7/30/2016, Milwaukee Journal Sentinel – In 2011, Gov. Scott Walker and the state Legislature inherited two fiscal time bombs from former Gov. Jim Doyle. They’ve largely defused one. The other has become more volatile.
The positive news involves the state’s general fund. The 2011-’13 budget — and Act 10 — put the state’s general treasury and local government on a positive fiscal course.
But the news is anything but good when it comes to the Transportation Fund, a separate account that finances highways, mass transit and other transportation expenses.
Two actions by the state have the fund in a downward spiral. As a result, there isn’t enough money to maintain state highways and help towns, cities, villages and counties repair local bridges and roads. This is the biggest challenge before the 2017 Legislature.
The first action — in 2006 — was a legislative decision, OK’d by Doyle, to freeze the gasoline tax. This has meant stagnant Transportation Fund revenue during a period when road construction costs have grown more than 60%.
The freeze in the gas tax spurred the second action. Doyle and the Legislature ratcheted up borrowing in response to the lost purchasing power of transportation fund revenue. Republicans who took charge in 2011 have pressed the debt accelerator pedal further to the floor, adding another $2.5 billion to the billions in transportation debt issued under Doyle.
The consequence? According to the Legislative Fiscal Bureau, by next year nearly 22% of transportation revenue will be devoted to debt service. This compares with just 10% only a decade ago. How bad is the problem? Observes the nonpartisan Wisconsin Taxpayers Alliance, “the Wisconsin transportation fund already devotes a higher share of revenues to debt service than the U.S. government.”
With more gas tax and vehicle registration revenue needed to repay debt, less is available to repair roads and rebuild the southeastern Wisconsin freeway system. Thus, the downward spiral, an unsustainable situation called out by independent commissions, the nonpartisan LFB, the respected WTA and Walker’s transportation secretary.
Bottom line: Existing transportation revenue — stagnant for more than a decade — simply can’t support 1) repayment of mushrooming debt, 2) reconstruction of southeastern Wisconsin freeways, 3) a well-maintained statewide highway network and 4) local assistance for 90,000 miles of rural and municipal roads.
Compared to other states, Wisconsin ranks 35th in gas taxes and other fees paid by motorists. In the four neighboring states, a typical motorist pays an average of 61% more than in Wisconsin.
There’s a cost to that ranking, one the next Legislature has to confront. It is the cost to motorists and the state’s economy of not raising the gas tax. In that event, credible evidence shows that the share of state highways in poor condition could grow to more than a third. Likewise, southeastern Wisconsin freeway reconstruction will experience long delays and higher costs. These are but two of many illustrations of the real price that will be paid if the state chooses not to reverse the downward spiral.
The cost to the average motorist would be less than $10 a month to turn things around. Given the larger reduction in state and local taxes already in place since 2011, Walker could sign a gas tax increase and still rightly claim a net tax reduction during his tenure.
Potential savings might arise from recommendations in a soon-to-be issued legislative audit of the Transportation Department. However, they will not dent the documented funding shortfall that confronts the Transportation Fund. Likewise, the savings will be modest if the Legislature repeals prevailing wage laws that affect highway construction projects.
The governor and Legislature deserve great credit for progress in stabilizing Wisconsin’s general fund. They’ve largely cleaned up one problem inherited from Doyle. It’s time to address the other one.
Retired education consultant George Mitchell was assistant state budget director in the Lucey administration when the current Transportation Department and integrated Transportation Fund were created. He is a former Milwaukee County director of public works.