Tuesday, June 3, 2014

Is there a plan to solve the growing DOT deficit?

I've mentioned several times in recent months about the large amount of unpaid needs and projects at the Department of Transportation that are looming in the upcoming budget. But there are a couple of interesting developments in recent days that are a bit of a change from what we knew before.

First of all, after several meetings around the state to discuss these needs and the ways to finance them, DOT Secretary Mark Gottlieb says he has come upon a plan that he will propose as part of this Fall's DOT's budget request for 2015-17. Gottlieb told the Wisconsin State Journal that toll roads are not a part of this filling of the funding gap (claiming that it would need Congressional approval anyway), but did say that he's not looking for a one-time fix.
“Our hope is that whatever we propose will be sustainable, meaning that one of our goals is to propose a structure that once in place will be sustainable for the future,” Gottlieb said in an interview with the Wisconsin State Journal. “Our hope is that whatever comes out will be a long-term solution to this problem.”

The department is projecting a $680 million shortfall in its 2015-17 budget. (Note, but there are other projects enumerated and planned that will make that figure closer to $1.1 billion) A bipartisan state transportation commission
reported last year that if Wisconsin wants to maintain current service, traffic flow and road condition levels under the existing funding system, the state will be short $15.3 billion over the next decade.

That’s largely because more fuel-efficient vehicles, including hybrids and electric cars, are eroding state revenues from the gas tax, the largest source of state transportation funding.....

The commission recommended these increases: the state’s gas tax by 5 cents per gallon, annual registration fees for commercial vehicles by 73 percent and the eight-year driver’s license fee by $20 to $54. The panel also recommended eliminating the sales tax exemption on the trade-in value of a vehicle; and adopting a mileage-based registration fee system for passenger vehicles and light trucks.
After this report came out, Scott Walker and the WisGOP-controlled Legislature promptly ignored all of these higher-tax and fee options, instead opting for increased borrowing in some major projects, minor slowdowns in others, and sizable one-time transfers from the General Fund to take care of things in this biennium. And if the $112 million in annual transfers continue in the next budget, that's an extra $224 million tacked onto our $642 million (and growing) budget deficit.

But there are also other needs that aren't even on Gottlieb's list. The Urban Alliance part of the League of Wisconsin Municipalities recently said the polar vortex winter means local governments are in desperate need of a boost in state aid for this year to help to take care of unanticipated needs.
We have had to make some very tough budget decisions this winter, and we aren’t even through 2014,” Dickert said. “Plowing, salting, pothole repairs and water pipe maintenance has really taken its toll on our budgets.”

Dickert said he estimates the total relief sought will be close to $12 million. The amount isn’t determined since many municipalities are in the initial phases of collecting damage estimates, he said.

“We think a direct one-time appropriation by the Governor will provide the necessary relief,” Dickert said. “We’re not asking for above and beyond what we need.
The state has given a small bump in funding for maintenance on state highways and in payments to counties in exchange for the counties' help in plowing and salt work on state roads, but as of now nothing extra is coming to cities to fix their streets in 2014. If the DOT and the Joint Finance Committee doesn't act to increase and/or shift road aids in the 2014 calendar year, many communities will be facing property tax increases and fewer potholes being fixed. But if the DOT does help, it'll raise the next budget's deficit even more.

Lastly, the state could get squeezed even further by a battle shaping up in Congress over the next highway bill, which expires on September 30. And yes, the State Journal notes that the feds are also facing a deficit.
The National Highway Trust Fund is expected to run short on money later this year, and the U.S. Department of Transportation could scale back payments to states, which could exacerbate Wisconsin’s....shortfall in the next budget.

More funding requires action by Congress, but lawmakers have yet to move on President Barack Obama’s $302 billion four-year transportation plan, which includes allowing states to toll Interstate highways.
The federal DOT shortfall is the subject of a Wispolitics event in Appleton tomorrow with U.S. Rep. Reid Ribble, and the loss of House Transportation Committee member Tom Petri could leave the amount of Wisconsin's help from the feds further imperiled. The VA scandal and other DC hijinks may be grabbing the attention for now, but the end of September is less than 4 months away, and local and state governments are going to be watching what comes out of the highway bill very closely, as they might be looking at even more constraints than state policy has put it into over the last 4 years.

By the way, the fact that a Walker cabinet member is talking about the next budget shouldn't be read as an arrogantly assumption Scotty will win in November- all state agencies get their budgets ready independent of the results of elections. Regardless of who sits in that governor's chair in January 2015, that person is going to have to immediately deal with the mess that the short-term thinking of Walker and WisGOP has left as a result of their decisions (or lack thereof) in the 2013-15 budget. And it's an issue that isn't getting nearly the heat that it should.

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