WisDOT has less money coming in. But with Fed help, we'll see more roads get fixed in 2021

I saw this interesting note cross by the Legislative Fiscal Bureau's site, where the LFB dexcribed a couple of big adjustments to WisDOT’s funding in the COVID World.

The first adjustment has to deal with the revenue shortfall due to the lower amount of driving over the last year.

DOT indicates transportation fund collections continue to be negatively impacted in 2020-21 due to adverse effects from the COVID-19 pandemic. The Department projects that gross revenues will be $122.3 million less in 2020-21 than the amount estimated in 2019 Act 9, including the motor vehicle fuel tax and title fees below their respective estimated amounts by approximately $100.1 million (9.2%) and $61.2 million (22.3%). However, in 2020-21, the lower revenues will be partially offset by an estimated $44.9 million less in debt service on transportation revenue bonds due to slower than anticipated issuance as well as interest savings and bond premiums associated with a 2020 refinancing.

Combine that with another shortfall in the 2020 Fiscal Year for many of the same reasons, and it means that on the state funding side, WisDOT would have a $172 million deficit to fill.

But at the same time, WisDOT is a getting significantly more help from DC, largely due to the bill that passed Congress and was signed into law in late December.

Under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, the Department was allocated $186.6 million in additional federal aid for highway infrastructure programs as well as $27.0 million in federal appropriation supplement as part of the Consolidated Appropriations Act of 2021. In addition, the Department was allocated $50.0 million in federal redistribution aid for federal fiscal year 2020, which is any federal highway aid unobligated or unallocated by states that the Federal Highway Administration is required to redistribute to states that are able to use that authority. This redistribution amount was $30.0 million higher than anticipated at the time of 2019 Act 9. Including the $733.5 million the Department was allocated through regular federal highway aid formula funding, the Department was allocated a total of $997.1 million in federal highway aid in 2020-21, which is $209.9 million, or 26.7% higher than the $787.2 million in federal formula aid appropriated in 2019 Act 9. All of this federal aid remains available for obligation until September 30, 2024, except redistribution aid was required to be obligated no later than September 28, 2020.

So as a result, the LFB says that despite the lower amount of state-generated revenues, WisDOT not only will avoid cutting back on road projects, it’s actually going to be able to send more aid to local communities to help them get their roads fixed, as well as put in more money to fix state highways.

Under the federal portion of its plan, the Department requests the appropriation of the additional $209.9 million in federal aid to increase the expenditure authority for corresponding federal appropriations to replace the amounts lapsed from program's continuing appropriation balances proposed under its deficit reduction plan. Under the Department's plan, many appropriations would experience no net change in funding. Two programs, the state highway rehabilitation program and the local roads improvement program, will receive a net increase in funding of $25.7 million and $25.0 million, respectively. Projects in the local bridge improvement assistance program are typically eligible for federal funding while projects in the local roads improvement program are not typically eligible for federal funding. In order to increase funding for the local roads improvement program, the plan would reduce SEG funding by $25.0 million in the local bridge improvement assistance program segregated appropriation, and provide an equal amount to the corresponding federal appropriation for that program. Reducing the local bridge improvement assistance program segregated appropriation and replacing that funding with federal aid would make available $25.0 million in segregated revenue to re-allocate to the local roads improvement program under the plan.

Now that’s a nice trade-off. What we can hope is that the post-COVID World of 2021-23 means that we will be back near normal in DOT revenues, so road building can continue on schedule. It also indicates how a Federal infrastructure package would help the state’s ability to catch up to the negligence of the Age of Fitzwalkerstan, which is why that needs to be a big push in DC this Summer as part of federal budget negotiations for the Fiscal Year that starts on October 1.

That extra infrastructure help from DC could also reduce the need for WisDOT to borrow money over the next 2 years. Governor Evers is planning to borrow a bit more than he did in the current budget, but it won't be close to the high levels of DOT debt we saw under most of the Walker years.

The Evers budget has no plans to raise the gas tax or registration fees like he wanted to do in the last budget. Given that moves were made in the last budget to raise registration and title fees, and combined with a restoration of driving in a post-COVID world and a potential boost from DC, and that may be enough to get the roads fixed and smoothed over for the next 2 years.