Monday February 9, 2009
Lawmakers advised to retool State Road Fund
by The Associated Press
CHARLESTON, W.Va. West Virginia could ease its annual struggle with road funding by combining its gasoline taxes and creating a new fee for alternative fuel vehicles.
The recommendations were among several presented Monday to lawmakers, and also include increasing taxes on vehicle titles and indexing registration fees to inflation.
West Virginia University economist Tom Witt gave an interim committee a draft report on the future of the State Road Fund. Witt estimated that the fund's traditional revenue will continue to lose ground, and that the deepening economic recession only compounds that situation.
West Virginia has the largest percentage of state-owned roads in the country, federal figures show, but only one-fourth of them are eligible for federal highway dollars. The State Road Fund has proved unable to keep up with the demand on West Virginia's highways and bridges for much of this decade. Lawmakers have previously responded by assigning some of its duties to agencies funded by general revenue while also tapping that source for one-time dollars.
Fuel taxes account for about 60 percent of the state's share of the road fund, budgeted at $638 million. Director of WVU's Bureau of Business and Economic Research, Witt estimated that revenue from those taxes will fall slightly below the projected collection target of $380 million by the time the budget year ends June 30.
Witt said increasing fuel efficiency has gradually reduced consumption and therefore revenues from the per-gallon taxes. Last year's high gas prices decreased travel miles, a trend furthered by the economic downturn, Witt added.
The summer's pump prices prompted Gov. Joe Manchin and lawmakers to freeze a scheduled increase to a fuel tax that otherwise adjusts annually to changes in wholesale prices. Witt's draft report suggests that lawmakers settle on a single gas tax, set at the current rate of 32.2 cents per gallon.
A new fee for alternative fuel vehicles should account for their use of roads and offset the corresponding loss in fuel tax revenues, Witt said.
The draft report also advises lawmakers to raise the title or privilege tax from 5 percent to 6 percent, to match the state's sales tax for most goods. Witt noted national figures showing a decline in vehicle sales, saying that will depress both privilege tax and registration fee revenues this year.
The report's other options include encouraging county or local governments to shoulder road building and repair jobs, such as through the sort of user fee adopted by Kanawha County. Witt suggested the state promise matching funds to those that do.
Several Republicans on the Joint Standing Committee on Finance, which received the draft report, questioned its reliance on tax-related measures.
Sen. Donna Boley, R-Pleasants, suggested the state could offer a tax credit to encourage residents to buy new cars. Delegate Craig Blair, R-Berkeley, faulted the report for recommending no belt-tightening measures, and for failing to target state law governing wage rates for public road projects.
