Walker’s Transportation Budget Sets Up Showdown With Legislature

January 8, 2017

[Madison, Wisc…] Transportation funding is expected to dominate this year’s budget debate as concerns over Wisconsin’s road conditions clash with concerns over financial mismanagement at the DOT.

Governor Walker insists there will be no gas tax or fee increases for transportation. He plans to bond for $500 million over the biennium, whereas the last budget authorized $850 million in transportation bonding.

Walker also wants to transfer $30 million from the petroleum inspection fund (PIF) into the transportation fund. The PIF is funded by 2 cents of the state’s 30.9 cents per gallon gas tax.

In the fall, the DOT requested $522 million in additional funding, and the governor says his proposal meets that request.

The DOT warned, however, even with this increase in funding, three major highway projects would be delayed. Also, the north leg of the Zoo Interchange megaproject would be delayed two years, and work on I-94 would not be funded.

The governor says all active major projects would stay on schedule under his plan. However, the Zoo Interchange “North Leg” would remain on hold, and the state would not enumerate the East-West I-94 project. However, the core of the Zoo Interchange will be completed on schedule.

Walker’s plan also leaves $31 million for southeast Mega Projects for the North-South I-94 project, although work on that will not be finished on time.

Last month after the Audit Bureau released its report on the DOT, Assembly Speaker Robin Vos said “construction delays are driving up costs unnecessarily, our road conditions are only getting worse and a long-term solution is needed. It’s clear Wisconsin is trying to do too much with too little and taxpayers are not getting their money’s worth.”

Vos and other lawmakers believe the answer is to increase transportation funding, preferably by raising the gas tax. That is the largest source of revenue in the segregated transportation fund, making up 53.7 percent of it last year.

However, the audit also contained a devastating assessment of the DOT’s internal operations, which undermines any efforts to raise taxes on its behalf.

That audit found the DOT regularly breaks state law in budgeting, negotiating, communicating, and managing contracts. Among these statutory violations: the department does not always solicit bids from more than one vendor, it does not spread out solicitations throughout the year, it does not post required information on its website, its cost estimates to the governor are incomplete, and it skips steps in the evaluation process for selecting projects.

These practices manifest themselves through an inescapable reality: the cost of major projects tends to double after the DOT gets approval from the governor and legislature to proceed.

In August 2016, the DOT was $3.1 billion over budget on 16 projects, according to the audit. Shoddy recordkeeping made it difficult to determine the exact cause of this. The DOT has a committee in charge of approving substantial increases, but it doesn’t keep minutes and auditors were told it would take months to reconstruct what happened from scattered emails.

Sen. Chris Kapenga (R-Pewaukee) zeroed in on these problems in the audit. “A lack of transparency has led to costly overruns on projects, which is unacceptable moving forward,” Kapenga explained in a press release.

Kapenga also noted that the audit only scratched the surface. “It is important to know that the audit is not a comprehensive review of DOT. It looked at specific areas, so there is significantly more to this discussion than the audit; however, it highlighted the need for significant reform within the DOT,” he wrote.

When Vos reacted to the audit, however, he pointed out $1.5 billion in savings since 2011 under Secretary Mark Gottlieb. (Gottlieb resigned right before the audit was made public.)

In addition to bonding and the transportation fund, the DOT receives funding from the federal government. According to the Legislative Fiscal Bureau, the state received $748 million in Federal Highway Aid in 2015-16. Governor Walker’s proposal for transportation funding in this budget does not depend on what the state might or might not get from Washington.