Sure, road construction continues now. But WisGOP will have to tax or borrow for more

As the state’s budget impasse continues, the state trudges to complete work with the funds that they have. For example, Janesville’s Gazette noted over the weekend that despite the state budget impasse, they will continue on with planned work in September to expand I-39/90 in and around the city.

The reason they can do that is largely due to some pork timely funding from DC that was pushed through in 2016 by hometown boy Paul Ryan.

Steve Theisen, a spokesperson at the [Wisconsin] DOT's I-90/39 project field office in Edgerton, said Janesville's leg of the Interstate expansion remains set to roll this fall because it's being paid largely by a $40 million federal FASTLANE grant awarded last year.

He said the state is paying for the remainder, about $14 million, out of a pot of “base-level” state funding for major highway projects. That funding kicked in this month as the 2015-17 budget ended and the new biennial budget locked in a stalemate despite several big road projects slated to go to bid in July and August.

In the absence of a state budget, the base-level funding gives DOT project officials about $175 million to divvy up among several major highway projects, the I-90/39 expansion being just one of them, Theisen said.

The problem is that “base level” funding won’t pay for the additional needs for highway work that have cropped up in the state, and would mean sizable delays in big projects such as the full expansion of I-39/90, which would stretch from Madison to the Illinois state line.

The desire by Senate Republicans to expand work on these projects has led to the main reason behind the conflicts between Republicans in the State Senate and Assembly, as they continue to argue about a budget that is 3 ½ weeks overdue at this time. Both sides would prefer to complete the projects, but Senate Republicans have chosen to stay on the good side of DC Lobbyist Grover Norquist by refusing to raise taxes or fees to do so, and instead asked to borrow $712 million for road projects as part of their budget proposal from last week.

The Assembly Republicans aren’t keen to add more borrowing to an already debt-ridden Transportation Fund, to the point where Assembly Speaker Robbin’ Vos indicated that he would accept a cut in state highway spending down to that base level if he couldn’t get any type of fee or tax increase to pay for the extra road work.



But many Senate Republicans are still standing firm against a tax increase, which makes me and others wonder if they truly understand (or care) about the potential consequences about borrowing their way into oblivion.

For example, State Sen. Dewey Stroebel (R-Grothmanland) tried to tell the Bubble World crowd at Right Wisconsin that borrowing $150 million to pay for road work in the next budget was better than increasing the gas tax by 5 cents a gallon. Stroebel’s argument indicated that the borrowing was a one-time deal whereas increasing the gas tax continues year-after-year, which means there are an additional $3 billion in gas taxes for the next 20 years.

Lou Kaye at Rock Netroots rightfully saw the absurdity of Stroebel’s “math” and pointed out that borrowing does nothing to fill in budget gaps in future years, which means that more borrowing is needed for future needs.

Is Stroebel implying that $3B worth of transportation can be paid with $240 million? Well, not quite ...it's actually much, much worse than that.

As per Stroebel's math, a single $150M twenty year bond at 3% will cost Wisconsin taxpayers $4.5M per year in debt service or $90 million in interest before it's finally paid off in 20 years. But we're still short $2.85 billion in additional road funding for the next 19 years. To put that number into perspective, the I39/90 expansion alone is expected to cost $1.5B and that's climbing higher as I write.

So we must assume Stroebel would rather buy a $150M twenty year bond ...each year for the next twenty years to equal the $3B target a 5¢ tax on a gallon of gas would raise over twenty years, given the choice. BUT, instead of paying $3B for $3B worth of transportation with a higher gas tax after 20 years - Wisconsin taxpayers will end up shelling out, in one shell game or another, $4.8B for $3B worth of transportation funding using Stroebels' borrow approach. The bottom line: State taxpayers will pay $1.8B more unnecessarily ...and get less. AND ...the last bond won't be retired until year 40 from the time the first bond was purchased.

This is why raising the gas tax is a better way to handle the state’s chronic $1 billion budget deficit than borrowing, if the revenues are there to be added onto (and it would be). Kaye doesn’t even mention that the Senate GOP plan borrows nearly half of their money from the General Fund, which means those future debt payments aren’t just eating up available funds from road repairs, they would also be taking away from schools, medical care, and other services.

Maybe this week, some people in WisGOP can be adults and deal with these gaps in WisDOT financing before the base funding runs low and real highway delays happen along with the unending line of orange barrels and annoying traffic patterns along Wisconsin’s freeways. But with no meetings scheduled for the state’s Joint Finance Committee in this week, it seems likely that this budget isn’t going to take effect until August…if not later.