SPN MacIver Institute 2012 National Think Tank of the Year
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What Gottlieb Forgot To Tell You

Comments | Posted in mi perspectives | By MI President Brett Healy | Posted August 21, 2017 10:31 AM

MacIver will always question the need to raise taxes and challenge the wisdom of bureaucrats

August 21, 2017

It would appear the MacIver Institute's look into wasteful transportation projects and practices in Wisconsin has struck a nerve.

It certainly has with former state Department of Transportation Secretary Mark Gottlieb. Mr. Gottlieb apparently took offense with every item on our list and decided to re-enter the public debate on the need for a gas tax increase in Wisconsin. In his response, Mr. Gottlieb accuses the MacIver Institute analysis of being "riddled with errors and misrepresentations," reflecting a "substantial misunderstanding of how transportation projects are approved and financed."

Even though we did not mention Secretary Gottlieb or blame him in our article, he has now chosen to insert himself into this discussion. Welcome back Mr. Secretary.

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Let's refresh for taxpayers exactly how we got to this point in the debate and why they should view Mr. Gottlieb's critique with some skepticism.

Mr. Gottlieb retired as Department of Transportation Secretary in early January 2017, having served in that position in the Walker administration since 2011. Less than a month later, the nonpartisan Legislative Audit Bureau released an audit of the State Highway Program that the co-chair of the Audit Committee called "devastating to the management of DOT." Unfortunately for Mr. Gottlieb, many of the problems outlined in the audit occurred under his management.

The audit pointed out the department could have saved taxpayers $44.7 million had it obtained more than one bid for 363 of its construction projects. Mr. Gottlieb argues in his response that the DOT cannot force contractors to bid on projects. That is true. However, consistently failing to attract more than one bidder indicates a failure in managing the bid process. Otherwise, why would the Audit Bureau identify this failure as one that needs to be fixed. A fix, in our opinion, that should have come from the DOT Secretary.

The audit identified 16 projects that collectively ran over original cost estimates by $3 billion dollars. Let that sink in for a minute. Three billion dollars. Taxpayers have yet to hear from Mr. Gottlieb on how something like this could happen. More concerning for taxpayers was the fact that the Audit Bureau was unable to determine why expenditures increased because "a committee of DOT staff reviewed and approved requests from project teams for 'substantial' increases in project expenditures, but it did not keep meeting minutes." (Wheeler Report - 01/26/17 WisDOT Audit) Whoa. DOT didn't keep records on which bureaucrat decided to spend more of our money on projects than was originally estimated and why?

If you would like to comment, Mr. Gottlieb, MacIver would be happy to send a camera crew wherever you choose and share with Wisconsinites your explanation on how this could happen. Please let us know if you are interested.

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We also learned from the audit that $191.9 million in lost taxpayer savings could be attributed to the DOT's failure to meet performance goals. Mr. Gottlieb says those goals were unrealistic because they would have meant eliminating waste in those projects. He does not dispute that the $191.9 million was wasted - only that he believes it's unrealistic that a government project can have no waste. What does it say to taxpayers that $192 million of potential savings is so casually dismissed?

But Mr. Gottlieb's frustration with the transportation debate and the reluctance of taxpayers to hand over more of their money to government goes back further than the most recent audit.

Back in 2013, Secretary Gottlieb captained a transportation task force that issued a report advocating for more than $640 million in gas tax and transportation fee increases. The plan also suggested implementing a new fee based on the miles you drive and applying the state sales tax to the purchase of a new car. According to multiple media reports, Gottlieb's plan was immediately shot down by Speaker Robin Vos and then-Assembly Majority Leader Scott Suder because, in part, "raising taxes would damage our recovering economy."

In November 2014, Mr. Gottlieb submitted his transportation budget proposal for consideration to Gov. Scott Walker. Gottlieb proposed $751 million in transportation tax increases, including a 5 cent gas tax increase, a 10 cent tax increase for diesel, $805 million in transportation borrowing, a 2.5% fee on the purchase of every new vehicle, and the return of the ever-popular automatic indexing of the gas tax. Predictably, Walker largely ignored Gottlieb's recommendations when he formally introduced his transportation budget to the Legislature the following January.

