Dept service eats up funds needed for road projects

Should out-of-state tourists pay more toward repair and construction of roads in Wisconsin? Or should we leave the costs to our children and grandchildren?

The key to getting help from the folks from Illinois and Minnesota is an increase in gasoline taxes. Wisconsin’s gasoline tax is now 32.9 cents per gallon, the sixth-highest in the nation.

Tax phobia has gripped the state. For years Wisconsin indexed the gasoline tax to inflation, but that was repealed by lawmakers who said it was wrong to allow tax rates to increase without formal action by the Legislature and the governor.

The recession hit after gas tax indexing was repealed. Gas tax revenues fell 2 percent. Other major taxes increased modestly at the same time – 7 percent for income and 3 percent for the sales tax.

State officials opted to borrow in order to maintain and increase the level of highway spending. Highway-linked debt service reached $306.9 million in 2012, the Wisconsin Taxpayers Alliance noted in a recent report.

“Rising debt-service costs mean fewer dollars available for highway construction and repair or for other transportation needs,” the Alliance report noted.

It’s going to get worse. The gubernatorial transportation finance commission has warned that debt service could claim nearly 25 percent of transportation revenues in a decade. The gap will continue to grow.

“Existing transportation taxes fees are expected to generate $25 billion over the next 10 years,” the Alliance said. To maintain current levels of service the state would need $30.8 billion in the next decade. In January the Transportation Commission suggested spending $31.8 billion in the next 10 years.

Major multi-billion dollar projects are on the planning boards. Major roads and freeway interchanges are going to be rebuilt in the Milwaukee area. Work is beginning on widening the interstate road from Madison to the Illinois line. The highway work is touted as helping the state’s economy. It will also provide a lot of jobs in future years.

We all love good roads with limited congestion. The politicians know that, and they also like to name roads for assorted public figures who have departed. Perhaps the politicians think that they, too, may get some section of highway named for them.

For the immediate future, the politicians have – in the favorite phrase of political pundits –“kicked the can down the road.” The day of decision-making (higher taxes or less spending) has been delayed while the politicians tell the public that there are no tax increases in the new state budget.

“Ultimately, the answer comes down to a matter of political will,” the Taxpayers Alliance says.

Other factors outside political will also are at work. Gas tax collections are impacted by increased fuel efficiency of vehicles. Federal efficiency standards are now put at 54.5 miles per gallon by 2025. The Alliance reported that in 2012 Wisconsin gas stations sold 77 million fewer gallons of fuel than a decade earlier.

Slower economic and population growth and the rise of the state’s average age also apply downward pressure on miles driven.

Transportation finance varies widely among the 50 states. Some states subject gasoline sales to their sales taxes. Others rely more heavily on registration fees. The value of the vehicle comes into play in determining the level of registration fees. It’s been argued Wisconsin relies more on the gasoline tax because of its desire to have out-of-state tourists help.

A final question. With the continued bouncing up and down of prices at the pump would anyone have noted an increase in the state gasoline tax?


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