Time for new road options
“The highway’s a ribbon, it makes a gift of everything,” croons singer/ songwriter Eef Barzelay on his band’s 2001 song “Long Lost Twin.”
And Barzelay is right; roads are the arteries of the state economy’s circulatory system. Properly maintained highways get goods and services where they need to be, promote jobs, save us time, and keep us safe. Ask any citizen — Republican or Democrat — what a core function of government should be, and building and maintaining roads will be at the top of the list.
But Wisconsin now faces a quandary, with a billion dollar deficit in the state Transportation Fund. This funding hole has gone largely unaddressed as Gov. Scott Walker and lawmakers have borrowed money to paper over the deficit. And under the budget plan submitted by Walker’s Depart- ment of Transportation, the state will take on $500 more in bonding to help plug the hole. This means nearly a quarter of the Transportation Fund will soon be used to pay off debt service; only a decade ago, that number was 10%.
The drop in transportation revenues is the result of a number of factors, primarily the decision in 2005 to freeze the gas tax at 30.9 cents per gallon. At the time, the argument for doing so was sound; no state tax should increase automatically every year without legislative oversight. Before it was frozen in 2006, the flat gas tax had been automatically indexed upwards 21 times.
But the argument at the time was, if the Legislature wants to raise the gas tax, it should be debated and put to a vote. And that time is now.
Part of the difficulty of the gas tax is how it is applied — as a set, per-gallon fee. This means it doesn’t increase automatically as the price of gas increases, as normal sales taxes do. Since most other
sales taxes are applied as a percentage of the cost of a product, as inflation pushes cost higher, taxes naturally follow. Between 2003 and 2014, the state’s sales tax collections jumped 18.7%, without any law change increasing taxes. Essentially, inflation provides a hidden tax increase every year.
But the gas tax doesn’t have the benefit of such increases, as it is applied as a set amount. Consumers also are buying less gas, which means shrinking revenues. In 2013, drivers were buying about 2.2% fewer gallons of gas than they were in 2004; hybrid cars and telecommuting have made driving more miles less of a necessity.
And there’s a cost to that revenue drop. State Transportation Secretary Mark Gottlieb testified on Tuesday that the share of Wisconsin highways in poor condition is likely to double over the next decade. At the current rate of funding, Gottlieb said, certain “megaprojects” in southeastern Wisconsin would likely be delayed 70 years.
Of course, there are those that would counter that it’s not very “conservative” to simply raise taxes rather than lower costs. And certainly finding savings within the DOT budget should be the first option.
But it’s also not conservative to put road building on a credit card, either, which will cost taxpayers much more in the long term. Think taxes are high now? Wait for the bill to come due on the billions the state owes with interest.
Further, the gas tax makes sense because it is directly tied to a particular service, and paid for by those that utilize that service. With a new constitutional amendment that protects the Transportation Fund from raids, drivers can be sure that the taxes they pay are going for their intended purpose — this wasn’t always the case. So in essence, one could consider it a road user fee, just as a toll would be.
It seems likely that Walker’s new debt plan is just a brief pause while the state waits for Donald Trump to shower money on the state through his proposed trillion-dollar infrastructure plan. But this would just be bailing the state out of its bad decisions that continue to compound year after year.
Wisconsin needs a stable, balanced funding source for its highways. Simply kicking the can down the road will just leave us all climbing out of a giant pothole.