The governor’s proposed oil fee assessments for the next state budget continues to stir debate both inside and outside the Capitol in Madison.
The Wisconsin Transportation Builders Association rebuked Wisconsin Manufacturers & Commerce’s recent comments that compared the governor’s proposed assessments to the state’s gas tax indexing program, which was repealed by the Legislature last year. WMC says gas taxes will be driven up by the proposal, while WTBA says that’s just a scare tactic.
“It misrepresents the oil company fee to say that taxes will go up,” said Kevin Traas, WTBA’s director of transportation policy and finance. “[The proposed 2.5 percent fee] is fixed and will change as the price of fuel changes. When the price goes up, revenue goes up, but when it goes down, it too will go down. Where gas prices are right now, it’s a little higher than anybody expected, but in January when gas was selling for $2.02 per gallon, that was below what the budget would have expected.”
Traas said that rising prices at the pump make it convenient for rhetoric about tax increases and lowering fuel costs to intensify but that the Legislature’s recent track record in trying to lower gas prices has left a lot to be desired.
“The last time they wanted to do that, they repealed gas tax indexing,” he said. “That was when gas was selling for $2.50 per gallon. So obviously that had no impact.
“When you look at the way prices have fluctuated over the last several months, you’ll also see that the gas tax has not budged from 32.9 cents per gallon.”
Other options offered
But James Buchen, vice president of government relations for WMC, maintained that the proposed gross receipts tax would drive up the tax by seven cents. In a statement Wednesday, he compared it to “gas tax indexing on steroids,” which prompted the strong response from WTBA.
“We can understand why they’d be philosophically against the proposal, because it is a tax on profits,” Traas said. “But to call it indexing on steroids is just inaccurate.”
Buchen said the statement was made because the proposal would see gasoline taxes increase along with the price, and that gross receipts are ultimately a hidden tax, albeit a rather conspicuous one.
“We’re not opposed to the indexing system we had in place,” he said. “That would’ve only raised the tax a penny or two as opposed to seven cents.”
Buchen said WMC shares WTBA’s concerns for strong investment in the state’s transportation system but would prefer to see a more modest proposal including increases in licensing and registration fees and increases in the sales tax on motor vehicles instead of such a heavy reliance on gas taxes.
“We need to diversify away from our reliance on gas taxes,” he said. “We’re one of the only states that doesn’t have a diverse means of bringing in dollars to the transportation fund.”
Buchen also said that while he feels some in the Legislature are committed to the state’s transportation system, others are not, and implementing a series of changes might be tough going.
“The biggest problem is that our governor is not committed to transportation, and he’s shown that biennium after biennium in taking away millions of dollars from the fund,” he said.
Traas said WTBA will continue to support the governor’s proposal as it would bring in necessary transportation funding and is the best idea on offer at the moment.
“We’ve done some legal analysis that suggests you can prevent oil companies from passing on their assessments to the consumer,” he said. “The thing is, until somebody steps up to the plate and offers an alternative or a better suggestion, this is the best thing we’ve got, and we’re going to run with it.”