The state’s road map to paying for highway construction during the next two years will drive up the budget deficit the Legislature spent months trying to close.
Jon Dyck, a fiscal analyst with the Legislative Fiscal Bureau, said the state will be on the hook for 10 to 20 years paying off the $204.7 million promised to transportation projects through general budget-supported bonding, which means the state will use the general budget as collateral for loans to pay for transportation construction.
“In general, it’s contributing to the ongoing deficit,” Dyck said. “Debt service has become an increasing share of the general fund in recent years.”
But for the next two years, road builders can take solace knowing money set aside for road projects will be protected, said Craig Thompson, executive director of the Transportation Development Association of Wisconsin. He said his members also can be grateful there will be no lawsuits brought on by a state-imposed tax on the revenue of oil companies working in Wisconsin.
“The good news is this could keep us moving for two years,” Thompson said.
The bad news is state officials still are struggling to find an alternative to bonding to pay for transportation work in 2011 and beyond.
“I think right now, all we’re doing is borrowing from our children’s future,” said state Rep. Jeff Stone, R-Greendale. “That’s not a plan, and it’s not something we should keep considering.”
Three years ago, the Legislature’s Road to the Future Committee determined the state’s transportation system faces an annual $700 million shortfall for basic needs. Thompson said the Legislative Fiscal Bureau raised that number to roughly $1 billion only a year later.
Alternatives such as open-road tolling and weight-based vehicle registration fees have failed to pick up momentum. Wisconsin Department of Transportation Secretary Frank Busalacchi has maintained his opposition to tolling.
In two consecutive state budgets, Gov. Jim Doyle proposed taxing revenue oil companies to generate money for transportation work, but he faced strong legislative and legal opposition to the idea. Doyle said he wants to prevent oil companies from passing the tax through to consumers, but critics argue there is no legal way to do it, and the state could pay millions defending the idea in court.
Nevertheless, Doyle spokesman Lee Sensenbrenner said the governor remains committed to finding a way to make the idea work.
“He will continue to push it,” Sensenbrenner said. “It’s the preferred option.”
The oil-franchise fee remains the only new idea offered during the budget process. Although GOP lawmakers criticized the idea, they did not provide alternatives, instead arguing the state’s transportation money must first be protected from raids to pay for other areas of government.
Stone said there will not be broad support for a new source of transportation revenue until lawmakers can be assured the money will not be used for nontransportation purposes.
Some business groups suggested raising the gas tax or returning to gas-tax indexing, which is an annual and automatic gas tax adjustment that keeps pace with inflation and fuel consumption. But Thompson said the gas tax might not grow enough to consider it a viable option.
Regional transit authorities, he said, are a step in the right direction because they offer a new source of money for transportation. Yet Doyle’s green light in the budget to create RTAs does not guarantee they will take hold in areas such as Dane County, where voters are hotly debating the issue and a referendum might kill an RTA before it can start.
Thompson said he will begin meeting with lawmakers and other road and construction groups in the coming months to start discussing new revenue ideas.
The discussion has to happen, Stone said, but unless the money is protected and until the federal government finds a way to raise money for road projects, state lawmakers will be hesitant to commit.
“We need to know there’s a plan that makes sense,” he said.
Meanwhile, Dyck said, bonding continues as one of the most formidable roadblocks to the state’s deficit recovery efforts.
“It’s not the biggest factor over the last few years,” he said. “We started in a hole with general fund revenues.
But debt service is growing and is one of many factors keeping us in a deficit.”