An Increase in Gas Tax Could Help Pay for Transportation Projects
Legislators have taken a break from public debate on the budget as they meet privately to try to hammer out agreement on a few key issues, including how to pay for major highway construction projects. There is not nearly enough money in the state’s Transportation Fund to pay for the highway expansion and other planned transportation projects. But lawmakers are reluctant to increase the gas tax, which is the main source for financing highway projects, and which has declined considerably over the last decade.
The decline of the gas tax has meant a significantly smaller pot of money to fund highway project, and lawmakers have yet to come to an agreement on the best way to address that issue in the next budget. Possibilities include:
- Increasing borrowing to finance highway building. Governor Walker recommended borrowing $1.3 billion for road projects over the next two years, an approach that would spread costs out over time but wouldn’t do anything to address the mismatch between the cost of building highways and the money available to pay for those projects. Legislators have balked at the amount of borrowing recommended by Governor Walker, calling it “not sustainable.”
- Increasing car registrations or other transportation-related fees, to increase the amount of revenue going to the Transportation Fund. Governor Walker has rejected this approach as the equivalent of a tax increase.
- Scaling back proposed highway projects. From the reports in the press, it appears that legislators are likely to postpone some planned highway projects, and approve a lower level of borrowing than what Governor Walker originally requested.
One of the approaches that hasn’t gotten serious consideration is raising the gas tax to pay for road projects, as anti-tax lawmakers have rejected the possibility out of hand. But lawmakers should keep in mind that they could raise the gas tax significantly and still keep it under historical levels. The gas tax has been frozen since 2006, and the effects of inflation have eaten away at the value of the tax considerably since then. Raising the gas tax by 5 cents per gallon – which would still keep it below levels of a decade ago – would increase revenue by $319 million over the next two years, money that could be used to reduce the amount of borrowing for transportation.
As long as lawmakers are facing a transportation budget crunch, they should take this opportunity to consider whether our current priorities for transportation spending are meeting Wisconsin’s needs. The number of highway miles Wisconsin drivers travel has dropped, yet Wisconsin continues to prioritize highway expansion projects while cutting resources for transit and local road repair.
According to “Fork in the Road,” a recent report by the WISPIRG Foundation,
“The decision to spend massive amounts of taxpayer resources on new and expanded highways appears especially out of step at a time when Wisconsinites are driving less than they did a decade ago – and when citizens and local leaders in communities across the state are clamoring for long-overdue investments in road repair, transit systems and infrastructure for bicycling and walking.”
Lawmakers could generate additional resources for transportation by simply keeping the gas tax at a consistent level rather than allowing it to continue to decline. But before they take that step, they should take a hard look at our current transportation priorities and make sure they meet the needs of Wisconsin’s families, businesses, and communities.