Transportation Fund- looking up for now, lot worse later

One item that's lurking under the surface in the 2014 elections in Wisconsin deals with how to handle the state's issues in funding transportation. And that was part of the news that was buried within the state's Annual Fiscal Report that was released last month. The major news relating to the AFR was the General Fund situation (click here for a rundown on that and the looming General Fund deficits over the next 3 years), but the Transportation Fund’s condition statement is also in Page 4 and 5 of the Appendix, and let's take a look at it to see what it says for the 2013-14 July 1- June 30 fiscal year.

Starting balance +$153.48 million
Ending balance +$101.49 million
CHANGE -$51.99 million

This would seem worrysome to be $52 million in the hole for last year, but it’s actually better than the $120.7 million decrease that was projected, based on the Transportation Fund’s projections when the budget was passed in 2013, as well as a $43.0 in additional highway repair that was passed over the winter (and now you know why you've seen orange cones everywhere the last few months- who says Republicans don’t believe in stimulus?).

A big reason for the better numbers is because of a surprising increase in fuel taxes (up $32.4 million from the prior fiscal year, and $27.6 million over projections) and in net vehicle registration fees (up $29.8 million). Expenses also were slightly below projections (by about $39.7 million), which allowed the Transportation Fund to get by without $25.75 million in expected transfers from the General Fund. I mentioned that delay last week, and it was done in no small part by the Walker Administration to artificially prop up the state’s year-end General Fund in time for the AFR report, but they also could get away with holding that money back given the large carryover balance.

That extra payment is coming in for this fiscal year, and it’ll boost up Transportation Fund revenues accordingly (hurting the General Fund in the process). Combine that with an assumption that fuel tax and vehicle registration fees will stay at the high level they were at in the last fiscal year, along with expenses staying within budget (which would be a 2.34% increase, not unreasonable) and you get a year where the Transportation Fund would take in more than they spend out by around $46.82 million.

So plug those numbers in, and we get this for the 2014-15 fiscal year.

Starting balance: +$101.49 million
Change in FY 2014-15: +$46.82 million
Projected ending balance: +$148.31 million

Now, this doesn’t fix the long-term problems of added debt and unfunded future projects, which still means there would be a budget hole in the Transportation Fund of somewhere between $530 million and $1 billion to fill in the next budget, if we use the estimation of a $680 million- $1.1 billion deficit from before. And unlike the $689 million of General Fund taxes and borrowing that's been put into the Transportation Fund over the last 4 years, the upcoming deficit-riddled budget should not be relied upon for similar moves to bail out the Transportation Fund in 2015-17. with the amount of highway funding from Congress yet to be determined, since their money only runs through May 2015, the possibility of an extra $100 million cushion will be a welcome sight.

The question of where the Transportation Fund stands is different than asking what it should be used for. This part of the issue came to the forefront again earlier this week when numerous community and pro-transit groups came together at the Capitol to complain about priorities on what state government is using its Transportation funds for.

“Instead of spending billions on new mega-highway expansion projects that we can’t afford, don’t want and don’t need – and especially before considering new transportation taxes – we should focus transportation funds on fixing what we have first,” said Bruce Speight, WISPIRG Director....

Four dubious highway expansion projects, including the double-decker expansion of I-94 in Milwaukee, would cost taxpayers nearly $3 billion. For just a third of that, we could repair local roads, upgrade transit, bicycle and pedestrian infrastructure, and finance the urgent rehabilitation of state-owned roads – for the next 10 years.

“Let’s be clear: We don’t have a revenue problem, we have a spending problem,” concluded Speight. “We are here today to call on Governor Walker to tell us why he is talking about taxes when we are wasting precious transportation dollars on wasteful highway expansions, AND our local roads and transit systems are crumbling. Governor Walker, will you cancel wasteful and unneeded highway boondoggles, and get our transportation priorities right?”

And that question will face whoever the new governor is. Because regardless of whether the Road Builders get their amendment passed on November 4 preventing transfers into the General Fund from the Transportation Fund (I am a big HELL NO on that one due to its one-sided nature), the Legislature and Governor will still have to decide which items to fund from those monies...and which items not to fund. Identifying those priorities will prove every bit as important as coming up with the funding to take care of those needs.