Tuesday, June 23, 2015

An update on WisGOP's transportation bind

Yeah, I wouldn't count on the state budget being done when this current fiscal year ends one week from today. A look at developments in recent days on the state's Transportation Fund indicates that not only are the Wisconsin Republicans still not close to an agreement, but they seem to be moving further apart, instead of getting closer.

These cleaves in the Republican caucus were very apparent in a letter signed by numerous GOPs in the Assembly and sent yesterday to GOP leadership in both houses of the Legislature. The letter demanded that any cuts in transportation projects be spread throughout all parts of the state, and pointed the finger directly at Scott Walker's borrow-and-spend policies for putting the state in this bind.
This legislature has made tough choices to ensure our state's finances are in order (Hey! Stop laughing!) We find the level of transportation bonding in the Governor's budget proposal to be untenable. Currently, $0.17 of every $1.00 of transportation spending goes to debt service. Under the Governor's budget, $0.25 of every dollar would go towards debt service. This path is simply not sustainable. If a long-term solution cannot be achieved in this budget, we support the alternative of reining in the state's transportation spending and delaying projects until the required funds are available.

However, we want to be abundantly clear that the decision to make responsible budgeting choices should have a shared and equal impact statewide. The discussion of excluding the Southeast [Wisconsin] Megaprojects (including the Zoo Interchange) from any cuts or timeline delays would disproportionately affect our constituents and taxpayers outside the Milwaukee area.

As you know, safe and reliable transportation infrastructure is critical for commerce and safety across Wisconsin. We cannot allow a singular focus on Milwaukee to bring detrimental effects to industry, tourism, and ultimately the taxpayers of Wisconsin.
The letter was signed by more than half of the Assembly GOP caucus, and it did not include one legislator in the 414 or 262 area codes. It reiterates the public argument from last week between the two Co-Chairs of the Joint Finance Committee, where the outstate GOPs are clearly at odds with the ones from the suburbs and small towns near Milwaukee, Racine and Kenosha.

The Legislative Fiscal Bureau has documented which projects are slated to be built outside of SE Wisconsin, and which ones will be hit through the reductions in spending. The amount of these major highway projects outside of the SE Megaprojects are estimated at $836.1 million, and Gov Walker set aside $623 million for the SE Megaprojects, which would all go to the Zoo Interchange project in this 2015-17 budget.

So what would happen with an $800 million cut in DOT spending, which is the number that Assembly Speaker Robbin' Vos has thrown around as a goal when it comes to reduced borrowing. The LFB notes that $500 million of the cuts would likely be split by taking $300 million away from the major highway projects, and $200 million for regular maintenance (I mentioned some of the outstate projects that would be delayed in this post). Bad enough, but if the Legislature follows the wishes of the outstate GOPs and includes the Zoo Interchange in the cuts, the LFB says there would be a double-whamy where the Zoo Interchange project drags on for another year, and they STILL can't come up with the $300 million in cuts.
DOT was asked how it could best absorb a $100 million to $200 million cut to the Zoo Interchange project. The Department indicated that if such a cut were required, that it would prefer to delay the north leg of the Zoo Interchange project (USH 45) by one year, which would reduce the amount of funding needed in 2015-17 by an estimated $155 million. [Alternative #A2] DOT believes that delaying this project component would result in an estimated $6.3 million increase in costs due to inflation. Because of the project timing, the timing of design completion for this project could be slowed down to eliminate the need to update future specifications based on the potentially revised project schedule. However, this alternative would result in the need to fund the remainder of this project in addition to ongoing costs associated with the I-94 North-South freeway project in 2017-19.
And in that scenario, there would still be $145 million in cuts or tax increases that would have to be figured out, on top of the reality that there would be extra costs in the next budget to pay for a Zoo Interchange project whose completion would be delayed into 2019.

Of course, an easy answer when it comes to filling the gap without borrowing would be to raise taxes and/or fees that go into the Transportation Fund. The LFB estimates that raising the state's gas tax by a mere nickel a gallon would add $318.6 million to the Transportation Fund in the next two years, so only half of that would be needed to make up for that last $145 million that would get to Vos's goal of $800 million in reduced borrowing. It means any gas tax increase could be put off until July 2016 conceivably, or the Legislature could be inventive and only have the raise happen in the tourist-driven months between April and October, which lessens the burden borne by Wisconsinites that live and work in the state year-round. Raising the registration fees for all cars and trucks under 4 tons by $20 a year would also fill in that $145 million hole, if the GOPs want to weasel their way out, and claim they didn't raise "taxes" (a trick they've already done with camping and other DNR-related fees for next year).

But then that would be defying Walker's promise not to raise gas taxes or registration fees, as part of the pose he strikes to the bubble-world oligarch purists that he wants to kiss up to in the 2016 presidential campaign. And so Wisconsin GOP legislators that have to face Wisconsin voters next year are stuck in a massive pickle, which means the budget remains stuck in neutral, with regional and ideological differences being apparent, and very little progress being made as our fiscal year grinds to a close.

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