While most state residents believe Wisconsin roads are not in good condition, a narrow majority oppose raising the gas tax.

That dichotomy largely reflects Governor Scott Walker’s use of the bully pulpit. It highlights the central transportation finance issue confronting Governor Tony Evers whose challenge is to convince the legislature that new revenue is required.

Evers’ transportation budget will set an upper limit for bargaining that likely will extend well beyond the end of the current two-year budget. The framework for the governor’s position will be influenced by the commission of “stakeholders” he announced in Tuesday’s State of the State Address. Its job will be to document the gap between current law revenue and the amount needed to address identifiable needs. (The operative word in that sentence is “needs,” as distinguished from “wants.” The state needs to rebuild 60s-era freeways. It needs to repair weight-posted bridges. It needs to adequately finance mass transit.)

Full chart and explanation below

A chart now circulating in the Capitol lays out, in one page, essential facts that confront the commission, Governor Evers, and the legislature. The chart was prepared by the Wisconsin Transportation Builders Association (WTBA). That’s right, the dreaded “road builders,” the group regularly demonized by a segment of the legislature as a nefarious “special interest.”

As the late Sen. Daniel Patrick Moynihan once noted: Everyone is entitled to their own opinion, but they are not entitled to their own facts. So, when the predictable ad hominem attacks on the chart surface, ignore them. Data in the chart are solid, backed by independent sources (Legislative Fiscal Bureau, Department of Transportation, Department of Revenue, and more).

The bottom line? Annual revenue is about one billion short of need. That’s a shortfall of about 30 percent of fiscal year 2018 revenue for state highways, local road aids, mass transit aids, and other costs financed by transportation revenue. Because road builders are, well, road builders, the chart does not address mass transit and other transportation needs that the commission will assess.

New state revenue (from higher gas taxes, tolling, higher registration fees, whatever) is not the only means of addressing that gap. Congressional action to increase federal infrastructure funding could provide significant assistance; the prospects of that obviously are uncertain. (The state could also incur more debt, an option used to excess by the Doyle and Walker administrations. However, the ability to borrow more, based on current law transportation revenue, is constrained by the debt explosion of the last sixteen years. It’s one reason the general fund is now being tapped for transportation purposes — see below.)

Here are some factual highlights from the road builder chart:

  • Highway construction costs have nearly doubled since 2000, growing on average at least five percent a year.
  • After subtracting general fund transfers and mushrooming debt service costs, funds available for actual transportation projects — highway and non-highway — have grown a meager 18 percent during the same period.
  • Under Walker nearly $1.5 billion in general fund support was provided to the transportation fund. This underscores — proves, in fact — the inadequacy of current law transportation fund revenue.
  • The repeal of gas tax indexing in 2006 has led to a 12 percent decline in the purchasing power of gas tax revenue.

The legislature in its wisdom has dismissed recommendations of three previous commissions tasked with identifying transportation finance needs. Neither Walker, nor Governor Jim Doyle before him, provided the political leadership needed to support the work of those commissions. As a consequence: highway debt service has doubled; Interstate freeway reconstruction has stalled; non-freeway state road mileage in poor condition has grown, mass transit financing is short of need; and county/municipal/town streets, roads, and bridges are in disrepair.

I recently documented the substantial decline, dating to 1970 and continuing through the Walker administration, in the share of Wisconsin personal income taxed for transportation purposes. It helps explain the worsening condition of the state’s transportation infrastructure. The unmet needs aren’t going away. The cost of addressing them is growing twice as fast as the general cost-of-living. This is not a conservative approach. It’s a negligent one.

Key to Reading Chart (from the WTBA)

Right axis labeled “Hundreds of Millions” tracks recommendations of three transportation study committees between 1996 – 2012.

1996 Transportation Finance Study Committee:  Identified short-term need for additional $155 million annually to meet needs through the 1990s, but warned of looming reconstruction needs of Southeast Wisconsin Freeways.

Members:  Reps. David Brandemuehl and Mark Meyer; Sens. Russ Decker and Margaret Farrow;  Emmer Shields, Ashland County Highway Commissioner; Ernie Stetenfeld, Wisconsin AAA;  William Welch, Fox Cities Chamber of Commerce; WisDOT Secretary Chuck Thompson (non-voting chair).

2006 Joint Legislative Committee on Transportation Needs & Finance:  Confirmation #1 of 1996 Finance Study Committee.

Members: Sen. Dan Kapanke and Rep. Mark Gottlieb, Co-Chairs; Sens. Scott Fitzgerald, Glenn Grothman, Dave Zien, Roger Breske and Russ Decker; Reps. Don Friske, Dean Kaufert, Jeff Stone, Mike Sheridan and Josh Zepnick.

2012 Transportation Finance & Policy Commission:  Confirmation #2 of 1996 and 2006 study committee recommendations.

Members:  John Antaramian, Tom Carlsen, Dave Cieslewicz, Robert Cook, Barb Fleisner LaMue, Martin Hanson, William Hanson, Robb Kahl, Craig Thompson, Tom Vandenberg and WisDOT Secretary Mark Gottlieb (non-voting chair).

Adjusting 2006 and 2012 recommendations by 5 percent inflation annually (actual WI Construction Cost Index inflation from 2000-18 is 5.5 percent) yields an annual funding shortfall range of $911 million to $1.254 billion.

Left axis labeled “Percent Change” illustrates past progress and funding challenges in meeting growing transportation infrastructure needs:

Blue Line:  Construction inflation as measured by WI Construction Cost Index nearly doubled from 2000-18.

Green Line:  Total State Transportation Revenue increased 55 percent between 2000-18 due to nearly $1.5 billion in General Fund support for transportation (GPR-supported borrowing, one-time transfers, 0.25 percent ongoing GPR transfer) during Gov. Walker’s tenure.

Orange Line:  General Fund revenues grew 48 percent during this period with no increase in tax rates (decreases in income tax rates).

Gray Line:  Transportation Revenue available for investment after paying debt service and subtracting General Fund support for transportation.

Yellow Line:  The Fuel Tax – which generates approximately 50% of state transportation revenue – has lost 12 percent of its purchasing power since 2000, with the most precipitous drop following the repeal of fuel tax indexing.