CHARLESTON, W.Va. — West Virginia has a mountain of borrowed money on hand for “Roads to Prosperity” highways projects.
Should a slice of that money be diverted to fix bumpy, bouncy secondary roads?
West Virginia went to market with $800 million in bonds last May. Because of advantageous interest rates, the state actually wound up with bonds valued at $915 million.
Since then, very little has been used.
According to documents available through the state Auditor’s Office, only $11,133,309.19 had been spent as of earlier this week.
Meanwhile, the money in reserve generated $13,666,081.46 in interest. So what’s been spent roughly equals the interest.
At the same time, an outcry has come from counties where the condition of secondary roads has become alarming. Preston County, for example, has declared an emergency because roads have gotten so bad.
But leaders in the counties with the worst road problems are already issuing strong warnings about diverting the bond money.
“I am adamantly opposed to taking funds from the road bond and putting it on secondary. We didn’t vote for that. The money is available from other avenues,” said Monongalia County Commissioner Tom Bloom.
“You do that, citizens of Monongalia County will never vote for another road bond issue.”
Governor shifts priorities
Gov. Jim Justice has expressed interest in diverting some of the bond money to improve maintenance on local roads. He received a standing ovation at his State of the State address in early January for mentioning the need to improve maintenance.
“We’ve done — I don’t know how many, but it’s hundreds of projects already. Here’s the very thing, though, that we need to do: We’ve got to shift a little bit of the focus — and we have had extensive discussions with the bond holders and everything else, that we can do this,” he said.
“We’ve got to pull some of the money out of the bigger projects and move some of the money — or significantly more money. Not more than all the big projects, but a little bit of additional moneys over to fix more of our secondary roads.”
At the start of this week, the governor announced the firing of Transportation Secretary Tom Smith, who led the run-up to “Roads to Prosperity.” In a short statement, Justice said he wants “a new direction to be taken with our Department of Transportation, a return to the core mission of maintaining the quality of our secondary roads and bridges.”
All this builds to Wednesday, when the governor says he will have an announcement about the roads.
“There is no doubt the Department of Transportation is doing great work on our ‘Roads to Prosperity’ projects, but our secondary roads aren’t being addressed with the urgency needed,” Justice stated.
“This is the issue that we will address with this plan, and secondary roads will be the No. 1 priority of the department. These roads have been neglected for nearly two decades, and that’s not going to continue on my watch. The people of West Virginia deserve well-maintained roads.”
Senator Randy Smith, R-Tucker, says it’s about time to fix the roads.
“The governor stated this isn’t going to happen on his watch. Well, it is his watch. We’re three years into his watch,” Smith said on MetroNews’ “Talkline.”
Smith spent much of the regular legislative session asking for attention to roads. He is skeptical of reaching into the bond money for maintenance, though. Smith notes that the buildup to the road bond was based on new construction.
“If this big announcement is to use road bond funds to fill potholes, that’s not what those bonds were intended to be used for and that’s not what the citizens of this state were sold,” Smith said in a public statement released by the Senate. “It’s absolutely irresponsible to use the public’s money to pay 25-year notes on pothole repair.”
His Senate colleague, Charles Clements of Wetzel County, agreed.
“I do not think we can afford to take the road bond money and spend it on maintenance jobs,” Clements, a Republican chairman of the Senate Transportation Committee, said in a telephone interview this week.
“As much as everyone wants road fixed, I think there was a commitment to the people of West Virginia that this was what we were going to use the road bond for.
Big projects promised
The outline of what was promised for “Roads to Prosperity” remains on the Department of Transportation’s Drive Forward WV page, which is a public resource for the roads projects.
The frequently asked questions section addresses whether the roads in local neighborhoods would be fixed.
The answer was yes.
The vast majority of the projects specified for “Roads to Prosperity” are for paving, slides, bridges and other local road improvements. But they’re financed as “pay-as-you-go” through increased revenue streams.
