Nygren gets the numbers, shows Transportation $1 billion in the hole

The last couple of days have offered more proof that when it comes to road funding, Governor Walker and reality are not mixing well. And now we have some numbers to go along with that, courtesy of Joint Finance Co-Chair John Nygren (R-Marinette). Nygren asked the Legislative Fiscal Bureau to compare the costs of the state’s road projects with the amount of money that would come in for them (before borrowing), and said that gap in funding confirms that Wisconsin has to look at raising fees and/or the gas tax to pay for roads.

“In the 2015-17 State Budget, several transportation projects were delayed. Instead of updating and building upon our infrastructure, efforts were focused on maintaining existing roadways. Unfortunately, to cover these maintenance costs, Governor Walker advocated to use an unsustainably high amount of transportation bonding.

“According to LFB, we will need to recover over $939 million just to maintain what was approved last budget. That figure doesn’t include debt service payments. Our state’s principal repayment currently stands at $4.3 billion in bonding; a whopping $3.5 billion of this repayment is owed by the transportation fund and the rest is set to come from the general fund. Moreover, some of the transportation bonds that were approved last budget have yet to be issued, which means Wisconsin’s debt service will only continue to rise.

“We have kicked the can down the road long enough. In the upcoming budget, we need to bring in new revenue that will help buy down our transportation debt and structure a sustainable plan for Wisconsin’s infrastructure. It’s imperative to look for reform and program savings as we continue discussing revenue options for the benefit of our state. Moving forward, I implore the governor to consider additional avenues of funding as well.

There’s a small bit of good budget news buried at the bottom of the memo, which says “an estimated $26.8 million reduction in bonding will be required. DOT may submit a s. 13.10 request in 2016-17 to replace the bonding reduction with transportation fund revenue.” This is part of a budget provision that allowed for the $350 million in additional borrowing that was approved in November by the Joint Finance Committee, which said that Transportation Fund revenues came in higher than budgeted, then that borrowing would be reduced. .

c) For fiscal year 2016-17, the modification amount is equal to the amount by which total state revenues for the transportation fund as shown in the annual fiscal report for fiscal year 2015-16 exceed $1,661,562,400, except that the modification amount may not exceed $150,000,000. Notwithstanding paragraph (a), the total amount of debt authorization under section 20.866 (2) (uuu) of the statutes that the joint committee on finance may approve in fiscal year 2016-17 is reduced by the modification amount.

So it goes from $850 million to a little more than $823 million over the course of the 2-year budget. Still not great, but worthy to know.

Interestingly, Nygren is backing down a bit on those statements today, saying he was merely trying to "lead a discussion." But the fact that he felt a need to say anything to begin with illustrates how bad the situation is. Did this news of Wisconsin being nearly $1 billion short of paying for its needs move Gov Walker off of the “no-tax, no-fee” pledge he has made to out-of-state oligarchs ? Of course not.

"Raising taxes and fees is not the answer," Walker said in a statement Wednesday issued in response to Nygren's comments. "Under our administration, we will keep it a priority to live within the means of the hardworking people of Wisconsin. That is a commitment I will honor. Leadership will require us to identify cost savings and prioritize our needs, as I have directed my Department of Transportation secretary to do, especially when it comes to safety and maintenance. I am confident we can do better than placing new taxes on Wisconsin citizens."

In a letter to DOT Secretary Mark Gottlieb last month, Walker outlined his opposition to increasing gas taxes or registration fees and encouraged Gottlieb to look for design changes to construction projects that could be made to reduce spending.

Proposed spending on mega-projects in southeastern Wisconsin should be minimized, Walker wrote, with an emphasis on needs rather than wants. Large, necessary projects should have their plans reviewed to look for possible cost savings while maintaining safety, he also wrote.

I’m sure slowing work on the Zoo Interchange project (making that mess last even more years) and keeping I-94 under construction between Milwaukee and Kenosha is going to go over REAL well, and won’t make us fall further behind in our competitiveness. What a maroon.

