As the state moves more money toward road construction and maintenance, costs of those projects are also going up dramatically, Transportation Secretary Byrd White told legislators.
“The bids are coming in much higher than the original estimates,” White told the Joint Committee on Government and Finance of the first round of highways construction projects to be funded with Roads to Prosperity bonds.
While the first round of bond projects were slated at $800 million, and the sale of the first round of bonds actually raised $913 million, actual costs of those projects are going to come in around $1.1 billion — about 37 percent higher than estimated, he said.
Last year, a number of bids for Roads to Prosperity projects came in well over estimates and have had to be redesigned to reduce costs, including a project on Interstate 70 in Wheeling that came in more than $100 million over the estimated cost of $172.5 million.
White, who is not a highways engineer, said a number of factors are contributing to the overbids, including increasing costs for construction materials, and a limited pool of contractors to bid on the projects.
“Many of these estimates we kind of pulled off the shelf, and they’re two or three years old,” he said.
White said the department plans to make up the $300 million additional cost using federal road funds and grants.
Similarly, White told legislators that a limited number of contractors is hampering secondary road repairs, even with the Legislature in the process of passing supplemental appropriation bills moving more than $100 million of fiscal 2018-19 revenue surplus into the state Road Fund.
“It is absolutely a problem,” he said. “It’s one of the reasons we’re moving to this different type of work.”
White said that instead of being used for traditional maintenance, including paving, patching, ditch clearing and culvert repair, one $50 million supplemental appropriation will be used 50-50 to repair more than 1,700 road slips and slides, and to start to repair some of the 2,800 bridges in the state that are rated as deficient.
“We’ve got 2,800 bridges to do, and we can’t do them all even with the $50 million,” he said.
Last month, members of the Joint Committee — the most powerful legislative interim committee and only one required by law to meet during interims — directed that the Secretary of Transportation appear at committee meetings to provide monthly updates on road construction and road repairs.
Also during the meeting:
n Deputy Revenue Secretary Mark Muchow said that, following a fiscal year that saw nearly 12 percent growth in tax collections, revenue collections for the upcoming 2019-20 budget year probably won’t be as spectacular.
“It will be difficult next year to deliver that kind of growth in collections,” he said.
Muchow said that in recent years, state revenues have experienced extremes, going from a 7.5 percent decline two years ago to near 12 percent growth this year.
He said much of the growth came from the construction sector, and said natural gas pipeline construction in 2019-20 is unlikely to match current year levels.
n Rod Livingston, with the state Investment Management Board, reiterated that state pension funds will not reach the goal of 7.5 percent growth in the budget year, with earnings at 4.1 percent through April.
He noted that May was a tough month for the stock market, stating, “The market expected that the U.S. and China would work out a trade deal, so that additional tariffs would not be approved, but they were.”
Livingston said the market was further rocked with threats of tariffs on Mexico, but has made a recovery this month, with the tariffs postponed for the time being.