Following the “wonderful success” of passage of the state road bond referendum Oct. 7, state Transportation Secretary Tom Smith told legislators Sunday the state will be moving deliberately on what ultimately could be the issuance of a total of $2.6 billion of road bonds.
In the first phase, Smith said the state will be closing on $260 million of federally financed GARVEE bonds by the end of the month.
That will fund 13 interstate reconstruction projects and 18 bridge replacements around the state, Smith told a legislative interim committee Sunday.
Over the past 10 years, the state has done 7 miles of interstate reconstruction, on Interstate 79 near Weston, Smith said. The GARVEE bond sale will fund 60 miles of interstate reconstruction, he said.
“It’s high time we get to make that kind of repair to our interstates,” he said.
Smith noted that, over time, repeated “mill and fill” resurfacing of interstates becomes less and less effective.
He said both Moody’s and Standard and Poor’s rating services have given the bond issue a strong AA rating.
Legislation passed in the special session in June increased the amount of GARVEE bonds the state can sell from $200 million to $500 million, and Smith noted, “We want to get to that $500 million limit as soon as we can.”
At current interest rates, the $500 million will require using about $55 million a year of federal highways funds to pay down the bond debt, he said.
Conversely, Smith said the state plans to take a slower, incremental approach to selling up to $500 million of Parkways Authority bonds, beginning with a $100 million bond issue likely this spring.
He said that will provide an opportunity to see how the bond market reacts to Gov. Jim Justice’s unprecedented “Mountaineers Drive Free” mandate that will allow passenger-vehicle owners to purchase EZ-Pass transponders, providing unlimited use of the West Virginia Turnpike for no more than $25 a year.
Smith said the first round of Parkways bonds probably will not be ready to go to market until April or May.
While the road-building legislation gives the Parkways Authority broad power to create new toll roads, Smith said there are realistically very few opportunities for new toll roads in the state.
“We always want to retain it as a tool in the toolbox, but tolling interstates is exceedingly difficult,” he said.
In large metropolitan areas with heavy traffic congestion, localities can add interstate lanes and toll them as express lanes, Smith said. However, no West Virginia cities have enough interstate traffic to justify that option, he said.
He said there are a very limited number of state highways planned or under construction that will have enough out-of-state and commercial vehicle traffic to justify tolls, with Corridor H potentially being one.
Meanwhile, Smith said a $100 million pay-as-you-go plan to upgrade secondary roads will be doubled to $200 million.
The secondary road plan was originally announced shortly after the Legislature passed the $140-million-a-year package of new Road Fund revenue to underwrite $1.6 billion of general obligation bonds.
Because those road bonds will be sold in phases over four years, Smith said the full $140 million a year won’t be needed to pay bond debt for several years.
“The long and short of it is, it will allow us to get another $100 million of work done on secondary roads,” he said.