Wednesday, December 30, 2009

Commercializing Welcome Centers, Rest Areas Could Ease WVDOH Financial Burden

Forty some odd years ago NASA realized that a ball point pen would not write in space. They worked on the problem and spent over a million dollars to make a ball point pen that would write in zero gravity.

They were successful and developed a beautiful pen at great taxpayer’s expense, but NASA solved the wrong problem. The problem was not to make a pen write in space, but to just “write” in space. The Russians realized that they only needed to write in space, not use a ball point pen and simply used a five cent pencil instead of wasting a million dollars. The lesson is the first thing you must do to be successful in solving a problem is make sure you have identified the true problem.

At the end of November the amount of expected revenue for the West Virginia highway fund was down $14.6 million, mostly because of the poor economy. Immediately there was talk out of Charleston about raising taxes, but the tax rate is not the real problem. The real problem is the rising cost and reduced revenue. Until these problems are solved, the state’s Department of Highways will continue to have problems even in good economic times. The state must get creative on generating additional revenue and cutting cost.

There are 22 welcome centers and rest areas run by the WVDOH. Each costs approximately $500,000 a year in annual maintenance for a total of $11 million dollars. Two of these on the West Virginia Turnpike have a Federal exemption to allow them to be commercialized, which is pretty common on toll roads. However they also occur in a few other places on non-Toll Road Interstates, such as I-95 north of Baltimore, MD.

Commercialization of West Virginia’s other twenty rest areas and welcome centers could provide a partial solution to the WVDOH funding problems. As these are leased to private companies then a $10 million drain on the WVDOH would disappear as responsibility for the maintenance would shift from the state to the private companies. There would also be a revenue stream generated from the lease agreements. A drain on the state highway fund would be turned into revenue generation, all without putting any additional burden on the taxpayers.

There would also be employment benefits for the state. Each rest area at a minimum would end up with a fast food restaurant and a convenience store/gas station. The average fast food chain restaurant employs about 60 persons and the convenience store 10 persons. This would generate approximately 1,400 private sector jobs across the state from entry level fry cooks to well paid manager positions. As an example; if the two rest areas in Braxton County were commercialized in this way, the Braxton County unemployment rate could drop from 8.3% to 5.3% making it the lowest in the state.

The benefits do not stop at increased employment and reduced operating cost to the state. The free market approach also creates new tax revenue streams into the states coffers. The 1,400 new employees and the new businesses created will pay income taxes to the state. There will now be property taxes paid to the counties at the rest areas on the equipment installed where before there was none. Most important to WVDOH is the gasoline sold at the new filling stations will pay new taxes directly to the highway fund without raising taxes on struggling WV families.

In these hard economic times West Virginia must work to solve the correct problems and reduce the burden of taxes on all the people of the state in the process. We must look for new solutions to old problems and stop thinking the only solution is increasing taxes. Bookmark and Share

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