Transportation funding — Pay now, or pay more later 3/27/2019
3/26/19, InBusiness Blog – Over time, the cost of most things goes up — food, clothing, rent. According to the U.S. Bureau of Labor Statistics and their Consumer Price Index (CPI), it takes about $1.25 today to buy what $1 would get you in 2006.
So, we should not be surprised the gas tax, which is a flat rate per gallon and last increased in 2006, is not keeping up with the needs of Wisconsin’s transportation system.
If the gas tax were still indexed for inflation using CPI, it would be about 8 cents higher today. This is right around the amount of increase the governor is proposing in his budget.
Until a little over a decade ago, small increases to the gas tax based on CPI would have occurred automatically each year.
In 2005, lawmakers repealed the indexing of the gas tax just as the need to rebuild the aging interstates was really picking up steam. While at the time, legislators said they would take the tough vote on increasing the gas tax, they never did. Instead, they treated bonding not as a financing mechanism but as a funding stream.
As a result, the amount of user fee dollars needed to service the debt grew, and the negative cycle began.
More money going to pay off projects already built reduced cash available to build today’s projects, which led to more debt to bridge the funding gap.
Currently, over 20 cents of every dollar paid by motorists in gas tax and registration fees goes to servicing the debt versus around 10 cents in 2006.
These decisions impacted most aspects of Wisconsin’s transportation system. According to information prepared by the Wisconsin Department of Transportation (WisDOT), real spending has declined in all programs since 2006 except two — highway operations (maintenance) and debt service, which has more than doubled.
This has meant local governments and WisDOT had to make tough decisions, a kind of transportation triage where projects and services were sorted based on their need for immediate treatment compared to their chance of benefiting from such care. While this process may be the most rational use of scarce resources short term, let’s be honest, this also left some roads and bridges to simply fail over time.
The road treatments performed were also more likely to fall into the category of “lowest cost today” versus “best value over the life of the asset” — another overlay versus rebuilding an aging and outdated roadway. These short-term Band-Aids may give temporary relief but do not fix the underlying problems, resulting in the need for recurring treatments. Orange barrels became a sign not of progress, but a symptom of the disease — inadequate funding.
Roadway conditions declined, and the public took notice.
TDA has spent the last three years traveling the state as part of the Just Fix It campaign talking to people about transportation conditions and the impact in their communities. We have seen bridges fail and main streets in poor shape. We have heard from businesses about the impact of road conditions on fleet maintenance and the need to connect employees to employers with better public transportation. We have engaged commuters on social media and read their stories about bent rims and front-end alignments.
There is widespread consensus something needs to be done to fix our transportation problem. Now for the tough part: we need to agree on HOW to fix the problem.
Wisconsin Manufacturers and Commerce is on record supporting a 5-cent gas tax increase and a modest increase to registration fees, historically $25 for cars and light trucks. The interesting thing about this proposal is that it generates roughly the same amount of revenue a biennium as the governor’s proposal.
So, coming to consensus and taking the first step to stop the further decline of the system should be doable.
Debate about various funding mechanisms may dominate the discussion in the Capitol and the press, but it is important to remember what this is really about. This is about taking care of a transportation system that supports Wisconsin’s economy and enhances the quality of life for everyone in Wisconsin.
For around $4 a month in additional fees from users of the system — about the cost of a large gourmet coffee — Wisconsin can stabilize highway conditions, give more support to local governments for roads and public transportation, and reduce the the percentage of user fee dollars going to service the debt.
Will it completely solve the problem? Probably not, but it is an important first step.
It took us more than a decade to arrive in this spot. It would be unrealistic to expect to solve it overnight.
But we know one thing with certainty — that $4 won’t go as far in the future.