The oil-franchise fee is on its way to the state Assembly with waning support from lawmakers and a road-building industry wondering how the state will pay for projects.
“We thought (the transportation fund) was safe in the past, but ever since they took (gas-tax) indexing away, it’s been a question,” said Mike Ryan, president of Concrete Structures Inc., a Janesville-based bridge building company.
Ryan said state or federal money finances 90 percent of his company’s work. Although projects are out there for the industry, he said, no one knows if the cash will be.
Ryan’s concern stems from controversy festering over Gov. Jim Doyle’s proposed oil-franchise fee since he first introduced the idea in his state budget proposal earlier this year.
The proposal would tax gross receipts of oil companies doing business in the state and could generate as much as $272 million for Wisconsin’s transportation system in the next two years. It also contains a provision that would prevent oil companies from passing the tax on to consumers.
Long derided by GOP lawmakers, the idea now is losing support from Doyle’s own party. State Reps. Jennifer Shilling, D-La Crosse, and Gary Sherman, D-Port Wing, both supported a failed Joint Committee on Finance motion Thursday to remove the fee from the state budget.
State Rep. Mark Pocan, D-Madison, tempered his support of the fee by acknowledging the legal land mines surrounding the proposal’s anti-pass-through caveat, which many predict will face a court challenge that could lead to large legal fees for the state.
Adding to the oil-franchise fee’s tenuous support was a push from state Sen. Luther Olsen, R-Ripon, and state Rep. Robin Vos, R-Racine, to back a gas-tax increase if the money stays segregated for transportation purposes.
The faltering support and willingness by some to embrace previously unpopular alternatives sends a clear message, said Senate Minority Leader Scott Fitzgerald, R-Juneau.
“I think it goes to show you how bad the oil-franchise fee really looks,” he said. “A 1- to 3-cent gas tax increase actually seems reasonable in comparison.”
But not reasonable enough to Fitzgerald, who said the Senate Republican caucus will not support a gas-tax increase.
Doyle last month said he would consider the tax increase, but his spokeswoman, Carla Vigue, said Friday the governor remains committed to the oil-franchise fee.
The state Assembly is scheduled to begin considering the budget June 9. And Terry McGowan, business manager for the International Union of Operating Engineers Local 139, said he has faith lawmakers will choose wisely when deliberating on the fee.
“If they see a lawsuit with penalties coming, they’ll protect us,” he said.
Taxing oil companies to help pay for road and bridge projects is legitimate, McGowan said, but the idea must be balanced with the prospect of losing a legal battle over the anti-pass-through provision.
“We lose a lawsuit, we’ve got to pay that money back plus 9 percent,” he said. “What’s the Highway Trust Fund going to look like then?”
Ryan said he knows his business will not look good if the state cannot find a reliable way to pay for road projects.
“There aren’t many private bridges out there,” he said.