Thursday, May 11, 2017

WisGOP ideas on DOT funding getting worse by the day

Scott Walker to Assembly Speaker Robbin’ Vos, late March 2017
“I believe we will have decent [revenue] growth in the future.”
May 9, Legislative Fiscal Bureau- that’s not going to happen, Scotty.
For 2016-17, the January estimates projected tax collection growth of 2.7% over 2015-16. Through April, 2017, year-to-date collections are approximately 2.2% higher than the same period last year. The discrepancy between the 2.7% estimate and the 2.2% actual year-to-date growth rate is primarily due to the corporate income and franchise tax. Corporate collections for the entire fiscal year are estimated to decline by 6.5% compared to 2015-16, while the year-to-date decrease is 8.9%. However, since January, corporate collections have increased by more than 20% over the same period last year, and the year-to-date growth rate has improved from -22.5% to -8.9%. This collection pattern was anticipated in our January estimates, and it is expected that improved corporate collections will continue through the remainder of the fiscal year. Collections of the other tax sources are tracking closely with the January estimates.

Regarding the economic forecast, IHS Marki! released its most recent figures on May 9. The new forecast is very similar to the January forecast, which was the basis of our current estimates. The projected growth rates for employment and both real and nominal gross domestic product are nearly identical to the January forecast. Forecast growth rates for personal income and consumption are slightly lower than the January projections, but anticipated growth in profits is somewhat higher.

Based on the recent collections data and the new economic forecast, we believe that the current estimates are still reasonable and should not be adjusted.
So no extra money is available to transfer to the Transportation Fund to bail out that deficit-ridden area of the budget, which puts an end to Scott Walker’s pipe dream of having more money for road projects without raising taxes or fees or excessively borrowing.

However, that’s not stopping Walker and State Sen. Scott Fitzgerald from insisting that taxes and fees don’t need to be raised on gas or regular vehicles. And Fitz thinks he has a way to get the money needed to fix the roads.
Fitzgerald suggested lawmakers might find a happy medium if the state issued bonds backed by the full faith and credit of Wisconsin’s general fund, which gets its money from Wisconsin’s income and sales taxes and pays for expenses such as schools, prisons and Medicaid. Typically, borrowing for road projects is backed by the transportation fund, which gets most of its revenue from gas taxes and vehicle registration fees.

Fitzgerald said that while the transportation fund is already overextended with debt, there’s enough money in the general fund to support more borrowing.

Somebody wants Grover's attention...

Holy Christ is that a bad idea! Our general fund already has record debt of more than $8 billion, and prior GOP can-kicking is why there is an increase in debt payments of $149 million already slated for the 2019-21 budget (see Page 3 of the LFB’s memo projecting a $1 billion deficit for the next budget).

Side note, using General Fund money to pay back borrowing for the DOT is exactly why the WisGOP talking point of “we still have to pay back money that Doyle raided from DOT” is a flat-out LIE. As this memo from 2015's added borrowing shows, we designated $1.4 billion in General Fund money to pay back DOT borrowing between 2003 and 2015, and $175 million more was added in this last budget.

So now Fitzy wants to add to this debt and screw up the state’s finances even more over even more because he doesn’t want to get on the bad side of Grover Norquist and be seen as supporting a tax increase? Even Assembly Speaker Robbin’ Vos and other top GOP Assembly members think that idea is irresponsible.
But the idea may have been short-lived. Shortly after Fitzgerald’s comments, Rep. John Nygren, R-Marinette, the co-chair of the Legislature’s budget committee and a close ally of Vos, said Assembly Republicans' position had not changed: they oppose growing debt in the general fund, too.

"That’s going to be the side that’s going to compete with schools and Medicaid and every other priority we have," Nygren said. "So our basic position isn’t going to change on a proposal like this."
Yeah, these groups are far apart, and that’s before legislative Democrats even get a say on what Transportation funding and the rest of the budget should look like. It’s so bad that Joint Finance Co-Chairs Nygren and Darling are talking about going beyond their earlier move to rip up Scott Walker’s DOT budget and starting from the 2017 base, but also might take the DOT out of the budget altogether.
Facing an impasse on how to fund roads, Republicans who control the Legislature are contemplating pulling transportation funding from the state budget to pass it separately, the co-chairs of the Legislature's Joint Finance Committee said Thursday.

The approach is unusual but not unprecedented. It could allow Republicans to craft a transportation plan that might have support from Democrats while the rest of the $76 billion state budget - which is unlikely to have Democratic backing - would be voted on separately.

Rep. John Nygren and Sen. Alberta Darling both said Thursday they were open to that approach but there was no agreement among Republican leaders in the Senate and Assembly about whether to do it. The idea was brought up during a meeting between Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald on Wednesday, Nygren said.
That would be an intriguing way about it, which I would guess means that they could delay the DOT part of the budget till after the July 1 start of the 2018 fiscal year.

And here’s how that delay could work out - it would give time to see what might be happening at the federal level (where a bailout from DC in the form of a large infrastructure package could save things in the short term), and many local road aids are done on a calendar-year basis and won’t need to know their new numbers until they do their budgets in November.

But the problem is that it would leave open just how much General Fund money would be available to help the Transportation Fund, and would indicate that perhaps some General Fund money needs to be held back to increase the options that are available. That means cuts to a Walker budget that only has $12 million in cushion in the General Fund budget as it stands today.

The DOT part of the state budget is definitely a mess, and it’s being illustrated by the constant bickering and lack of realism that many WisGOPs are displaying on the subject. Any solution to these self-inflicted problems will be something that upsets a lot of people, and/or make the problem even worse for the next budget.

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