Update June 22: West Virginia Gov. Jim Justice (D) signed Senate Bill 1006 into law on June 22. At the signing, Gov. Justice stated, “…One thing we didn’t miss the opportunity on was the roads. We passed an incredible roads package. It is truly landmark and what it will do for our state is unbelievable… This will save the day. This is and I’ve said it over and over again, is the 800-pound gorilla in the room and this will save the day.”
Secretary of Transportation Tom Smith confirmed the department is prepared to begin construction projects as early as July, with $30 million in advanced surface reconstruction resurfacing beginning once the legislation takes effect. The transportation funding measures are expected to create 48,000 jobs— both direct and indirect— within the state.
In October West Virginia voters will be asked to approve a $1.6 billion bond to accelerate transportation projects.
Original Post: The West Virginia legislature on June 16 approved legislation that will generate $135 million annually in new transportation funding. The bill now now goes before the Gov. Jim Justice (D) for final approval.
Senate Bill 1006 (SB 1006) amends several transportation-related taxes and fees, including:
- Adjusting the variable-rate state gas tax component (an additional 5 percent tax on the average wholesale price of gasoline, on top of the 20.5 cents-per-gallon flat excise tax) by raising the floor price (the minimum the tax can be charged at) from $2.34 per gallon to $3.04 per gallon. The resulting calculation would ensure that the variable-rate tax would never be less than 15.2 cents-per-gallon (as of Jan. 1, the tax has been charged as 11.7 cents-per-gallon);
- Increasing state department of motor vehicle fees (automatically adjusted every five years based on changes to the Consumer Price Index) and the consumers sales and service tax on sales of motor vehicles;
- Imposing additional registration fees for alternative-fuel and electric vehicles— an additional $200 for vehicles fueled with hydrogen or natural gas, $100 for vehicles operating on a combination of electricity and petrochemical fuels, and $200 for vehicles operating exclusively on electricity; and
- Increasing the sales tax on vehicles from 5 percent to 6 percent.
The legislature also approved Senate Bill 1003 to permit tolling on new roads and bridges or existing roads that are widened.
The new revenue could be used to fund a $2.8 billion bond proposal from Gov. Justice. Legislation approved on April 8 will ask voters to approve $1.6 billion in general obligation bonds before the end of 2017. The remaining bond revenue would be generated from Parkways bonds (funded by tolls on the West Virginia turnpike) and GARVEE bonds (utilizing future federal highway funding payments).
SB 1006 was proposed during the 2017 First Extraordinary Session, which convened May 4 to address unmet budget needs. The bill was proposed on May 16 by Senate President Mitch Carmichael (R- District 4) at the request of Gov. Justice. SB 1006 was passed initially by the Senate on May 24 and was amended by the House to remove an additional increase on the flat excise tax on gasoline before passage on June 16. The Senate made additional amendments and passed the bill on the same day. The House concurred those amendments and voted 54-32 to send the bill to the governor.
The variable-rate adjustment comes after an automatic 1-cent reduction in the amount the formula generated on Jan. 1, resulting in a $12.5 million loss to the state’s road budget. A 2015 study by the Contractors Association of West Virginia found that the state already needed an additional $500 million in new revenue for road projects, and a 2013 Governor’s Blue Ribbon Commission on Highways found a much larger need of $1 billion annually.