Thursday, June 1, 2017

Sorry, you'll need more than $93 million to get the roads fixed, Scotty

As we head into June and the last month of Fiscal Year 2017, the final tough decisions of the Wisconsin state budget process will be coming up, and the biggest problem yet to be dealt with continues to be the state’s deficit-ridden Transportation Fund. Yes, Governor Scott Walker and the DOT got a bit of a break on Tuesday when the LFB said there would be an extra $93.4 million of money in the Transportation Fund for this budget cycle.

But that’s a tiny fraction of a $6 billion DOT budget for the next two years, and this newfound money isn’t something to rely on for the future. As the LFB notes, some of this “extra money” is due to a Walker Administration to bank funds and borrow more, instead of spending higher revenues on projects today.
One reason the opening balance was higher than expected under the Governor's bill is due to an Act 55 [2015-17 state budget] provision, as affected by the Joint Committee on Finance's action in November, 2015. This provision required a $44.8 million reduction in SEG-supported, general obligation bonding provided to the major highway development program due to actual 2015-16 transportation fund revenues exceeding Act 55 estimates. Act 55 also provided DOT the authority to submit a request in 2016-17 to replace the bonding reduction with the available transportation fund revenue. However, AB 64/SB 30 [the governor’s 2017-19 budget] assume[s] that DOT will not request these funds in 2016-17, which allows the $44.8 million to remain in the 2017-19 opening balance, and instead appropriates the funds in the 2017-19 biennium.

As a result of these decisions and reestimates of other revenue elements of the fund, the estimated ending balance for 2016-17 (the 2017-19 biennium opening balance) is estimated at $145.4 million, or $37.8 million higher than under the Governor's budget.
Other reasons for having more money available include higher-than-expected gas tax revenues ($46.1 million in total), savings from refinancing current DOT debt and kicking it into later years ($29.2 million), and higher vehicle registration fees ($12.9 million).

The extra money added to where a Tuesday Walker photo op near Beloit where he encouraged the Legislature to “Get it done,”, and pass a Transportation budget for the July 1 start of the next fiscal year. Walker warned of delays on large Wisconsin highway projects, and also signaled that he’d be OK with tolls as a way to eventually get projects done.
An impasse over the state's next transportation budget risks delaying key highway projects now under construction, including an expansion of U.S. Interstate 39-90 in Dane and Rock counties, Gov. Scott Walker said Tuesday.

Walker also signaled he is open to proposals to toll U.S. interstates in Wisconsin — a move favored by Republicans who control the state Assembly — but only if tied to a reduction in the state's fuel tax.

'It would have to include a reduction in the gas tax for Wisconsin residents," Walker said Tuesday…
A big problem with Walker’s statement is that tolling would cost hundreds of millions of dollars to start up, would need Congressional approval, and wouldn’t be collecting money for at least a couple of years while it gets set up. In the meantime, there has to be a way to pay for these projects NOW, and Walker seems to have no plan to do so other than borrowing the state into oblivion in the short term, because he values staying in the good graces of DC lobbyist Grover Norquist instead of actually getting things fixed and paid for in a fiscally responsible manner.
In fact, even if all of the new $93 million in new money was used for projects in this budget, there would still be $407 million that would need to be borrowed to match the spending in Walker’s budget. Overall, we’re still on track to spend $450 million more than we’d take in, if we follow Walker’s budget, and more needs will pile up for future years.

Ok Scotty, where’s the money to “get it done”?

Walker’s “borrow and defer” plan would make the Transportation financing problems even worse for the next budget…or the next governor. Assembly Speaker Robbin’ Vos says he’d rather take care of the issue now, and pay for those projects in 2017-19 and in the future. Vos appeared on Mike Gousha’s TV show last weekend, and said the Governor’s plans to increase borrowing is the main source of conflict.
Vos was critical of Gov. Scott Walker’s plan for the $500 million in borrowing; Walker also proposed a boost in local road aids, but delays for major projects.

“To me that’s not acceptable,” Vos said. “I’m not willing to accept delaying those projects forever. He wants to continue to borrow. So maybe the answer is we just freeze spending in place.”

Vos said while the state’s roads would be made “problematic” under that approach, “at least we’re not putting the debt on our kids that we can’t afford.”

Vos said he is still open to considering transportation as separate legislation to avoid delaying the rest of the budget.
You can see why Vos might want something that wipes out the chronic DOT deficit and remove the reliance on borrowing for now and the future. But one of the best options to reduce borrowing is being eliminated, since WisGOP members of the Joint Finance Committee are indicating they will go along with Walker’s gimmick of using $180 million in tax dollars to fund a $27 property tax break. That means those $180 million aren’t going to be available to be used for the DOT or other needs, so good luck on working it through, Robbin’!

In addition to the big-ticket road projects, there are more local and basic DOT needs that have to be taken care of. We just saw another tragically pop up this week, when an Iowa man was killed after Highway 82 in Crawford County was washed out Tuesday morning near the Iowa-Wisconsin bridge, and the man’s vehicle was swept into the sinkhole. Highway 82 and that bridge are now closed and that means more extra expenses that the Wisconsin DOT will have to shell out for without extra funds coming in.

Given that Federal money is not likely to be available to clean up from May’s F2 tornado in Chetek, nor does it seem likely that the Trump Administration is going to have any kind of major infrastructure spending to help the states, it looks like WisDOT isn’t going to be bailed out of its problem by DC, either.

Which makes it all the more odd that the GOP-led Joint Finance Committee came out yesterday to put another spending burden onto WisDOT.
The Department of Transportation would be required to contract with private vendors, counties or municipalities to remove deer carcasses. But the agency would not get any additional funds to do so.
The DNR received $701,400 on a one-time basis from the forestry account in the 2015-17 budget to establish a program to remove dead deer from state, interstate and U.S. highways. That money was not included in the 2017-19 budget.

Dems slammed transferring the responsibility to DOT without providing money to carry out the directive considering the ongoing debate over available money at the agency to fund highway projects.
Remember when Republicans used to be against unfunded mandates? There’s another DOT intiative we need to find money for over the next 2 years…or borrow for it.

So while Senate Majority Leader Scott Fitzgerald and Governor Walker are trying to put a positive face on the DOT budget, and are claiming things will wrap up in the next 2 weeks, the chronic deficits in the Transportation Fund and the constantly-growing needs tell me that there is a lot that still needs to be figured out. And I’m not confident that WisGOPs or others in the Legislature “get it done” in any kind of responsible way during this last month of Fiscal Year 2017.

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