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Tom Miller: Higher fees, new fees commission's solutions to state road fund issue

Sep. 08, 2013 @ 03:56 PM

It sounds a lot like "smoke and mirrors," but members of the Governor's Blue Ribbon Commission on Highways indicated to reporters last week that they have come up with a way to generate $1.1 billion to fund state road improvements and maintenance without raising taxes.

Actually, commission members are recommending the state increase tolls on the 88-mile West Virginia Turnpike, increase fees at the Division of Motor Vehicles by $77.4 million and create a new $200 annual registration fee for alternative fuel vehicles.

"The recommendations we made don't raise taxes at all," commission chairman Jason Pizatella told a newspaper reporter -- presumably with a straight face.

The commission's recommendations include (1) a gradual toll increase on the West Virginia Turnpike although it's still not clear just how much of an increase is contemplated; (2) an increase in various fees at the Division of Motor Vehicles that would generate about $77.4 million a year; (3) moving state sales tax revenue from vehicle repairs, automobile parts and similar purchases from the state's general revenue fund -- some $25 million a year -- to the State Road Fund.

The plan also calls for a new $200 annual registration fee for vehicles not powered by gasoline or natural gas and a $100 annual registration fee for "hybrid" vehicles powered by a combination of petroleum-based fuel and electricity.

Altogether these recommendations are expected to generate about $100 million a year -- far less than the $1.3 billion needed by the state to maintain its current roads while also expanding its infrastructure, according to a recent engineering study.

However, members of the commission believe they will be able to come up with another $1 billion by issuing road bonds. The state could then pay off that debt by keeping tolls on the West Virginia Turnpike which are currently scheduled to end in 2019.

The rationale for extending tolls on the Turnpike -- presumably indefinitely -- is considered an "attractive option" because 75 percent of the tolls are paid by out-of-state drivers. And West Virginia motorists using the Turnpike who use an EZ Pass will enjoy a five-year freeze on their current toll charges.

Current plans call for an end to tolls on the Turnpike in 2019 but the new proposal would extend those tolls for another 30 years, providing a substantial amount of additional funding for road building in the state.

Commission members plan to finalize their recommendations at the next meeting on Sept. 19 and present its entire report to the governor by the end of September. The governor, who had originally expected it by July 1, is now expected to make use of the recommendations in preparing his proposals to the 2014 West Virginia Legislature when it convenes in January.

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Taxes collected in West Virginia for the first two months of the current state fiscal year that began July 1, 2013 were only $226.8 million -- nearly $35 million less than the $260 million that was expected, according to estimates from the state Department of Revenue.

A major problem is the tax break for alternative fuel vehicles, originally intended to provide tax credits to individuals and businesses who purchased natural gas or propane-powered vehicles. The Legislature expanded the tax break at the 2011 legislative session to open it up for owners of any alternative fuel vehicles.

Legislators repealed that tax credit during this year's regular legislative session but many West Virginia residents had already taken advantage of the tax break. Deputy Revenue Secretary Mark Muchow had previously predicted the tax credit could cost the state as much as $100 million.

Probably the most positive number is the 23 percent increase in severance tax collections. Even though August collections were $2.8 million less than budget estimates, the amount received for the first two months of the current fiscal year was $57 million -- a healthy 23 percent increase over the same two months in 2012. Muchow attributes most of that's boost to the state's booming natural gas industry.

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There are already four more municipal governments in Kanawha County alone that want to bid for 16 new slots in West Virginia's home rule pilot program next year. Currently Charleston, Huntington, Wheeling and Bridgeport are the only four home rule cities in the state. St. Albans, Nitro, Dunbar and St. Albans have all said they will apply for admission to the program next year.

The Legislature voted earlier this year to expand the pilot program to up to 20 municipalities and amended the law to allow cities of all population sizes to participate. Even Handley, which is the smallest incorporated community in Kanawha County with a population of 349 according to the 2010 census, wants to get in on the act. City Clerk Debbie Matics told a Charleston newspaper recently that home rule could help officials address problems specific to small communities.

Tom Miller is a retired state government reporter for The Herald-Dispatch. He is a regular contributor to The Herald-Dispatch opinion page.

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