Just Fix It Wisconsin
Raise the gas tax 2/15/2016
2/12/16 RightWisconsin.com by George Mitchell – To some those are fighting words. They believe the phrase “tax increase” may be uttered or written only after the word NO.
I’ll make three arguments here. First, the Wisconsin gas tax needs to be increased. Second, there’s a solid conservative rationale for that idea. Third, opponents need to man up and own the alternative.
The issue is timely given commentary this week from my friend and RightWisconsin contributor James Wigderson. Wiggy opposes Assembly Bill 210, a measure whose entire raison d’être is explained by Wisconsin’s failure to address squarely the funding of transportation. While I also oppose it I do so for very different reasons. AB 210 is a band-aid effort to work around the fact that Republicans kick this can down the road year after year. Enactment would reduce the incentive for a bona fide deal as part of the 2017-19 budget that Governor Scott Walker will submit a year from now.
Governor Walker and the Legislature have only three options. What they do next year will fall under one of these choices.
Option 1 — Raise the gas tax.
Option 2 — Don’t raise the gas tax. Instead, rely more on transportation borrowing. (To date, this is the option that Governor Walker has favored.)
Option 3 — Don’t raise the gas tax. Don’t increase borrowing.
One thing is crystal clear. Whatever option is picked, Republicans will own it. 100%. The next state budget will be the fourth consecutive spending plan enacted with state government in complete GOP control.
Two numbers help explain my argument for a gas tax increase:
$1.3 billion — In his 2015-17 budget Governor Walker proposed $1.3 billion in new borrowing for state transportation projects. This is more than three times the level of new transportation debt approved in the 2003-05 budget.
$408 million — Had the Governor’s proposal been enacted this is the amount of debt service on transportation borrowing that would have been required in the current fiscal year. It is four times the amount of debt service in 2002-03.
While the Legislature pared back the Governor’s recent borrowing plan, the share of the transportation budget devoted to debt service still is nearly three times the level it was 15 years ago. Were Paul Ryan or Ron Johnson to examine these trends they would offer a one word finding: Unsustainable.
What the state has been doing under Jim Doyle and now Scott Walker is not a conservative financial approach. It is instead akin to a family with a $75,000 income deciding to spend at a $90,000 level by juggling credit cards. The implications for Wisconsin’s transportation fund are similar to the grim picture of federal budget trends depicted by Senator Johnson in charts he has discussed with more than 17,000 Wisconsin residents.
While the language is dry, read carefully the following analysis from the independent Legislative Fiscal Bureau:
Due to slow growth (or decline) of motor fuel consumption…revenues available for transportation have not been sufficient to maintain the purchasing power [for programs OK’d by the Governor and Legislature] or to respond to increased funding demands…[O]ver the last several biennia [this has] led to…bonding to fund a significant part of the state highway program. The increased debt service…has put further pressure on the transportation fund’s ability to meet program demands…
Limited revenue growth and previous decisions to use bonding extensively have driven the annual increases in debt service…The Governor’s recommendations…would rely even more heavily [on debt]. This will further and more quickly escalate the impact of debt service…
The effect [of more bonding means that] for five of the last six years the annual growth in debt service has exceeded…the annual growth in gross transportation fund revenues…That fact that debt service payments have consistently been growing faster than transportation fund revenues suggests that…revenues are not sufficient to continue the recent or proposed levels of bonding.
In other words: Unsustainable.
Governor Walker has disregarded the evidence presented by various study commissions and, more recently, his transportation secretary. He opposes raising the gas tax but still wishes to spend more than the level provided by the current gas tax (and other transportation fees). It’s a downhill spiral.
The most honest approach for those who oppose a gas tax increase is to list the projects they believe should not be funded. They should be held accountable for the resulting impact on the state’s economy and the stated goal of the Governor and Republican legislators to create new jobs.
The other option for opponents of a higher gas tax is that the state can continue borrowing more and more to finance projects whose costs exceed transportation fund revenue. What could go wrong?