“The first year of increased DMV fees, increased wholesale gas tax, and increased sales tax on new vehicles resulted in approximately $130 million in new revenues for use on the State’s more local service roadways, likely the roads that pass your house,” according to the FAQ.
“These funds were distributed around the State for resurfacing of West Virginia and County Routes, small bridge repairs, and slip repairs. As the ‘Roads to Prosperity’ program is now underway, the influx of funds for new roadway construction and repairs will allow the WVDOH’s normal roadway maintenance funds to be dedicated to needs that could not otherwise be addressed.”
The General Obligation Bonds, the ones the citizens voted to approve, were targeting big highways projects.
Some of the bond documents refer to “highway and bridge construction and for general highway and secondary roads and bridge construction or improvements in each of the fifty-five counties in the state.”
The documents specify 10 big projects.
Those are lane-widening projects on Interstate 81 in Berkeley County, on Interstate 64 in Putnam and Cabell counties, along the West Virginia Turnpike in Raleigh County and on U.S. 119 in Monongalia County.
The intended projects also included a major rehabilitation and bridge project on Interstate 70 in Ohio County, four-lane highway construction on a stretch of Corridor H in Tucker County, construction of a new southbound exit on Interstate 77 at Exit 99 in Lewis County and a paving and grading project, including a new interchange, along U.S. 35 in Putnam County, plus Coalfields Expressway paving in Wyoming County.
All those were anticipated to be bid out in 2018 and completed by 2021.
Is a shift wise?
Delegate Eric Nelson, R-Kanawha, doesn’t like the idea of using bond money for routine maintenance. Nelson is a former House Finance chairman. He runs Nelson Enterprises, a financial consulting business.
“To issue bonds to do maintenance, I’m not in that camp. That is the wrong match,” Nelson said.
The $915 million that’s available was just for the first, big bond sale.
Additional bond sales of $400 million, $200 million and yet another $200 million were approved for succeeding years.
So it’s possible the state could forego moving ahead with those bond sales and instead dedicate the revenue streams that were meant to pay down the bonds toward current road maintenance needs.
“Looking back, could they potentially delay issuance of additional bonds and use the current cash flow from the higher revenue to bump up our annual maintenance dollars? Yeah, I think that’s a possibility,” Nelson said in a telephone interview.
Nelson also wonders why there hasn’t been more consideration of dedicating a big piece of the current general revenue surplus to roads.
“We have a $300 million surplus year to date. Through the supplementals we approved this year, $225 million went to different sources from our current revenue surplus because the governor has raised revenue estimates three times this year,” he said.
“If roads were a true priority, could we have or should we have looked at some of our surplus dollars and put those to road maintenance?”
House Speaker Roger Hanshaw, R-Clay, said the needs on West Virginia’s secondary roads aren’t just routine. To Hanshaw, that elevates the possibility of using borrowed money.
He says the roads are so bad it’s almost like rebuilding them.
“We have parts of West Virginia where secondary roads have been let to deteriorate to the point now where they are beyond the point of the kinds of repairs that last just a couple of years. I represent a part of the state in which we have some total loss of half lanes of roads,” Hanshaw said this week on “Talkline.”
“Those are deep-rooted structural issues. We’ve got that all over West Virginia. We’ve got massive slides in places where roads are made impassible. We’ve got roads worn all the way down to base that if let go further will be irreparable. These are the roads West Virginians drive on most of the time.”
Senate President Mitch Carmichael, R-Jackson, expressed caution about using bond money for maintenance.
He says voters were told bond money for big projects would free up dollars for maintenance — not that there would be a choice between the two.
“Part of the sales point of the road bond to begin with was it would free money that would otherwise be used for those types of improvements or construction projects for maintenance of our secondary roads,” Carmichael said on “Talkline.”
“As the voters decided upon these road bonds, it was committed that certain projects would be accomplished with that money. To the extent that those projects would not be accomplished and the money would be used for secondary road repair, I think you’ve got a problem there. I really do. I think there’s a problem.”