Gas Tax Insanity
Bipartisan opposition to the gas tax is causing potholes and rising car repair bills, and hurting the state economy.
If I had a dollar for every time I heard a politician talk about “kicking the can down the road,” I’d probably be a wealthy man. The mind-numbing frequency with which this phrase is used, though, tells us something about the current political climate, where any policy making that looks long term, even a couple years down the road, can be hard to find.
A case in point is the state gas tax, which is really just a user fee that drivers pay to finance the building and maintenance of roads. There seems to be a national bipartisan reluctance not just to raise gas taxes, but to simply maintain them at the same level in real dollars. As a 2010 report by the Institute on Taxation and Economic Policy (ITEP) noted, “total state gas tax revenues nationwide… were lower as a share of personal income than at any point since the widespread adoption of state gas taxes at the end of the 1920’s. In layman’s terms, this means that state gas taxes are a less significant component of families’ household budgets than they have been in roughly eighty years.”
And the situation has only gotten worse in the last five years. Witness the squirming of Republican legislative leaders, who are unhappy that Gov. Scott Walker’s budget will greatly increasing the amount of borrowing for the state transportation fund, yet won’t hear of increasing the gas tax an iota, even though its value has been declining for some 20 years in Wisconsin. “If nothing is done, state transportation funding could be short between $2 billion and $6 billion over the next 10 years,” a 2014 study by the Wisconsin Taxpayers Alliance warns.
The result is a catalogue of ills for this state, including runaway borrowing, poor maintenance of roads across the state, an epidemic of pot holes, and increasing costs for car repairs for motorists who could instead be paying a few cents more per gallon in a fuel tax. The annual dance around the fuel tax has become a continuing, bipartisan comedy in Wisconsin. “Neither Democrats nor Republicans for the past 15 years have been willing to make a decision,” says Todd Berry, President of the Taxpayer Alliance. Under both Democratic Gov. Jim Doyle and Republican Walker, “we’ve punted and borrowed,” he adds.
Last year Walker gave his transportation secretary Mark Gottlieb, a civil engineer and former legislator, the task of developing “a thoughtful plan” to generate revenue for transportation. In November, Gottlieb announced his proposal, which used a complicated formula that in essence, would have raised the gas tax by about 5 cents per gallon, or $2.25 per month per average driver, and also hiked the vehicle registration fee by $50 a year for drivers of hybrid and electric vehicles, who pay little or nothing at the pump.
This small increase in the gas tax wouldn’t have even raised its level in real dollars back to what it was in the year 2000, much less the 1990s or ‘80s. Yet it would have raised $750 million a year. Craig Thompson, executive director of the Wisconsin Transportation Development Association, called it “a really thoughtful, comprehensive proposal that doesn’t kick the can down the road.”
Thompson apparently didn’t realize Walker’s goal was exactly that, to boot the can down the highway. Thompson told the Journal Sentinel he believed the governor was involved in developing this thoughtful proposal. Wrong. Walker often likes to have his department heads propose some kind of funding increase that he can then overrule and pose for a fiscal conservative holy card. Walker had warned Gottlieb he wanted no tax increase, which made the whole thing an exercise in futility.
Nor were GOP legislative leaders interested in Gottlieb’s vision for the future. Republican Senate Majority Leader Scott Fitzgerald has made it clear he opposes an increase in the gas tax. More than 40 of the 63 Assembly Republicans are willing to consider a gas tax increase, Urban Milwaukee columnist Steven Walters has reported, but Fitzgerald and Republican Assembly Speaker Robin Vos presumably fear that some Democrat might run on this issue in one of the few legislative seats that hasn’t been redistricted into an unassailable fiefdom for incumbents.
It’s hardly surprising so many Assembly Republicans favor an increase in the gas tax, given the plague of potholes across the state. Wisconsin has 11,800 miles of state and Interstate highways, but 103,000 miles of county highways and municipal roads and streets to maintain and state funding for the Local Roads Improvement Program has been cut by 45 percent between 2000 and 2013.
Local officials have been complaining for years that they no longer can afford to repair all the potholes. An analysis of the state by 1000 Friends of Wisconsin found that conditions vary by section, but 32 percent to 45 percent of roads in the state are in bad condition. And poor road conditions cost drivers $502 per year on average in extra vehicle repairs and operating costs, according to a report by national transportation research group TRIP. Nationally, AAA has estimated, pot holes cost drivers $6.4 billion a year for auto repairs.
As the report by WisTax noted, all companies rely on transportation to some degree, if only for employees commuting to work. “However, four industries stand out as most reliant on it: manufacturing, farming, transportation (trucking, in particular), and tourism.” And in Wisconsin, manufacturing, farming, and trucking claim a larger share of employment and wages than in any other state, save Indiana, the report noted.
In short, there may be no better way to stifle Wisconsin’s economy than to let its roads deteriorate. And because Wisconsin also is a big state for tourism, with countless Illinois residents driving up north to cabins and cottages they own or rent, they are underpaying for all the wear and tear on roads and highways they cause. Indeed, you could argue that the gas tax is one of the least onerous taxes because so much of it falls on visitors to the state. In Iowa, it’s been estimated that out-of-state residents pay 20 percent of the tax; in New Jersey the estimate is 27 percent. “It wouldn’t surprise me if it’s 25 percent in Wisconsin,” Berry says.
We Wisconsinites get gouged by the toll roads in Illinois. Yet we won’t even charge Flatlanders a reasonable gas tax. Republican leaders are now gathering the votes to raise the state’s annual auto registration fee to $100, up from $75. That will raise an additional $116.7 million per year, which will hardly make a dent in the problem, and will tax only state residents. Small wonder Illinois residents so love vacationing here.