21% of Gas Tax Will Go to Repay Debt
Debt level has doubled in a decade, yet legislators approve plan.
Don’t try this at home: Out of every $100 in family income, $21 must be used to pay off debts. It makes it hard to save for a more reliable car, a better place to live and come up with higher health care co-payments.
Yet that’s what your state is doing. Say you just paid $35.38 to fill up your car, buying 15 gallons of gas at $2.359 per gallon. You paid $4.63 in state gas taxes and of that total, 21 percent — or 95-cents — will go to pay off what state government has already borrowed.
With the blessing of Republican Gov. Scott Walker, 10 legislators – six Assembly Republicans and four Democrats – on the Joint Finance Committee (JFC) last week took state government $350 million deeper in debt for highway construction and maintenance.
As a result, major projects like widening I39/90 between Madison and Beloit will be delayed by only one year, instead of two.
But there’s a cost: 21-cents out of every $1 in Wisconsin gas taxes and vehicle registration fees will soon go for debt service payments on debt interest and principal.
In just 10 years, debt service on transportation projects has doubled – from 10.3 percent to 20.7 percent, according to the Legislative Fiscal Bureau (LFB).
“This is horrible leadership,” lamented Democratic Sen. Lena Taylor, a past JFC cochair. “We’re put between a rock and a hard place.”
She was one of the four JFC Democrats who voted to borrow the additional $350 million without having a plan to pay for it. “Investing in our roads is commerce,” Taylor explained.
Republicans control JFC by a 12-4 margin. In a rare public split, the 12 Republicans divided on the next round of credit-card debt. Republican Sen. Alberta Darling, Finance Committee cochair, spoke for the six Senate Republicans who voted against more borrowing, which will be added to $500 million in bonding that was part of the state budget. “We can’t keep going in spending and spending and spending” without a long-range plan to pay for highway construction and maintenance, Darling said. “Our (transportation) revenues are not significantly up.”
LFB reports agree with that: Transportation Fund tax collections are expected to total $1.82 billion this year. That’s only $24.8 million – or 1.3 percent more – than last year.
Republican Rep. John Nygren, the other JFC cochair, defended the six Assembly Republicans who voted for new borrowing, which will require debt service payments on $175 million from the general fund and $175 million from the transportation fund. But Nygren said state government isn’t going deeper in debt to replace expensive buildings, as it has in every other budget.
Erpenbach vowed to again try to raise Wisconsin’s 30.9-cent per gallon gas tax, which has been unchanged since 2006, to put highway spending back on more of a pay-as-you-go basis. A 1-cent increase in the state’s gas tax would bring in an additional $33 million a year.
Gas taxes in neighboring states are Iowa, 31-cents per gallon; Minnesota, 28.5-cents; Illinois, 33.9-cents; and Michigan, 33.2-cents, according to the Fiscal Bureau.
Wisconsin’s $75 annual fee to register cars and light trucks has not been increased since 2008. Raising it by $10 would bring in $37.5 million more per year.
First-term Senate Democrat Janis Ringhand, whose district includes the I39/90 widening project, also said the additional $350 million had to be borrowed. “The U.S. Department of Transportation is saying that 71 percent of Wisconsin roads are in poor or mediocre condition, making us one of the three worst states for road conditions in America,” Ringhand said in a statement. “Not paying for needed road repairs has negatively impacted both highway safety and economic development.”
Defenders of borrowing to build and maintain highways say it makes sense, since those improved roads are used for decades. But critics say Wisconsin has gone too far in debt.
You be the judge. Outstanding transportation debt was $3.89 billion as of December 2014 – before the additional $500 million was added in the state budget and before the new debt of $175 million was tacked on last week.