Perhaps his repeated attempts to dramatically increase transportation taxes only to be publicly rebuked by legislators and the governor explains why Mr. Gottlieb failed to understand the point of our recent analysis. The point of our exercise was simply an attempt to look out for the hardworking taxpayers of this state.

In the overheated debate on transportation funding, proponents of a gas tax increase have repeatedly said that the state is facing a $1 billion transportation funding deficit. Sounds very ominous, doesn't it? They also believe that there is not enough potential savings, waste or inefficiencies in the DOT budget to fill that so-called $1 billion hole. And, if there is not enough savings to be found and redirected toward necessary road projects, then the gas tax hikers argue that state legislators have no choice - surprise, surprise - but to raise the gas tax.

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Or raise the automobile registration fee. Or begin tolling on Wisconsin roads. Or charge you a fee based on the cost of your new vehicle. Or monitor the number of miles you drive and charge you an escalating fee because you drive farther to work than your neighbor. Gee, there seems to be plenty of ideas on how to take more of your hard-earned money.

See how well that circular logic works? Just sit back, relax and don't worry about how big the gas tax increase would need to be to fix the transportation crisis.

We, at MacIver, refuse to just go along with this 'increase taxes first, ask questions later' mentality.
 
From the start of this debate, the MacIver Institute has worked to ensure that taxpayers have complete and accurate information they need to make a sound and rational decision on whether a gas tax increase is necessary.

We thought when Walker publicly made it clear earlier this year that he did not support a gas tax or registration fee increase that the push for a tax increase would go away. It didn't. Even after Walker pledged to veto any gas tax increase sent to him by the Legislature, the push continued. That is why we persist in our attempt to keep the debate aboveboard and credible.

Let's have an open, genuine and complete discussion about what our transportation needs are and figure out how we should fund our needs, not the self-serving and parochial wants of a few.

Remember, it was MacIver that uncovered a nefarious plot by the gas tax hikers to make it seem like there is widespread grassroots support for a gas tax increase. In that charade, phony letters from fake authors claiming to live in separate parts of the state popped up in newspapers all across the state.

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We hoped this deliberate attempt by the special interests and PR hacks to trick the public into thinking that everyday Wisconsinites are clamoring for a tax increase would have received more widespread media attention, but it didn't, so we persist.

While most of mainstream media immediately accepted the billion dollar shortfall argument, MacIver decided to dig deeper into the numbers. In March, MacIver documented the questionable set of factors that the supposed deficit was built on.

And so last month, in our continuing effort to provide taxpayers with the information they need to decide if a gas tax increase is warranted, we examined if there is enough questionable or unnecessary spending in the transportation budget to fill the billion dollar shortfall. Or, from MacIver's perspective, is there enough questionable or unnecessary spending in the transportation budget that could be repurposed to fund necessary road projects or the all-important mega projects in southeast Wisconsin?

We reviewed hundreds of DOT projects, programs and practices, finding all kinds of questionable transportation spending. In addition to the hundreds of millions in potential savings identified by the recent audit mentioned above, we put together a rather long list of questionable transportation spending that didn't take long to do.

We found potential waste in everything from the way the DOT has approached designing, bidding, and building highway projects to the millions of dollars it has spent on roundabout intersections despised by residents from one end of the state to another. We found millions of dollars spent on bicycle infrastructure - trails, bridges, roundabouts, and extra lanes.

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The idea that there is not enough questionable spending in the transportation budget to close the supposed billion dollar shortfall is just not true.

Budgets are, after all, about priorities. While cities like Madison and some special interest groups may see bike paths and other bike structures as the highest priority, our need to put more money into our roads and critical highway projects may suggest we need to take a break in our bike trail building binge. Rather than automatically increasing the gas tax 5 cents to meet our transportation needs, maybe it is not the time to build the state's largest bicycle bridge? Or the state's first bike roundabout. Or, here is a common sense idea: maybe we dial back our bike trail spending until the critically important mega projects get off the ground? Mr. Gottlieb finds an excuse for all of the bike projects on our list, but that is not really a surprise. He is, after all, a board member of the Bike Federation of Wisconsin, a detail he did not mention in his rebuttal. It should be noted as well that shortly after Mr. Gottlieb gave his impassioned defense of all the multi-million dollar bike projects we highlighted, former Madison Mayor Dave Cieslewicz, head of the Bike Federation, sent out a fundraising letter looking to capitalize on all the controversy.

