The Road to Red Ink

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By James Wigderson
Special Guest Perspective for the MacIver Institute

Watch out, Wisconsin. Governor Scott Walker’s transportation budget includes $2.7 million for training state patrol recruits. They’re going to be handing out a lot of tickets to help pay for the state’s $6.4 billion in transportation spending in the next state budget. I am seriously going to have to watch my lead foot while driving to the Wisconsin Dells lest I make a sudden involuntary contribution to the state’s coffers.

Those new recruits will also be needed to achieve Walker’s goal of greater size and weight restriction enforcement on Wisconsin’s highways. In addition to more revenue, greater enforcement should have some impact on maintenance costs. Curiously, the Walker Administration put this under the heading of “Decrease Regulation and Streamline Services” on the governor’s press release touting the new transportation budget.

Walker’s state transportation budget is a reversal of the budget under former Governor Jim Doyle. Under Doyle the state raided the transportation budget for $1.3 billion over eight years for spending on other budget priorities. The state attempted to make up for the shortfall by borrowing through binding, but the transportation fund still ended up short $434 million in the process.

Meanwhile, the costs of borrowing meant less money for transportation in the long term due to debt service. The state was only able to spend 88 cents on the transportation dollar to keep our infrastructure intact.

So there is good news that the transportation funds raids have stopped. There is even more good news in that the legislature has completed adopting a state constitutional amendment protecting the transportation fund from further raids. The amendment now moves to a referendum in 2014.

As expected, Walker is not going to listen to a state transportation commission that proposed, among other things, increasing the gas tax and a new mileage driven fee. Given the weak economy and record gas prices, additional taxes and fees would not be a welcome addition to the transportation budget.

Nor does he delay reconstruction of the Zoo Interchange, an idea floated by the state Department of Transportation Secretary Mark Gottlieb in his department’s budget request. Over 350,000 vehicles move through the Zoo Interchange on I-94 every single day. The Hoan Bridge reconstruction will also move forward.

However, Walker’s transportation budget does reach into general purpose revenue for $129 million to cover some of the shortfall. Transit aid takes $106 million from general purpose revenue instead of the gas tax and registration fees that make up the transportation fund. This is the second budget in a row proposed by Walker that reaches into general purpose revenue for transportation.

Even more of a concern, the state will again be borrowing money through bonding to pay for transportation. Walker’s budget would allow for $662 million in bonding over the next two years. The Zoo Interchange is responsible for $307 million. If the reliance on this level of bonding continues, Wisconsin could be spending 25% of the transportation budget in 2023 just to pay for the borrowing, according to Dave Reid of Urban Milwaukee.

While those numbers seem daunting, and they are, they are still a significant improvement over the $1.34 billion in bonding in the last state budget under the previous administration. Legislators and Democratic critics of Walker who were silent during that era may have a difficult time having their new-found aversion to transportation fund bonding being taken seriously.

Given the tightness of the transportation budget constraints, Wisconsin taxpayers are probably grateful now that the governor stopped the proposed “high speed” passenger rail program in Wisconsin that would have taken $810 million, before the ongoing annual operating costs. Nor should the taxpayers regret the decision to not build a bike path across the Hoan Bridge that would have cost an additional $9 – $84 million, depending on the plan. Those are examples of politicians setting priorities and not indulging in wish fulfillment at the expense of the public treasury.

The state transportation fund is facing a shortfall of $4-$6 billion to meet Wisconsin’s needs over then next ten years, depending on the estimate. Wisconsin’s legislators will need to do careful job of prioritizing if the state’s transportation fund isn’t going to drown in it’s own red ink.