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Oil-franchise fee avoids major scrutiny

Paul Snyder
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The state Legislature’s Joint Committee on Finance only lightly questioned Gov. Jim Doyle’s proposed oil-franchise fee during a budget review session Thursday.

Frank Busalacchi, secretary of the Wisconsin Department of Transportation, testified before the committee on the transportation portion of the 2009-11 budget. Although he said Doyle’s oil-assessment proposal, which could generate nearly $272 million for the state in the next two years, is essential to meeting the state’s core transportation needs, only two committee members questioned whether the state could get the money.

State Rep. Robin Vos, R-Racine, raised a concern over the possibility of the fee facing a court challenge.

Under the proposal, oil companies doing business in Wisconsin would be taxed on gross receipt totals every year. The proposal also contains a provision prohibiting companies from passing the tax on to consumers.

“But no state has ever put an anti pass-through provision that was found to be constitutional,” Vos said.

While attorneys, construction industry leaders and lawmakers from both parties said recently that a legal battle is likely if the state passes the fee, Busalacchi said Thursday Wisconsin needs to broaden its reach for money for a wide array of services, and oil companies should be accountable.

“It’s a way to ask oil companies to pay their fair share in our transportation system,” he said. “I always talk about needs. The fact is, (transportation) needs are far outpacing what we’re getting in revenues. And the shortfall gets greater every year.”

But David Crass, an attorney with Madison-based Michael Best & Friedrich LLP, said he wonders if the money could ever get to the point of meeting those needs. Passage of the oil-franchise fee, he said, would likely lead to a legal battle that would last at least two years and cost the state hundreds of thousands of dollars.

“And the big risk to the transportation fund,” he said, “is that we lose the lawsuit and not only have to pay back the money lost but pay it back with interest.”

If that happens, Crass said, transportation is left with a big financial hole.

State Sen. Alberta Darling, R-River Hills, was the only other committee member to question whether the fee is realistic.

“In my district, my constituents call it gas tax increase, which is the last thing we want to do right now,” she said. “Nobody believes that’s passable. I would ask you to tell the governor that people aren’t buying it.”

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