WV: Road fund likely to shrink
- From: "Sherman L. Cahal" <shermancahal@xxxxxxxxx>
- Date: Sat, 13 Dec 2008 18:17:11 -0800 (PST)
http://www.wvgazette.com/News/200812080733
State road budget likely to shrink
Weak economy expected to depress tax revenue to Road Fund
By Phil Kabler, Charleston Gazette, December 9, 2008
West Virginia's cash-strapped budget for building and keeping up roads
will probably get worse as the weak economy hits two key sources of
revenue for the state Road Fund, a West Virginia University economist
said Monday.
Tom Witt, director of the Bureau of Business and Economic Research at
WVU, told legislators Monday that highway funding will grow more dire
than the bureau had forecast in 2004 and 2007 studies.
In the short term, Witt said, people are likely to cut back on travel
and defer new car purchases - which, aside from federal funding, are
the two main funding sources for the state Road Fund.
A drop in miles traveled will affect state gasoline tax collections,
while fewer new car sales will mean lower motor vehicle privilege tax
collections, he said. Those taxes account for more than 58 percent of
Road Fund revenues.
Witt said new car sales in West Virginia are projected to drop to
66,100 in 2009, down 18 percent from the peak year of 2006.
Meanwhile, he said, gas tax collections are likely to decline in the
long term, as drivers switch to more-fuel-efficient vehicles, hybrids,
and other alternative fuel vehicles.
"We're going to continue to see some erosion of the traditional
sources [of revenue]," Witt told a legislative interim committee.
Eventually, states will have to consider ways to fund road projects
other than taxes on fuel, he said. He noted that Oregon is looking at
installing GPS devices on all licensed vehicles in that state and
collecting a road tax based on mileage.
While state drivers complain about West Virginia's 32.2 cents per
gallon gas tax, Witt said at least 11 states have higher fuel taxes,
topped by California at 48.7 cents a gallon, and Connecticut at 47.2
cents.
"The perception that West Virginia has the highest tax rate is not
true," he said.
In the short term, he said, it might be preferable to increase the
federal gas tax to fund additional road construction, to avoid large
discrepancies in tax rates among the states.
Meanwhile Monday, an independent audit of the Division of Highways
raised a red flag over possible misuse of $23 million of federal
Highways Emergency Relief funds.
The funds were directed to District 6 in the Northern Panhandle to
repair flood damages in late 2004 and early 2005.
The audit raised questions about whether some of those funds were used
for repair projects in areas that were not authorized for repairs of
flood-related roads and bridges.
District officials are reviewing all projects and charges from the
period, and have requested an independent review by the division's
central office, the audit noted.
--
Sherman Cahal
http://www.americanbyways.com
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