The Contrarian

Highway Debt Cult Drinks the Kool-Aid

Many Republicans swallow crazy rationales for increasing Doyle-Walker debt.

By - Jul 19th, 2017 11:07 am
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Jim Doyle and Scott Walker

Jim Doyle and Scott Walker

Governor Walker’s ultimatum on higher gas taxes (not now and not in a third term) has many conservative legislators and commentators taking a decidedly sanguine view of the state’s burgeoning highway debt.

A prominent Republican legislator says the state “always” has borrowed to rebuild freeways. Another defends $713 million in new debt as necessary “borrowing in the short term.” A conservative think tank says the “research and experience” in support of highway debt is “overwhelming.” Two prominent talk show hosts liken highway debt to a home mortgage; their “logic” has been echoed by several legislators.

Within reasonable limits, highway debt makes sense. The record under Republican Gov. Scott Walker — and before him Democratic Gov. Jim Doyle — shows what happens when reasonable limits are ignored.

Specifically, spiraling road debt means the share of gas tax revenue needed to repay bonds has TRIPLED since Jim Doyle was elected. With gas tax revenue stagnant, still more borrowing will escalate this unsustainable trend. Each biennium, it means less revenue is available for ongoing transportation needs. In a (futile) effort to blunt the impact, beginning in the Doyle Administration the state started selling highway bonds backed by the general — not transportation — fund. The new debt package announced this week by Senate Republicans includes $350 million in general fund-supported bonds, an explicit admission that the transportation fund is tapped out when it comes to debt.

Let’s consider some “conservative” arguments advanced to support the Senate GOP plan.

Wisconsin has “always” borrowed to rebuild freeways. That’s precisely why the debt situation is out of control. At the same time the state committed itself to the unavoidable task of rebuilding freeways it froze the gas tax. The resulting stagnant revenue meant that billions of dollars of new debt was the only source of revenue for freeway reconstruction.

The Senate plan to borrow $713 million more is only a “short-term” approach while the state addresses supposed mismanagement by Walker’s Department of Transportation. This claim is advanced by a legislator who has voted for nearly $3 billion in new highway debt since Republicans took control of state government. Was that also “short-term”? And, of course, it is ludicrous to suggest that improved WISDOT management would free up enough money to finance the multi-billion dollar cost of freeway reconstruction.

The “overwhelming research and experience” in support of highway debt that supporters of this approach cite actually illustrates the folly of the Doyle-Walker record. There is no “research” to support growing reliance on debt when the source of repaying bonds is stagnant. (That’s why the state has resorted to the general fund to support hundreds of millions in highway bonds.) And the Wisconsin “experience” is Exhibit A in the case against excess reliance on debt.

When a homeowner pays off a 30-year mortgage it has a home that it owns free and clear. Given historic trends in home prices, the value of that home is equal to or more than the cost of the mortgage. If one includes taxes and routing maintenance most homeowners still break even. But when a road wears out, it is worth nothing. The flawed mortgage analogy ignores the fact that no responsible lender will make one loan after another to a borrower whose income is stagnant.

No matter how you slice it, the “conservative” case for continuing the Doyle-Walker highway debt binge simply does not hold up.

As for Walker’s role in this growing debt problem, consider my recent column, Highway Debt Up 87% Under Walker.

4 thoughts on “The Contrarian: Highway Debt Cult Drinks the Kool-Aid”

  1. DTY says:

    Thanks for pointing out that the highway debt service is already coming from BOTH the transportation fund and the general fund. It’s amazing that debt service in the transportation fund is going well north of 20% and that doesn’t even account for the debt service that is already a state general fund obligation.

    I would love to see you dig up information on the TOTAL amount of accumulated unpaid debt principal that is on the books for the state related to highways. I wouldn’t be surprised if the amount surpassed the entire annual transportation budget.

  2. Max says:

    This has been a bi-partisan (going back to the Doyle years) effort at obfuscation, mismangement, and a gross injustice to Wisconsinites, present and future. The GOP rationale doesn’t pass either the smell or backbone test (interest rates are low, therefore shop and spend to you drop, forgetting of course that loans need to be paid back). There are other ways, higher license/registration fees for those trucks chewing up concrete and asphalt comes to mind, but continuing this level of borrowing is unsustainable and irresponsible.

  3. steve says:

    We are in a new era in which highway use can easily be funded through automated tolls for those who actually use them, not just on gasoline which may be consumed mostly on local roads. Let the suburbanites and trucking operations pay for the roads directly. Lets stop subsidizing suburban sprawl and encourage a lifestyle built on the use of alternatives such as living close to work, walking or biking, carpools, and multitask car trips, or electric cars. But watch the Republicans find a way to suck funds away from those of us who don’t need more bigger, better highways to satisfy the excesses of their suburban and exurban supporters who cant get to the mall without a 4 lane highway…

  4. Daddy3Girls says:

    The startup costs alone to turn our roads into tollways wouldn’t pay off for decades. Spend a dollar to make a dime.

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