Budget proposal would broaden WisDOT’s powers to borrow for rehab projects

With a budget request that’s likely to change greatly under the newly elected governor, the Wisconsin Department of Transportation has proposed broadening its borrowing powers to pay for road rehabilitation work while avoiding any need to raise the state’s gas tax or vehicle-related fees.

In its 2020-2021 biennial budget request, WisDOT proposes changing Wisconsin law to allow so-called Transportation Revenue Bonds to be used for its State Highway Rehabilitation program, which pays for highway and bridge improvements. State law now prevents these sorts of transportation bonds, which are backed by registration and other vehicle-related fees in the state’s transportation fund, from being used for anything other than the agency’s Major Highway Development program. That program deals with costly and complex projects such as the ongoing reconstruction of Interstate 39/90 between Madison and the Illinois state line.

The agency’s budget request comes as an early step in the drafting of WisDOT’s next two-year infrastructure spending plan and will most likely be changed greatly after Gov.-elect Tony Evers takes office in January. The document was compiled under Gov. Scott Walker, who lost to Evers in early November. On the campaign trail, Walker had rejected calls for taxes to be raised to bring in additional transportation money and instead proposed putting plans for large highway projects on pause and spending more on local roads.

WisDOT’s budget request calls for changing state law to expand the department’s borrowing powers to allow debt to be used for rehabilitation projects. The plan proposes using $26.4 million worth of transportation-revenue bonds in the 2020-2021 budget period to make up for a expected shortfall of transportation revenue and cutting the amount of bonding allowed for the major highway development program by $34.8 million.

“Revenues to the transportation fund do not fully support the state’s share of improvements to the highway infrastructure,” according to the agency’s justification for expanding its borrowing authority. “Bonding, with debt service funded by the transportation fund, enables the state to continue key investments without significant transportation user fee increases.”

By expanding its borrowing authority, WisDOT would also gain “flexibility” to choose which funding sources are best for particular rehabilitation projects, according to budget documents. A WisDOT spokesperson didn’t respond by press time on Friday to questions about the agency’s budget request.

The budget, meanwhile, proposes cutting $198 million from the state’s major highway program and adding $153.5 million to its highway rehabilitation program. Such a change would be in line with how Walker said he’d pay for infrastructure projects if he won re-election this year — by placing a priority on highway maintenance and repairs rather than large interstate projects and giving local governments more cash for roads.

Evers, in contrast, has offered few specifics either about how he’d raise money for roads or where he’d like to see such money spent, while criticizing the condition of Wisconsin’s roads. During a visit to a union-training center in mid-November, Evers said he wants to draw up a “collective” plan on road funding and would prefer to carry it out without raising taxes. Evers’ spokeswoman Carrie Lynch repeated this stance in a statement on Friday, saying WisDOT’s budget proposal would not do enough for state infrastructure.

“This provision clearly shows the need for what Governor-elect Evers has been saying all along about the transportation budget,”Lynch said. “It’s time for a bipartisan, long-term solution to adequately fund Wisconsin’s infrastructure. He will work with both Democrats and Republicans next session to implement a sustainable, long-term fix for how we fund our roads.”

For years, various lawmakers, critics and experts have warned that the state needs new revenue sources to pay for transportation. Walker and some of his fellow Republicans have repeatedly rejected those appeals, in part because they did not want to raise taxes or fees at a time when the country was still recovering from a recession.

A state report released in late August found spending fell in each of WisDOT’s biggest transportation-project categories during Walker’s time in office and that the state’s debt-service payments had ballooned by 66.9 percent since the 2011-2012 fiscal year. This year, for instance, saw the state make a $496 million debt-service payment, an amount that was markedly higher than the $303 million Wisconsin paid in the year before Walker took office.

Dan Fedderly, executive director of the Wisconsin County Highway Associated, said WisDOT’s proposed expansion of its borrowing powers is another attempt to sidestep revenue increases. He deemed it a patchwork proposal and said that, if it were adopted, it would fail to eliminate current deficiencies in how the state pays for public works projects.

“When you’re talking about bonding, the other side of that, which is clearly part of the discussion, is raised revenue,” Fedderly said. “That’s why bonding gets such a spotlight on it. Ultimately we’ll have to answer the question of a long-term sustainable revenue source.”