The state Legislatureâ€™s Joint Committee on Finance only lightly questioned Gov. Jim Doyleâ€™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 Doyleâ€™s oil-assessment proposal, which could generate nearly $272 million for the state in the next two years, is essential to meeting the stateâ€™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.
â€œBut no state has ever put an anti pass-through provision that was found to be constitutional,â€ 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.
â€œItâ€™s a way to ask oil companies to pay their fair share in our transportation system,â€ he said. â€œI always talk about needs. The fact is, (transportation) needs are far outpacing what weâ€™re getting in revenues. And the shortfall gets greater every year.â€
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.
â€œAnd the big risk to the transportation fund,â€ he said, â€œis that we lose the lawsuit and not only have to pay back the money lost but pay it back with interest.â€
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.
â€œIn my district, my constituents call it gas tax increase, which is the last thing we want to do right now,â€ she said. â€œNobody believes thatâ€™s passable. I would ask you to tell the governor that people arenâ€™t buying it.â€