By RUSTY MARKS
The State Journal
CHARLESTON, W.Va. — A month after the West Virginia Legislature passed a series of bills designed to pay for a massive $2.8 billion road construction and maintenance program, those in the administration of Gov. Jim Justice remain convinced the program will create 48,000 jobs and dig the state out of an economic hole.
(Photo by Jim Ross)
But exactly how, and what the impact of the roads program will be, remains less clear.
In June, lawmakers passed Senate Bill 1006, which raises wholesale fuel taxes, the sales tax on vehicles and fees for documents and transactions at the state Division of Motor Vehicles. Lawmakers also passed Senate Bill 1003, which allows the state Parkways Authority to raise tolls on the West Virginia Turnpike and create tolls on other state highways.
According to Greg Barr, general manager of the Parkways Authority, state officials plan to fund the governor’s road construction program through several different avenues. He said state officials plan to finance about $500 million in construction with federal GARVEE bonds. Another $500 million in construction will be paid for by raising tolls on the Turnpike.
The remaining $1.8 billion or so in construction is dependent on state residents passing a constitutional amendment allowing the state to go after additional bonds. Voters will go to the polls Oct. 7 to vote whether to sign off on the deal.
Barr has pointed out the vote will only be whether or not to authorize the bonds. The fees and tax increases to pay for the bonds have already been approved by the Legislature.
Proposed road upgrades in the governor’s roads plan include $65 million to add lanes to Interstate 64 near Barboursville, $65.5 million to widen congested Jefferson Road in Kanawha County to four lanes, $170 million to widen Interstate 64 in Putnam County, do work on U.S. 35, build an additional bridge across the Kanawha River, and $150 million for work on U.S. 52 in Wayne County. The governor has proposed spreading the roads program across two phases.
Justice has said the roads program is the biggest construction program in the state’s history. Observers agree a construction program of that magnitude would create jobs, but sources disagree on how many.
Justice spokesman Grant Herring said the governor’s job creation estimate for the roads program is based on a 2014 study of the effects of infrastructure investment on job creation conducted by the Duke Center on Globalization, Governance & Competitiveness. According to the Duke study, every $1 billion in federal roads investment creates 21,671 jobs.
During a recent news conference, Justice Chief of Staff Nick Casey said the roads program can also be expected to create ancillary economic effects. Casey said income tax revenues could be expected to rise because more people would be working, for example, and sales tax revenues can be expected to rise because construction workers would be buying more.
Justice has also said the roads program can be expected to create more than $125 million in payroll taxes.
When pressed, however, Casey could not provide more detailed estimates.
“I don’t have a spreadsheet that says we’re going to sell this much more soda, this much beer, this many chips,” he said. “I don’t have that.”
Officials in the Justice administration have not provided more detailed information about the expected economic impacts of the governor’s roads program despite repeated requests for information by The State Journal.
Some are skeptical of the governor’s job figures.
“There is little doubt that well-targeted investments in transportation infrastructure such as roads creates jobs — especially in the short-run — while also boosting productivity by lowering business costs,” said Ted Boettner, executive director of the left-of-center West Virginia Center on Budget & Policy. “In the long-run, infrastructure investments can also boost economic growth. However, extracting job estimates or making revenue assumptions from a study that is based on 100 percent federal funding is not a sound practice.
“The economic impact of the proposed road bond depends on several factors, including the use of local labor and local inputs like raw materials, the share that is financed by state residents and federal revenues, the portion of the economic benefits that may spill over into neighboring states, the rate of interest on the bond itself, the amount of slack in the local construction market and whether the investment is targeted where the quality of the roads is bad,” Boettner added. “All of these factors and more need to be considered before policymakers can make a sound judgment on the number of jobs that will be created.”
Garrett Ballengee, executive director of the conservative Cardinal Institute for West Virginia Policy, also is taking the governor’s job figures with a grain of salt.
“I would be extremely skeptical of the job-creation estimates that we’re hearing,” Ballengee said. “The money that will be required to finance the infrastructure spending must first be taken out of the private sector through fees, taxes and debt financing. It’s impossible to know the effect that the same $2.8 billion would have if it was left in the hands of private citizens to spend, save and invest as they saw fit. We have to remember that all government spending is financed through the value and wealth created by the private sector — it’s the equivalent of taking water out of one end of the bath tub and dumping it in the other.
But Steve White, director of West Virginia’s Affiliated Construction Trades union, is willing to give Justice the benefit of the doubt.
“My guess is that they’ve done an economic model,” White said. “Clearly it’s going to be a lot of jobs.”
White knows the program won’t create 48,000 construction jobs — some of the jobs will be for engineers, surveyors, those delivering materials and others. But there will be enough that he’s worried about finding enough qualified construction workers to fill them.
Of 22,000 members in the ACT, about a quarter work in road construction, White said.
“We do not have enough people ready to go today,” he said.
Justice and union officials recently announced a construction apprenticeship program to train workers in anticipation of the roads program.
White is concerned West Virginians get the construction jobs and not illegal aliens, despite state laws giving preference to local workers. Still, he said, “This is a great opportunity if we do it right. If we don’t do it right, it could be a disaster.
“I’m an optimistic guy though,” he added.
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