WisDOT waits on revenue surplus decision

By Dan Shaw

An unexpected revenue windfall means the state could have enough money to eliminate a projected $688 million transportation deficit in the next budget and ensure the on-schedule completion of projects such as the Zoo Interchange reconstruction.

Even so, Mark Gottlieb, Wisconsin Department of Transportation secretary, declined to say whether he thinks the $912 million in additional revenue announced by the Legislative Fiscal Bureau on Thursday should be set aside for the shortfall. A spokeswoman for Gov. Scott Walker said Wednesday he will use his State of the State address next week to propose putting some of the surplus toward reducing property and income taxes, but she did not mention other priorities.

Gottlieb said he is deferring to Walker on whether transportation should be at the top of the list.

“I’ll leave it to him to announce those plans,” Gottlieb said, “on how he intends to propose to use whatever revenues come in.”

Gottlieb said lawmakers have three ways to deal with the looming transportation budget deficit, which largely is a result of anemic increases in projected fuel-tax revenues. They can borrow more, he said, cut spending or find a way to raise additional revenue.

None of the options is likely to be popular among state officials, but there are reasons to believe the last one is the least repellant. Many of the Republicans who control the statehouse have bemoaned the state’s ever-increasing debt burden, totaling $994 million for transportation projects alone in the current budget, and are hesitant to add to it.

Meanwhile, if WisDOT had to find the $688 million in its own budget, the savings would probably lead to a 25 percent reduction in highway spending and come at the expense of the on-schedule completion of priority projects such as the reconstructions of the Zoo Interchange and the north-south Interstate 94 corridor between Milwaukee and the Illinois border, Gottlieb said.

For a revenue increase, Gottlieb said, he and other WisDOT officials are calculating exactly how much lawmakers would have to increase the fuel taxes and registration fees now used to pay for most state transportation projects to eliminate the deficit and set the transportation budget on a solid footing for years to come. Gottlieb said the Walker administration has expressed openness to raising more revenue from those sources as long as the increase is offset by tax cuts elsewhere.

But such a proposal, said state Rep. Robb Kahl, D-Monona, would trade immediate tax reductions for the mere promise of an increase in transportation revenue. Noting that Walker will be running for office again in fall, Kahl said he wonders if tax cuts, passed in part to curry favor with voters, would be remembered when the question of the state’s transportation deficit comes up in the next budget.

“We have been hearing that we had a transportation problem in the last 20 budgets,” Kahl said. “It’s got to the point where it will have to be addressed in the next budget. Well, why not make a down payment on it now?”

Kahl was part of the 10-member Wisconsin Transportation Finance and Policy Commission that, at the behest of Walker and the Legislature, released a report a year ago on how the state can pay for its transportation needs. Concluding that an additional $5.8 billion will be required during the next 10 years merely to maintain what the state has, the report called for raising the state’s gas tax by 5 cents a gallon, charging drivers of passenger cars and light trucks 1 cent for every mile they travel, and increasing license and registration fees.

State officials have not acted on those recommendations. They have instead plugged previous deficits by reducing spending, relying more on borrowing and transferring money out of the general fund.

Kahl said one prudent use of any projected surplus might be to pay off some of the state’s debt. He said he is not opposed to a tax cut but said he thinks the governor also should be talking about other spending priorities.

But transportation advocates should be careful what they wish for, said Todd Berry, president of the nonpartisan Wisconsin Taxpayers Alliance. Berry said a greater reliance on the state’s general fund will cause roads to compete for money with other priorities such as education.

He also said turning more and more to general revenues in some ways undermines an implicit pact reached with the public. The historical reliance on fuel taxes and registration fees to pay for transportation is grounded on the principle that the money for roads should come from those who use them.

“If you believe you want a transportation fund paid for by user fees, then you can’t do what we did in the past, which is take the money and use it for other things,” Berry said. “But, conversely, you shouldn’t be raiding the general fund to subsidize the transportation fund.”

Despite such arguments, Gottlieb said more states are increasing their use of general revenues to pay for transportation. He said the practice makes sense because roads and bridges contribute to general economic prosperity.

Gottlieb said he and other WisDOT officials plan to discuss those matters in forums this spring before the public, which will have to decide how the state can best pay for transportation. The priority, he said, will be to find a way to make whatever revenue increase is proposed not hurt too much.

“When the governor gave us the direction to adequately and sustainably fund transportation for the next budget and beyond,” Gottlieb said, “he envisioned the proposal to be part of a broader tax reform package that he would putting together, which would in total not add to the tax burden in the state.”

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