Saturday, December 28, 2013

The tax reform we should discuss- streets and transportation

1. This topic seems timely given that temperatures are in the process of dropping more than 50 degrees in less than 36 hours in these parts. Saturday's Journal-Sentinel had a story on Milwaukee and Waukesha having their snow and ice removal costs go way over budget in 2013, In Wisconsin, local governments have a calendar-year budget (January-December), and the cold and snowy December has put a major pinch onto things.
The City of Milwaukee is likely more than $1 million beyond what it had allocated for clearing streets, with the exact figures yet to be tallied. The budget for 2013 was $7.9 million, but the city Department of Public Works already had spent $8.6 million as of Dec. 17. That was before last weekend's storm that dumped another 7 inches of snow on the city.

"We estimate that our costs are above $10 million but we won't have final numbers until all invoices are paid and charges are posted," said Sandy Rusch Walton, department spokeswoman....

Officials from other municipalities also said their budgets are stretched and salt bins low as December ends.

"We did order more salt this month than previously because of this weather," said Tom Eeg, assistant commissioner of the Department of Public Works in Racine. "The temperature has been below the average, too, which means yes, we are doing more salting and brining."
Some cities such as Milwaukee have separated snow and ice removal into a separate fee that appears on property tax statements, but many others include it as part of regular property-tax funded services, which means that if snow and ice removal runs high one year, some other service often has to be sacrificed. This is especially true in recent years, as the Walker/WisGOP budgets have cut shared revenues to municipalities for both general services as well as to help pay for local roads. Strict property tax limits have compounded this situation.

Partly as a result of this austerity combining with harsh winters, it has led to a need to make adjustments to policy to conform to Wisconsin's reality. The state already had to transfer big money out of highway construction this Summer due to higher winter maintenance costs from the previous months.
The 2012-13 winter season was more severe in most parts of the state than the five-year average (the basis of the Department's winter budget planning). In particular, snowfall totals were 46% above the five-year average on a statewide basis. As a result, counties incurred costs exceeding the amount budgeted for winter maintenance by an estimated $14,440,000. In addition, the counties' use of salt exceeded the amount set aside for the season, as well as the Department's salt reserve, which required the Department to replenish supplies during the season, at a total cost of $11,220,000. In total, therefore, winter costs exceeded the amount budgeted by $25,660,000.

Because of the nature of winter maintenance, the Department has already incurred the encumbrances or expenses for which the request is being made. The Department is required by statute to reimburse counties for their actual expenses, so it is not possible to avoid those costs by providing a partial reimbursement of counties' costs. Similarly, the purchases of additional salt were made during the winter season to avoid depleting supplies. As a result, expenditures and encumbrances in the Department's highway maintenance and traffic operations exceed budget authority in the appropriation. [Although winter costs exceed budgeted amounts by $25,660,000, some expenditures are not expected to be incurred in 2012-13. The Department's request of $25,000,000 is the amount that would be needed to avoid having the Department's maintenance and traffic operations appropriation end the fiscal year in deficit.
Given how the 2013-14 winter has start (31 inches in 30 hours in Ashland???), there may be a need for another additional injection of help state side. So the question is "How do we make up for this?" Do we cut certain road projects, or cut local road aids to local governments (who are already hurting, as you saw above)? The 2013-15 budget did put in more state funds for highway maintenance, so maybe the state's fiscal gap won't be as bad this year, but it still doesn't solve the problem for local governments in 2015 (especially if they've gone into their reserves to take care of this year's snow and ice removal costs), and there is now a higher base level of spending that is going to have to be met by the state in the next budget.

These concerns lead to a larger issue. The state's Transportation Fund already is slated to get $175 million from the General Fund and other non-transportation fees in 2014-15, and is still projected to spend $30 million over what it takes in, with major borrowing costs coming due in the next few years. In addition, Walker ignored the recommendations by a state tax force asking for a 5-cent raise in the gas tax to pay for a backlog of projects and needs, so that makes the up-front costs more if you decide to catch up in the future. So what do you do in 2015-2017? Throw even more sales or income tax revenue to Transportation? Larger fees for items like vehicle registration and driver's licenses?

Here's my suggestion. Why not have a part-time raise in the gas tax, from May 15-September 15? This would be the height of tourist season, meaning that more people from outside the state are paying the additional tax, instead of having people who work and live full-time in Wisconsin pay more of it, and it also allows for the roads to be better maintained so they can get to Wisconsin in the Summer.

Maybe we could also look at funding transit instead of adding huge projects in the Milwaukee and Madison areas? Especially in light of the US PIRG report from earlier this month that showed people are actually living closer to work in the state's two largest metro areas.
New Orleans has seen the largest drop in per-capita VMT – 22 percent – since 2006, possibly a result of Hurricane Katrina. The urbanized areas containing two Wisconsin cities, Milwaukee and Madison, saw the second and third biggest drops in per-capita VMT – 21 percent and 18 percent, respectively. Two Pennsylvania urbanized areas, Harrisburg and Pittsburgh, saw the fourth and fifth biggest drops in per-capita VMT – 14 percent and 13 percent, respectively.
Why not match policy to these changing commuter pattersn, and instead of sinking massive amounts of money into freeway expansion, why not have those funds go toward transit and local streets, since those seem to be getting used more? And maybe we should allow these communities to form Regional Transit Authorities and have the freedom to fund the level of transit that they see fit, instead of being dependent on state funding and property taxes? Heck, even the pro-Walker Journal-Sentinel said this week that RTAs should be brought back.

Unlike the stupid thought of dropping the income tax to 0% and raising the sales tax to 13.5% (I illustrated just how regressive and idiotic this proposal is here), this is the type of real tax reform Wisconsin should be looking into. We need to update our infrastructure and adequately fund transit if we want our economy to grow in the 2010s and our communities to remain vibrant, and developing more stable funding for these projects is much more important and effective than continuing failed trickle-down policies that inevitably will lead to a blown-up budget and unnecessary fiscal crisis.

Then again, we've seen that they don't want to have effective, stabilizing policy in Walker World. They just want to funnel money to campaign contributors and grab power for their little club. And talking about income tax policy distracts the public (and the lazy media) from the real funding discussion we should be having- how to pay for our streets, highways and transportation options.

1 comment:

  1. Ashland's recent 31.5" wasn't the start though: on the north coast we were also hit by a foot or two early this month.


    One of the gripes I have with the big freeway projects that Walker's donors love is that they're all based on a big bet that self-driving cars won't be making their mass-market debut within the 10 years or so that these projects will take to complete. Self-driving cars don't need the reaction time that human drivers do, so more can fit on the same stretch of road at the same speed, reducing or removing entirely the need for more lanes from A to B.

    They wouldn't have to have made large market inroads by then, merely enough to set back demand for road space from otherwise-anticipated levels. Given that by 2020 Mercedes-Benz, Audi, Nissan and BMW all expect to be selling fully autonomous cars, it seems that staking several billions on this kind of bet isn't especially wise.