Will Schools, Health Care Pay for Roads?

Road Closed. Photo by Dave Reid.

Wisconsin lawmakers are struggling with how to address a shortfall in the pot of money that the state uses to build and repair highways. There are several possible solutions, but one course of action should be off the table: siphoning off resources slated to pay for the education of Wisconsin schoolchildren or helping people with low incomes get the medical care they need, and redirecting that money to pay for highways.

State lawmakers are in a bind because there is not nearly enough money in the state’s Transportation Fund to keep planned highway projects on schedule. That shortfall is largely due to the fact that Wisconsin’s gas tax has been frozen for the past decade, with inflation eating away at the value of the tax and causing a slow decline in the gas tax revenues into the Transportation Fund.

There are a variety of opinions among lawmakers about how to solve this dilemma. Some Republicans, like Assembly leader Robin Vos, are open to the idea of an increase in the gas tax. Others, like State Senator Chris Kapenga, favor cutting highway spending and leaving the gas tax untouched. Governor Walker has signaled that he may be open to an increase in the gas tax if is paired with a corresponding tax cut. Because Republicans control the Governor’s house, State Senate and State Assembly, it will be Republicans who ultimately decide how to address this issue.

There are several potential solutions, but one option should be kept off the table: Taking away resources that support important Wisconsin priorities – like excellent public schools and safe communities – and instead using that money to build highways. Keep an eye out for these three ways that lawmakers might try to do just that in the budget process next year:

1. By transferring money out of the state’s General Fund – which pays for schools, health care, the University of Wisconsin System, the technical college system, support for local governments and many other purposes – and into the Transportation Fund.

State lawmakers have shifted millions of dollars from the General Fund to the Transportation Fund in recent years.

Voters recently approved a state constitutional amendment prohibiting transfers from the Transportation Fund to the General Fund, but transfers going in the other direction – from the General Fund to the Transportation Fund – are still fair game.

2. By requiring that some borrowing for highways be paid back with money from the General Fund instead of the Transportation Fund.

The state borrows money to build highways, spreading the cost of projects out over several years. In coming years, up to a quarter of every dollar spent from the Transportation Fund will go towards paying off the debt.

In the past, lawmakers have tapped the General Fund to pay part of the borrowing costs, and they might try to make the General Fund responsible for paying off a larger part of the highway debt going forward. That move would reduce resources available to support Wisconsin’s schools and communities in the future.

3. By pairing an increase in the gas tax with a corresponding cut in a tax for which the revenue is deposited in the General Fund or goes directly to communities.

Under this approach, the state and local governments would raise the same amount of revenue overall, but a larger share of the money to go into the Transportation Fund, and a smaller share to other purposes.

Some have speculated that Governor Walker will propose a bargain to increase the gas tax while eliminating the state’s personal property tax. The personal property tax paid is by businesses on the value of their equipment, machinery, and furniture. Because the personal property tax is paid to local governments, eliminating it would leave local governments holding the bag for providing the same services to community members, but with fewer resources.

Lawmakers should think creatively about how to solve the state’s transportation financing issues. But they should rule out draining money away from important state priorities that improve the lives of Wisconsin residents and strengthen our communities.

By Tamarine Cornelius, Wisconsin Budget Project