Thursday, July 2, 2015

Transportation budget passes, but still a mess

After looking at the tax parts of today's Joint Finance wrap-up of the state budget, I now want to go into the transportation elements of today's action, and where the budget stands on that. has a good rundown on today's motion for the Department of Transportation, starting with the topline changes to highways.
The sweeping GOP transportation motion, as expected, cuts bonding from Gov. Scott Walker's proposed $1.3 billion to $500 million, with an additional $350 million in contingency bonding Joint Finance could approve later.

The net impact of the changes in bonding and other appropriations would mean a $200 million cut to the Zoo Interchange that would delay the north leg, a $350 million reduction in the major highway appropriation and a $100 million cut to rehabilitation, according to GOP aides.

With the $350 million in bonding the committee would hold back, it could back fill those cuts in majors and rehabilitation, for example, if it chooses.
An interesting sidelight to the DOT developments is that the Legislative Fiscal Bureau released updated projections yesterday on the Transportation Fund. It’s largely good news, as it gave a slightly larger cushion for legislators to work with compared to what we knew of a couple of months ago.
An estimate of the transportation fund condition was last published by this office in LFB Paper #630 on April 22, 2015. This statement of the fund's condition was based on revenue and debt service estimates made subsequent to the [budget] bill's introduction. At that time, the fund was estimated to have a biennium-ending balance of $84.7 million. The Department of Transportation (DOT) recently provided updated information on revenues and expenditures for 2014-15 that reflect revenue collections data and fiscal actions taken through the end of May, 2015. As a result of these factors, and the actions taken to date by the Joint Committee on Finance with regard to the 2015-17 biennial budget, the transportation fund's ending balance for the 2015-17 biennium is now estimated at $114.0 million (or $29.3 million higher than the April estimate cited above).
The main reasons for the better bottom line were lower debt service costs, and slightly higher vehicle registration fees (driver’s license fees and gas tax revenues were pretty much as predicted), and since Gov Walker’s budget bill only counted a year-end balance of $11.2 million, there is another $102.8 million that can be used to reduce borrowing in the final budget. But even reducing the total borrowing to $850 million would still mean a cut of $350 million in spending, and add in the $350 million that is apparently being set to the side with the hope that it not be used, that becomes a cut of $700 million. This would cause many highway and maintenance projects would be delayed as a result (I mentioned that list in this post, as well as others), which includes the I-39/90 expansion to 3 lanes between Madison and Beloit, and work on the Verona Road project for Highway 18-151 in and around Madison.

It’s also interesting that the GOPs in the Legislature are insistent on not raising gas taxes or registration fees to lower the amount of borrowing, particularly in light of the GOP-controlled Michigan Senate passing a bill this week that would raise that state’s gas tax by 5 cents a gallon for each of the next 3 years, then indexing the gas tax for inflation after that. Iowa has already raised its gas tax by 10 cents a gallon this year to help pay for roads and bridges, and Indiana changed over to a 7% excise tax on gasoline this time last year, bumping its tax by 4 cents a gallon at the time (although this gas tax isn’t as high now, given that gas prices are lower). The Dems on Joint Finance presented a measure that would have returned the state's gas tax to indexing in 2017, allowing the tax to rise with the price of inflation, and making the Transportation Fund more stable for the 2017-19 budget, but it was quickly denied by Republicans.

So instead, the measure that did pass had a number of silly talk radio-based initiatives, such as not allowing any state transit funds to be used to operate the Milwaukee streetcar (of course, the streetcar won't be running by June 30, 2017 and there isn't any state money set aside in the budget to build or operate it anyway). There are also items that reduce the role of bicycle and pedestrian measures in road projects, and prohibiting the use of state money for local communities to add what Wispolitics describes as "aesthetic preferences" (I suppose this is related to those designs you see on E. Wash in Madison and other bridges). You know, important and forward-thinking items to care about.

But what is worth caring about is the statistic the Legislative Fiscal Bureau produced after contentious debate about borrowing and priorities in transportation.
If the GOP transportation plan is approved by the full Legislature, the state would dedicate 20.6 percent of transportation fund revenues to debt service beginning in 2016-17, according to LFB.

That would be less than the 22.3 percent for debt service the state would have paid under Gov. Scott Walker's original plan to borrow $1.3 billion over the next two years.

But it would also be the highest mark LFB says it is aware of in state history.
This might be a stat to have in your back pocket as Scott Walker tries to claim to a national audience he "responsibly balanced the budget" in Wisconsin and will do the same for the rest of the country. Because today's actions at the Joint Finance Committee showed neither Walker nor the Republicans to be willing to do the right thing, and ask citizens to pay a bit more for the road projects they want and need. But instead, highway construction will be cut AND the Transportation Fund's budget will be in worse shape for the next budget, as more projects will need to be done, with the budget deficit still in place (and likely growing).

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