To vote “yes” to Governor Jim Justice’s “Roads To Prosperity, Senate Joint Resolution 6” referendum on Oct. 7, 2017 is a vote against yourself.
Here’s why. Taxes were raised July 1, 2017 and since then an additional $130 million has increased the State Road Fund from the extra taxes on sales, gasoline, motor vehicle fees, DMV fees, privilege tax for buying a car, etc. These additional taxes, not current taxes, are expected to produce $3.2 billion over a period of 25 years for road and bridge projects, without any debt attached.
Prior to increasing taxes and fees on July 2017, improvements to roads and bridges were under way with the current funding. This additional tax money will support additional infrastructure projects and complete those projects sooner and cheaper at today’s cost.
Now the purpose of the “Roads To Prosperity Amendment” is to sell West Virginia Bonds to investors over a 4-year period to borrow $1.6 billion from them, with interest. The $1.6 billion (principle) and interest would be paid back to investors over a period of 25 years.
Analogy: Think of each bond as a credit card. Each bond, like each credit card, has a principal you pay back on the money you borrowed for purchases, repairs, roads, bridge projects and interest (which) is how the investor makes money for lending you up-front money. The payments on these bonds are (made) annually instead of monthly like the credit card. There is a little more to it but this analogy does not steer you wrong.
The West Virginia Governor and legislative delegates want to dedicate the $3.2 billion that will accumulate from the increased taxes imposed on July 2017 to pay off $1.6 billion they will borrow from investors using bonds. In short: Taxpayers lose $1.6 billion if they vote “yes” on Oct. 7 to borrow against money they will have or already have in the State Road Fund. In a different view, you have a dollar in your pocket but you borrow a dollar from someone and agree to pay back the dollar with interest. Now you need two dollars in your pocket to pay back the dollar that was borrowed with interest. Brings to mind how the U.S. debt has gotten out of hand.
Delegate Eric Nelson, House Finance Committee chairman, publicly supports the Road To Prosperity Amendment and the trade off on paying out $1.6 billion in bond interest is worth it to obtain $1.6 billion (up-front money) over four years than waiting for the $3.2 billion from the additional tax money to trickle into the State Road Funds. That is the cost of bond financing. However, $130 million collected every four months from the additional taxes is not what I call trickle in money.
The taxpayers can’t carry that type of burden to be taxed $3.2 billion and receive $1.6 billion in road and bridge improvements. Being a capitalist country, that’s the reality of what it costs to do business and it goes up each year. Therefore, should this amendment be passed by voters, future tax increases will have to be done to assure funding to pay on each bond’s principal and interest just based on inflation. Senate Joint Resolution 6, Road To Prosperity states, “When a bond issue as aforesaid is authorized, the Legislature shall at that same time provide for the collection of an annual state tax which shall be in a sufficient amount to the pay interest on such bonds and the principal thereof …”.
West Virginians should give great pause whether our state legislative delegates are representing the common people of the State of West Virginia or those waiting to buy the bonds. Once the Roads To Prosperity becomes an amendment to our Constitution, it will not be subject to voters. In essence, a vote “yes” by the taxpayer is putting your hand in the lion’s mouth.
The Roads To Prosperity Amendment brings into question how naive do our politicians believe the people of West Virginia are. In Charleston, Gov. Justice released a public statement, “The Road Bond Referendum is not going to raise your taxes at all, zero.” Taxes were raised three months ago, July 2017. Playing with words is a politician sword. Don’t pretend what is not said won’t hurt people.
Marty Gearheart, chairman, House Roads and Transportation Committee, said, “I just do not believe that we don’t need to go into debt on that level. I really think we put the cart before the horse by passing the tax prior to the bond being considered.”
Also, Delegate Tony Paynter, Wyoming County, said, “The state failed to spend $158 million in highway funds two years ago and $74 million last year. They shouldn’t throw more money at an inefficient bureaucracy and need some accountability on how the state’s money is spent.”
Thankfully the good news is the increased taxes and fees collected since July 2017 are already at work on additional projects improving Giles Mill Road, Harlan Springs Road in Berkeley County and other additional projects in other counties are being scheduled, creating jobs, putting money in people’s pockets, spending in local stores, businesses hiring, immediate construction jobs and improved infrastructure. Is there a need for the Road To Prosperity Amendment?