Transportation funding and paying for road repairs will be a sticking point in the upcoming state budget. Here are Five Things You Should Know:
The “real” price of gas is $1.65 a gallon: In Wisconsin gas prices are averaging $2.16 a gallon. But the federal government adds 18-cents as for the National Highway Trust Fund. The state adds another 32.9-cents per gallon.
Alaska and New Jersey have the lowest gas taxes in the nation, at 12- and 14-cents. Pennsylvania has the highest gas tax in the nation at 51-cents. The national average is 30-cents.
Wisconsin’s gas tax is shrinking: One reason the state’s gas tax is bringing in less money is obvious; we’re driving cars that use less gas. Electric-hybrid vehicles that use gasoline only as a reserve-fuel are fueled up less often and bring in less gas-tax revenue for the state. The other reason is a change in policy. For 20 years, between 1985 and 2005, Wisconsin’s gas tax was indexed to inflation. The gas tax was adjusted each year based on the consumer price index. It rose to 51-cents a gallon. With the 2005 budget the state cut the gas tax and dropped the indexing. Now the gas tax no longer increases automatically; it requires a separate vote from the legislature. Tax hikes have been unpopular to the point that it hasn’t been increased since.
Wisconsin’s gas tax generated $1-billion in 2008. That’s declined to $967-million today.
Some people have argued that raising the gas tax would be painless for drivers at a time when gas prices are going down. Today the pump price is 26-cents a gallon less than a year ago. A 5-cent per gallon gas tax hike would still allow drivers to enjoy a substantial savings. The counter-argument is that drivers should enjoy the full benefit of lower prices, not share the windfall with the government.
Wisconsin does not have a lot of flexibility on how its transportation funding is spent: The state’s gas tax and vehicle registration fees ($75 per car, unless you live in one of the counties or cities that has an additional wheel tax) goes into a transportation trust fund. The Wisconsin Transportation Builders Association, a powerful lobbying group, has been very protective of what that money is used for. Their position has long been that drivers pay into the fund when fuel up, and that the fund should be used almost exclusively for the benefit of drivers — for highway maintenance and improvements. The WTBA has long opposed transportation fund raids, like the $650-million Governor Jim Doyle took out of the fund and moved into general revenue in his last budget. That transfer was challenged in court, and state law has since been tightened to make fund raids more difficult.
The Badger State Express, the proposed high speed train from Milwaukee to Madison, is an example of the protectionism of the road-building lobby. Federal grants would have paid for almost all of the track upgrades and train purchases. Train manufacturer Talgo even agreed to set-up shop in Milwaukee and build the locomotives and train cars here. But ticket revenue for the new train line would not have covered all of the operating costs. The shortfalls would have come out of the state’s transportation trust fund, which the WTBA vehemently opposed. Governor Walker, unwilling to have the train line’s expenses suck up money that would have been used for roads, campaigned against the train and killed it shortly after winning election.
Communities with buses are in a similar pinch. Wisconsin state law does not allow for regional transit authorities that cover multiple counties or cities. Those transit authorities could become their own taxing districts, which many lawmakers oppose. So a county or city that has its own buses must fund them out of fare box collections, federal grants and general revenue. The state’s road dollars are off-limits for public transit.
In short, gas taxes are for roads only in Wisconsin. Other forms of transportation have to compete with all other government programs for their funding.
Toll roads are unlikely in Wisconsin: From time to time you’ll hear a debate over putting tolls on Wisconsin’s most traveled highways. After all, Wisconsin drivers pay each time we use the Illinois Tollway to Chicago. We could collect similar revenue from all those out-of-state visitors to the Dells or the Northwoods. Only, we can’t. Federal law is very specific on when and where tolls are allowed, and the law applies to the entire interstate highway system and to roads that were built with federal funding.
Tolls are allowed in two circumstances: either to pay for a specific road project, or to manage demand on crowded roadways. So, hypothetically, if Wisconsin were to build a new bridge on I-41 over the Menomonee River a toll booth could be set up to pay off the costs of the project. Or, if Wisconsin were to create high occupancy vehicle lanes around Madison or widen the highways near Kenosha to deal with rush hour traffic, tolls could be used to pay for it. But federal law would require those tolls to be electronic with rates that vary based on the times that roads are most crowded. The toll might be $2.50 during mornings, late afternoons, and holiday weekends. But drivers who delay their trips until midday might pay only 75-cents. The demand pricing model is much different than just putting up toll booths to collect general road revenue. Federal law has cut off that funding option.
Other options for road funding are on the table: Four counties have a wheel tax: Iowa, Chippewa, St. Croix, and Marathon. Car owners pay $20 or $25 more when they register their vehicles each year for county road maintenance. Twelve other communities have municipal wheel taxes. They are: Appleton ($20), Arena ($20), Beloit ($20), Fort Atkinson ($20), Gillett ($20), Janesville ($20), Kaukauna ($10), Lodi ($20), Milwaukee ($20), Prairie du Sac ($20), Sheboygan ($20), and Tigerton ($10).
Other proposals include dropping the state’s gas tax and registration fees in favor of a pay-as-you-go mileage tax. Drivers would report their odometer numbers on their tax forms each year and would be charged based on how much they drive. It would be a sweeping change in state law, but would also lead to dramatically lower operating costs for people who don’t drive a lot.
Governor Walker has also made the case for continuing to pay for big-ticket road projects through bonding. While some are concerned about Wisconsin’s long term debt, the Governor makes a reasonable argument. Suppose a $20-million highway project was shovel-ready today, and it was going to be paid for out of current tax revenue. It would be a big-ticket item and might crowd out other projects in the short term. The taxpayers of today would do without other things to have a new road. But the road will have a useful live of several decades. And a pre-teen living in the community today will grow up, get a drivers license, and will drive on that road for many years as an adult without having paid anything for it. The costs will have been borne by taxpayers before them. If the same project were bonded over twenty years the costs drop to a more manageable $1-million annually, and the payback is spread out among future users of the asset.
Chris Conley9.29.16
