Replacing the state budget’s proposed oil-assessment fee with a 3-cent gas tax increase will do nothing to ease the political battles brewing over transportation project money, lawmakers said Tuesday.
“It’s just the worst timing for a tax increase,” said Senate Minority Leader Scott Fitzgerald, R-Juneau. “You’re going to tell a guy just getting by on 10 bucks an hour that now you want to raise the price of gas? This would hit Wisconsinites hard.”
The subject attracted attention in the state Capitol after Gov. Jim Doyle on Monday said he would be open to discussing alternatives to the oil assessment. But Doyle spokesman Lee Sensenbrenner later said the governor’s remarks did not indicate he changed his mind about ways to find new money for the state’s transportation system.
“We’ll see which way the discussion goes,” Sensenbrenner said. “But at this point, the governor’s still committed to the oil assessment.”
Doyle’s 2007-09 budget proposal estimates the state could accumulate more than $271 million in transportation money through a tax on reported annual gross receipts of oil companies doing business in Wisconsin.
Opponents of the proposal argue the state is headed toward a lengthy legal battle over the fee because the budget proposes an anti-pass-through clause, which prevents the oil companies from passing the tax on to consumers.
“I think the most important thing I take from this is that there’s a recognition that the oil tax has a significant problem,” said R.J. Pirlot, director of legislative relations for Wisconsin Manufacturers & Commerce. “It’s going to be aggressively litigated, and I think a lot of people believe it just isn’t going to work.”
Senate Majority Leader Russ Decker, D-Schofield, said he has not drawn a line in the sand on the issue, but even Democratic support of a gas tax increase is not a lock.
“There would need to be a bipartisan vote for it,” he said. “And I don’t know whether the support is there for it.”
Decker has supported the oil assessment since Doyle first proposed it in his 2007-09 budget, but the senator said it is too difficult to determine which way legislative momentum would take the issue.
Although raising the gas tax by 3 cents likely would match the more than $271 million expected from the oil assessment, Fitzgerald said, there are no guarantees the money would go to road building projects.
“One idea’s losing steam, so (Democrats) now have this multimillion-dollar hole to fill,” he said. “Sure, (a tax increase) creates revenue, but will it stay in transportation? I doubt it. I think it will simply supplant money for other things like health and human services.”
Even if a gas tax increase is approved in this budget, Pirlot said, new ideas to find transportation revenue would be needed in the next budget.
“It could be setting the table for a return to indexing,” he said. “Earlier this year, when the governor seemed to be suggesting that could happen, we supported that. I think it would be a good thing, and we’d like to be part of the discussion.”
The Legislature in 2005 repealed gas-tax indexing, which was an annual and automatic gas tax adjustment that kept pace with inflation and fuel consumption.
But even with talk of returning to indexing, Decker said, bipartisan support on that issue also might be elusive.
“I think repealing indexing was a mistake that’s keeping a lot of road builders out of work,” he said. “But I don’t know where the discussion would go on it. It was a mixed bag when it was repealed.”