Economic argument made for W.Va. roads plan

CHARLESTON, W.Va. — The latest push for increased spending on West Virginia highway construction is focused on economics.

The state Division of Transportation and the Contractors Association of West Virginia were among those at a Wednesday presentation at the state Capitol focusing on potential economic benefits of infrastructure investments.

The main message came from Ken Simonson, chief economist for the Associated General Contractors of America, a national association for the construction industry.

Simonson said the need for greater investment in highways work was apparent to him from the moment he landed in Charleston.

“As we came down that steep hill, we saw that one lane was closed off, half of it had collapsed, and I realized how vital a connection that is,” Simonson said in a brief interview Wednesday.

“If the entire road were closed off, you’d essentially be cut off from any kind of air traffic. You’d see a lot fewer people coming into here if you didn’t have that connection.”

What Simonson was seeing was likely a section of Airport Road that was closed down after a slip several days ago. In any case, the sight illustrated his broader point about the need to re-invest.

“It’s really important to keep up the current condition of roads as well as to add capacity and modernize the many obsolete roads,” Simonson said.

His appearance came as part of a continued effort by the Justice administration for greater investment in road construction and maintenance.

The proposal includes three aspects, including an increased limit on Garvey bonds, which are paid off through anticipated federal dollars, increased capacity for tolled highways, and increased state Road Fund revenue, which could be leveraged through bonds.

In all, Gov. Jim Justice’s proposal aims for $2.8 billion in investment in West Virginia roads and bridges.

This week, Justice floated a new proposal to achieve the third aspect, the increased state Road Fund revenue:

A commercial activities tax of .015 percent would support highways funding. To simplify, if a company’s gross income is $1 million, the tax would be $150.

There is also an anticipated change in how the wholesale gas tax is calculated. The floor of the taxable amount would not go lower than $3.04 a gallon — meaning that the tax would remain at that level even if the wholesale price of gas goes lower. That’s expected to bring in $45 million the first year.

The sales tax on buying a car would go to 6 percent, bringing in an estimated $40 million.

And fees at the Division of Motor Vehicles would go up, bringing in $41 million the first year.

All that is expected to raise another $137 million for roads the first year and $143 the second year.

“There’s really a wide range of ways that highways are funded,” Simonson said. “Certainly the gas and diesel taxes are core in most states.

“But it’s really what the citizens in each state seem most accepting of. I think the most important thing is to make sure that funding level doesn’t slip back. I understand that West Virginia actually reduced its tax because it was tied to the wholesale gas price a year ago, and that’s just devastating for the number of project you can undertake.”

State Transportation Secretary Tom Smith noted Governor Justice’s attempts to come up with a mix of increased highways funding but emphasized the important part is the overall goal.

“What Governor Justice is doing is working very, very hard to try to produce an amount of revenue that we are then able to bond out to the amount we’ve talked about,” Smith said.

“The mix of that is under negotiation now. I’m not a party to those negotiations. I’m very optimistic they’re moving in the right direction. He is less concerned about how the pieces come together and more concerned about generating that amount of revenue.”

Those who gathered at Wednesday’s presentation pointed to several figures that they interpreted as poor signs for West Virginia’s transportation system and its economy.

For example, Simonson said the Charleston metro area lost construction-related jobs at a faster rate during the past year than all but one of 358 metro areas.

One trick to that figure is that the construction numbers are lumped in with employment figures for logging and mining, an industry that has experienced significant layoffs in the past year.

And even if the figures don’t fully represent what’s happening in construction, those who support increased highways work say ex-coal miners are among those who could be retrained to benefit from the resulting jobs.

At face value, 1,200 jobs were lost in the category lost over the past year — a 16 percent drop from 2016 and better only than the metro area around Casper, Wyoming.

In sum, there were 6,200 people employed in construction, mining and logging in the Charleston metro area in April, down from 7,400 a year earlier.

A broader set of figures provided by the Associated General Contractors of America showed statewide construction jobs decreasing only minimally in West Virginia over the course of the year — from 30,600 to 30,100.

Nevertheless, Smith said the downward trend demonstrates the need for reinvestment.

“As we put construction projects on the road, we have immediate economic benefit,” Smith said.

“What we’re hopeful to do is to push as much work out as we can, realizing jobs come along with the work. Those are good-paying jobs where you can take displaced miners, you can take folks who are out of work. We heard today this continuing decline of employment in West Virginia. We can turn that around if we make good choices.”

As a recent Bloomberg article noted, West Virginia’s employment-to-population ratio is only very slightly above 50 percent.

The labor force participation rate — a different figure that indicates the percentage of civilians ages 16 or over who have a job or who are actively looking — is at 53 percent.

That’s lowest in the country.

A lot of improvements will be necessary to change that, but Smith is touting road construction as one factor with significant potential.

“We’ll push these jobs out, we’ll have immediate jobs resulting from that, and we’ll have immediate economic recovery for West Virginia,” Smith said. “We have to do something to stop being last in everything.”

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