This is the same Dave Cieslewicz who claimed Scott Walker had, even before he has sworn in as governor, "done irreparable damage to Wisconsin's economy" because he shot down the not-so-fast high speed rail boondoggle before it was built.

This is the same Dave Cieslewicz that, according to his Bike Federation profile, was an adjunct professor at the UW Madison's Department of Urban and Regional Planning where he taught a class called "Bikes, Pedestrians and Cities." Is the UW training our kids in this class to run bike federations around the country? Sounds like a good use of taxpayer dollars.

This is the same Dave Cieslewicz that back in JULY OF 2016, had already declared Scott Walker's reelection over and asked readers gleefully to "imagine a Wisconsin finally free of Scott Walker."

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Are there projects on our list that could meet the necessary test? Perhaps. But too often, necessary transportation projects are in the eye of the beholder. Ornate Frank Lloyd Wright-style rest stops in Poynette and Portage, at a total cost of $22 million, may seem like a good idea to the out-of-state traveler with a passion for early 20th century architecture, but a taxpayer in Marinette or Monroe might see it differently.

Mr. Gottlieb seems to defend the $3.6 million spent on the Bridge Too Near, in part, because the locals wanted it. Well, of course the locals would want a multi-million dollar pedestrian bridge if they don't have to pay for it directly. We don't blame the locals. But, taxpayers needed the department to look out for the entire state's interests by trying to hold down costs. There was a viable alternative, an existing bridge, less than a two-minute walk from this one. Taxpayers needed the department to step up, be the adult in the room, and say no to this project. As we built our list, this was a recurring theme: it appears the DOT approves any and all new projects. Watch the Bridge Too Near video and decide for yourself.

Mr. Gottlieb's response to the Janesville Road project in Muskego on our list sounds like that of an out-of-touch bureaucrat. Two identical stretches of road were recently reconstructed, one using federal dollars and one using local dollars. The stretch of road using federal dollars cost $8.2 million, but the portion paid for with local dollars cost only $6.3 million. Obnoxious federal regulations drive up the cost of a road project, case closed. Sounds like a pretty good reason to do as few of these projects with federal dollars if you ask us. While Mr. Gottlieb reluctantly admits this change could save money, he points out the benefit of federally-compliant projects because of Wisconsin's good track record of obtaining "extra" federal funding. Mr. Gottlieb, Wisconsin taxpayers are federal taxpayers and that extra federal funding is coming from taxpayers, not some magical federal free money tree out in DC. Not to mention our federal government is $19 trillion in debt.

On prevailing wage, we expect our friends in Big Labor to ignore, ridicule, and deflect from the real-world examples of how much prevailing wage drives up the cost of public construction projects, but not the former secretary of Transportation. We didn't make up the staggering added cost of the ATV project in Vilas County thanks to prevailing wage, we got the information directly from elected officials in Vilas County. Rather than dismissing it as simply not possible, maybe Mr. Gottlieb should remember he was supposed to be looking out for taxpayers, not the narrow interest of unions.

We didn't blame the department for the Otter exhibit debacle at the Milwaukee County Zoo, Mr. Gottlieb. But there is something wrong when Milwaukee County can successfully sue the state in the local court system for the lost parking spots AND a new Otter exhibit and Welcoming Center. We agree that Milwaukee County should be compensated for the lost parking spaces. Milwaukee County should not, however, be awarded more than the cost of what they actually lost. This is not a case of just compensation for a property owner. This is a case of Milwaukee County officials seizing on what appears to be a friendly local court to force state transportation taxpayers to pay for their pet projects. Your attempted defense of this by invoking property rights doesn't fly. Sounds more like a case of one bureaucrat defending the actions of other bureaucrats.

It is telling, Mr. Gottlieb, that you objected to literally every item on our list. You couldn't find one example of wasteful or questionable spending on our list that you agree with? Not even one? It shouldn't surprise taxpayers because bureaucrats always defend more government spending and higher taxes. Always.

Spending priorities should be open to public scrutiny and debate. And that's really what the MacIver Institute's analysis was all about - generating discussion on a laundry list of transportation projects and practices that may be questionable at best, wasteful at worst.

Let the debate continue.

Brett Healy
President
The John K. MacIver Institute for Public Policy