As the new year of 2017 looms, it also means the State of Wisconsin’s 2017-19 budget and its associated deficits are going to have to be discussed and dealt with in the very near future. The worst of which is figuring out a way to close the $880 million gap between revenues available for the Wisconsin Transportation Fund, and meeting the spending plans that were part of the Wisconsin DOT's budget request for the next 2 years.
To that end, Wisconsin political columnist Steven Walters had this report discussing a 27-page pamphlet Assembly Speaker Robbin’ Vos handed out to his fellow Assembly Republicans this Fall. Vos’s document is apparently titled “No Easy Answers”, and deals with a number of “myths” peddled by Governor Walker and others, and compares it to the realities Vos says must be dealt with in the Transportation budget.
Myth No. 1: State highways are “not in bad shape.”Bottom line, the state has been underfunding these needs for several years, and because we have a Governor who cares more about sucking up to the Kochs and DC oligarchs with his no-tax, no-fee pledges than he does in maintaining the state’s infrastructure, the pattern of underfunding and borrowing funds has continued in increasing levels over the last 6 years. Unless we want our roads to completely fall apart and make us even less desirable for business or tourism than regressive Fitzwalkerstani policies have made it, we need to get this shit fixed.
Fact: The U.S. Department of Transportation ranked state highways 47th nationally, with 71 percent of them “poor of mediocre.” The Wisconsin Taxpayer Alliance gave state highways an overall D grade. And, a special state panel created to look at the funding problem warned that, without new revenues, the percentage of state roads rated “poor or worse” will double from 20 percent in 2014 to 42 percent by 2023.
Speaking of borrowing, that’s another item of discussion in Robbin’s little book.
Myth No. 4: With low interest rates, we should borrow more to maintain and build highways.A second complication with this is how interest rates have jumped as the possibility and alleged election of Donald Trump became reality, as the yield benchmark 10-year Treasury Bond went from 1.78% to 2.38% from the Friday before the election to last Friday. The 10-year is also 0.8% higher than it was in early September, when many of these budget requests were being put together. That means that debt service on those 10-year bonds is up by 1/3 in a matter of 3 weeks, and 70% in 4 ½ months, and the payback for Gov Walker’s proposed $500 million in borrowing has become much more costly than he planned it to be.
Fact: The current two-year state budget borrows a record $910 million, or 13 percent of all Transportation Fund spending of $6.82 billion. If the Legislature approved the state Transportation Department’s proposal to borrow $500 million more by mid-2019, debt-service payments would be about 25 percent of all transportation spending.
We are already crowding out current and future DOT spending with the borrowing on the books, and it would get much worse if we borrow more in the 2017-19 budget.
Myth No. 5: Let counties, cities, villages and towns enact “local option” taxes to pay for their streets and highways.True if you stay skin-deep, but it does reflect a lack of funding going to local road aid programs which are designed to help keep the pressure off of property taxes and other local taxes. If the Legislature would be OK with freeing up local governments to give road taxes, and stopped handcuffing these places with tight property tax limits, allowing this kind of offset could be a justification for having any new money go into state highways and freeways instead of local road aids.
Fact: Local-option sales taxes, or the growing practice of local governments approving “wheel taxes”—including $30 just approved by Milwaukee County—do nothing to maintain “state highway and Interstate projects.”
There is one other option out there that could take care of a lot of these problems- a bailout from Uncle Sam in the form of a massive infrastructure program under (gulp) President Trump, who has made noises about wanting such a thing. Obviously, such a plan would have to get through Congress first, and given Trump’s other plans to massively reduce taxes, it makes you wonder where that money will come from (other than massive deficits). But perhaps some of that would be in the form of major federal assistance, which the State of Wisconsin could use instead of having to come up the revenues themselves.
But that’s at least a few months off, and in addition to being ironic (since GOP posers usually don’t like the Feds helping out their budget crises…at least in public), isn’t something that should be counted on as the 2017-19 Transportation Budget is discussed.
Which means the $880 million hole between wants and projected revenues is going to have to be closed somehow, and living in Fantasyland and wishing the problem away isn’t going to do it.