnpike roadway is in poor or only fair condition versus a desirable 25%

- the value of Turnpike assets net of depreciation has declined 20% since 1990 due to inadequate maintenance and rebuild

- third laning of a 13km (7.8mi) section I-64 south to US19 as proposed by the Turnpike is critical to improving service and safety

- congestion mitigation measures are no substitute for the extra capacity of a third lane

- $203m needs to be spent on presently unfunded capital works in the next five years

- tolls of 4.3c/mile for cars and 14.5c for 5-axle tractor trailers are 36% and 40% below the US average of 5.8c and 20.3c/mile

- restrictions placed by the state legislature on the Authority's ability to sell bonds increase financing costs

Toll increase vital

The PRAG report says the Turnpike cannot be maintained at an acceptable level at present toll rates and an increase is urgent. The Turnpike increased toll rates at the beginning of 2006 only to have the courts and legislators force a rollback of tolls to levels which have not changed since 1989.

PRAG says toll revenues need be increased in the range 71% to 108% in FY2008. An alternative will be a two step increase in toll rates. It advocates a 40% toll rate increase in FY2008 and another 40% increase in FY2013.

PRAG finds the Turnpike has kept growth of operations and maintenance expenses low compared to comparable facilities, and a recently developed maintenance management system will allow improved efficiency of maintenance and rehab.

Get out of "economic development" and tourism

So-called economic development and tourism activities imposed by the legislature 18 years ago detract from the Authorities primary mission of operating a good tollroad, PRAG says. It says the Authority should be allowed to divest itself of non-Tamarack liabilities and work down Tamarack - a large arts and craft and conference center that bleeds many millions each year.

The report says legislative proposals for ending tolls are "not financially realistic." Ending tolls would require a 5.5c/gallon increase in fuel taxes to make up the shortfall. The state has $20b of unfunded highway capital projects.

State DOT projects should be toll financed

PRAG suggest that many major bridge and highway projects of the state department of highways could be toll financed. It notes that the fastest economic growth in the state has been of counties along the Turnpike, suggesting a substantial economic benefit from the accessibility it provides.

"Privatization should be studied in context of alternative options

"Privatization and sale of the right to operate the turnpike to a private party is a concept that should be analyzed thoroughly," says the report, qualifying that by saying it should be done "in the context of alternative public sector options to leverage the Turnpike asset for the benefit of the citizens."

Other state highways and bridges should be tolled

The report urges an end to the notion that the Turnpike will be de-tolled on the basis that there are no alternative funds available. It urges instead:

- "The state should consider the potential for future financing of currently unfunded... projects through the use of tolls rather than taxes."

- "The state should consider leveraging the turnpike asset to fiance other toll bridges and roads in order to reduce the cost of capital associated with start-up/stand-alone toll facilities."

- "The state may also want to consider converting existing bridge and limited access highways to toll facilities..." TOLLROADSnews 2007-02-13