Tuesday, April 21, 2015

More Transportation funding won't solve the problems

Tomorrow features the Legislative Fiscal Bureau resuming its budget meetings, and the biggest-ticket item will involve several parts of the budget for the Wisconsin Department of Transportation. This included a re-estimate of the state's Transportation Fund, which is separate from the General Fund that has been the source of many Scott Walker budget cuts. And it's generally good news, as there is a little more money to play with in the Transportation Fund for the next budget.
The Governor's budget was based on revenue and debt service estimates made prior to the time of the bill's introduction. Since that time, the Department of Transportation (DOT) has reestimated revenues and debt service payments and this office has reviewed, and, in some cases, modified, those estimates. The resulting estimates are reflected in the fund condition statement shown below. At the time of introduction, the biennium-ending fund balance was estimated at $11.2 million. However, due primarily to projections of higher motor fuel tax revenues and lower debt service costs, the transportation fund is now projected to have a biennium-ending balance of $84.7 million.
Some of that is related to an increased carryover amount of $32.2 million, which is related to more fuel consumption and vehicle registration revenue than anticipated, and lower interest rates have also helped, leading to debt service costs being $37.0 million less between now and mid-2017. It's a nice benefit to have, but as you'll see, it isn't going to go very far in minimizing the many issues that are prevalent in the Transportation budget.

For example, while the debt service is projected to be lower than it was in the budget bill, it's still slated to go way up over the course of the budget, and will crowd out the ability to spend funds in other Transportation areas as a result.

Projected revenue bond debt service, Wisconsin Transportation Fund
2014-15 $234.96 million
2015-16 $242.1 million
2016-17 $276.3 million

And that figure is slated to go up in future years, because Walker's budget plans to borrow $1.0 billion from the Transportation Fund, and $300 million more from the General Fund. This was the trade-off Walker chose instead of raising taxes or fees to pay for all of the $4.5 billion in DOT-related costs, and while the extra $72 million could go toward reducing that borrowing amount, it also is barely more than 5.5% of the total borrowing that's in the Governor's budget, leaving $1.228 billion that would still have to be paid back later, plus interest.

In addition, there are other needs that might be a better spot to spend the extra money on. For example, aids to local governments to help fix their roads is slated to stay at 2015's levels for 2016 and 2017, so that won't even keep up with any inflation that may come along. Same goes for mass transit aids, which are a huge necessity for local governments with bus systems, since the GOP Legislature removed all Regional Transit Authorities from the state in 2011, which means it comes down to state and federal aids, property taxes and fares to fund the systems. A small increase in these funds would go a long way toward removing burdens for cash-strapped local governments.

There are also a couple of General Fund notes that are intriguing with the DOT fund. First of all, the scheduled transfer from the General Fund to the Transportation Fund is notably less from what it gets now. This reflects the self-inflicted wounds that were part of Gov Walker's deficit-ridden budget, because there simply isn't the money available to send more funds into the DOT.

Transfer from General Fund to Transportation Fund
2014-15 $169.6 million
2015-16 $38.0 million
2016-17 $46.1 million

It's interesting to note that $46.1 million is a bit larger than the $39.1 million that was listed in the Governor's Budget in Brief (page 33), which indicates that there is $7 million more that has to be made up in the budget deliberations (unless I'm missing something, feel free to say if I am). That's money that isn't available for filling in the cuts at the UW System or K-12 schools or Senior Care or any number of other unfunded needs.

But maybe the $72 million can fill in some of those holes, and stop the daily announcements of UW layoffs. Oh wait, the Road Builder amendment from last November makes that illegal. So much for schools being helped with the increased tax revenue from driving.

So with that extra money in the Transportation Fund having to stay there, let's see what options the Joint Finance Committee takes tomorrow. Do they try to reduce borrowing, help local governments, pay for something else, or bank it for later. Regardless of which path is chosen, there are still major unfunded needs for Transportation in this budget, and the Walker Administration's "borrow and spend" policies aren't going to allow business as usual to continue much longer.

No comments:

Post a Comment