Thursday, April 13, 2017

Sorry Scotty, but the DOT shortfall is more than a $100 million problem

Given all of the strife that has been raised among Wisconsin Republicans regarding the state's debt-ridden Transportation Fund, this press release was interesting to see this afternoon.
The Wisconsin Department of Transportation (WisDOT) has realized let savings over the course of the state fiscal year. “Today, I am directing WisDOT to advance $65 million in projects statewide into state fiscal year 2017," Governor Scott Walker said. "In addition, WisDOT is projecting an additional $38 million in revenues, which the Legislature can allocate into the 2017-19 biennial budget. In total, these actions free up more than $100 million in funds for additional transportation projects due to new revenues and savings."

“Savings on the highway projects we planned for this year allows us to do more projects with existing funds. This June, WisDOT will fund 21 additional projects around the state,” noted Wisconsin Department of Transportation Secretary Dave Ross.

Lower fuel prices and more competitive bids on projects have resulted in increased savings on road projects. Using these savings now means WisDOT will accomplish more road work in the current fiscal year and provide additional resources to the Legislature in planning the next budget. Improving more roadways and bridges now, before inflation reduces purchasing power, and taking advantage of the savings will help preserve our assets and maintain infrastructure.

“We are also generating more revenue for transportation without raising the gas tax or registration fees,” noted Secretary Ross.
I suppose that's a good thing that there's a little extra money to put into projects now as opposed to later. But don't let Walker and Ross fool you- these projects were going to happen anyway, they're just starting them a month sooner so they fall into this Fiscal Year.

In fact, as part of the list of projects being accelerated, the DOT shows that the state is actually spending an extra $10 million of new money on top of $55 million in savings on other projects. That eats up most of the $12.97 million in added revenue that is slated to come in for Fiscal Year 2017, and then the 2017-19 budget is slated to get a little over $25 million more than what was originally projected, which brings it up to the $38 million revenue increase Walker and Ross are promoting.

The Walker boys try to make this sound like a big deal, but even Walker's fellow WisGOP was keeping it in perspective in light of the gigantic DOT budget.

So it's nice, but it doesn't close to solving the state's DOT funding crisis- no matter how the Kochs try to spin it. And starting the state highway projects earlier this Summer isn't going to change the fact that Walker's DOT budget planned to keep state highway rehabilitation below the levels of 2016, and if you add in this $65 million to the 2017-18 totals (basically moving everything up a few months) the Governor's budget was slated to have significant DROPS in state highway spending starting in July 2018 across all levels. This includes major highway projects that need work throughout the state and Southeastern Wisconsin work like I-94 expansion south of Milwaukee and the Zoo Interchange.

Now given that the Joint Finance Committee has ignored Walker's DOT budget and is starting from the base numbers for 2017, having a projected $110.5 million to carry over is a good thing, but it makes me wonder if some of this extra money might be put back to make up for the following planned Walker budget trick (and yes, I finally found the text on this).
Revenue bond debt service is primarily paid from vehicle registration revenue prior to that revenue being deposited in the transportation fund. Consequently, debt service payments are considered negative revenue rather than a transportation fund expenditure. Total transportation revenue bond debt service in 2016-17 is estimated at $229,877,700 an amount that is projected to increase under the bill to an estimated $233,023,600 in 2017-18 and $231,006,700 in 2018-19.

This reestimate reflects the administration's intention that no principal payments would be made in the 2017-19 biennium on transportation revenue bond obligations scheduled to be issued in the spring, 2017. Instead, debt repayment on these obligations would be structured such that all principal payments would begin in 2019-20, and be fully repaid over the subsequent 17 years (a 20-year maturity in total).
That borrowing is slated to be $144 million and is supposed to happen very soon (although the Walker Administration hasn't brought it out yet). If you space out the principal equally over 20 years, that's $7.2 million a year that's not being paid in each of the next 2 years. Why couldn't $14.4 million of that $38 million in extra revenue be used to avoid bigger payments (and higher structural deficits) in future years? Seems like a good place to start.

The bottom line is that this press release by Walker is a cosmetic move that's intended to distract from the growing numbers of potholes and lack of realistic solutions to solve the increasing deficit in the state's Transportation Fund. Add in the fact that this release seems like a desperate attempt to get out ahead of some looming bad news, and that a classic time to dump bad news would be ahead of Easter Weekend, keep your antennae up for something to come out tomorrow.

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