What’s scarier is that if you dig into the LFB memo that Nygren references, you’ll see that only $15 million is slated for Southeast Wisconsin “megaprojects”, leaving that area nearly $385 million short compared to what is being spent in the current 2-year budget. And we still have an additional shortfall of over $550 million in the rest of the state, even if we keep using current revenues at the same amounts as we are now.

The second part of Nygren’s LFB request is also intriguing, as it looks at the 4 states that border Wisconsin, and notes that motorists in those states pay a larger amount of combined taxes and fees than Cheeseheads do – often much larger. First of all, it compares the gas tax per gallon that motorists pay, and Wisconsin is pretty much in line with our neighbors these days, now that states like Michigan and Iowa added to their gas tax in recent years. This analysis assumed a gas price of $2.38 a gallon, to account for the fact that Illinois and Michigan pay sales tax on their gas (so their total taxes go up or down based on the price).

Total gas tax per gallon, 2016
Ill. $0.338
Mich $0.330
Wis. $0.329
Iowa $0.320
Minn $0.286

From there, the analysis decided to compare how much a motorist pays in fees and taxes to operate a vehicle for a year in all these states. The LFB used a couple of different car prices, to account for states that charge registration fees based on a vehicle’s value.

$25,000 car, driving 12,000 miles a year, 22.5 MPG
Wis. $250
Ill. $267
Mich $273
Minn $326
Iowa $424

$35,000 car, driving 16,000 miles a year, 15 MPG
Wis. $426
Ill. $432
Mich $486
Minn $541
Iowa $684

Also note that Illinois’ figures do not seem to include tolls, which would raise their figure above that $432, and make Wisconsin’s cheapness in the “cost to drive” even more obvious.

The only time these gaps narrow even somewhat is if you’re dealing with cheap cars that get lousy gas mileage, since that lowers the registration fees in some of these states. I figured that would mean that higher registration fees would be a logical solution, but interestingly Nygren said to the Capital Times that he was more in favor of raising the gas tax above over other policy options.

Nygren said he doesn't have a specific level of bonding in mind with which he would be comfortable, and added that he doesn't want to advocate specific policy proposals just yet. Rather, he said, he wants to start the discussion well in advance of the budget process….

"I'm hoping it won’t just be the governor saying 'yea' or 'nay,' but the people of Wisconsin stepping up and saying, 'we need to do something to fix our infrastructure going forward,'" Nygren said.

Personally, Nygren said, he favors a gas tax hike over a registration fee increase, because the cost would be shouldered by everyone who uses Wisconsin's roads. Similarly, he would be open to a toll road system; however, implementing a toll system in Wisconsin would require congressional approval.

I guess I could see that, in the sense that it makes the FIBs and other tourists pay some of the costs. If Nygren wants to go a step further, he could make that gas tax variable, where it is higher during the high-tourist months from May through September, and lower it for the other months, which would limit the burdens on Wisconsin residents even more.

Regardless of what is done, I agree with Nygren that SOMETHING has to be decided. Scott Walker’s inability to face the facts and cause a double-whammy of more borrowing and bigger repair backlogs is clearly something that is bothering his fellow WisGOPs in the State Legislature. And make no doubt, Walkerism (and Trumpism at the presidential level) is clearly a threat to the 71 GOPs who are up for re-election in 2016- a number that does not include Scott Walker. This is why you’re seeing top GOP legislators at the Capitol like John Nygren and Speaker Robbin’ Vos go out of their way to oppose Scotty on this issue, because they’re the ones that’ll deal with the consequences of doing nothing other than striking poses for Grover Norquist.

After taking a trip up North this last week, there’s a lot of work to be done, without a lot of sources for those communities to pay for it. The state will HAVE to help (barring a major bailout from the “liberal Washington” Scotty claims to dislike), and the solution that arises over the next 12 months will likely define how things shape up in Wisconsin as our critical campaign year of 2018 looms.