A sizable portion of new transportation borrowing approved by lawmakers will be repaid from the state’s General Fund, rather than from the Transportation Fund. The General Fund is the state’s main account for spending on education, health care, and communities. Using money from the General Fund to pay borrowing costs for highway projects reduces resources available for critically important institutions such as the University of Wisconsin System and public schools.
During budget deliberations, lawmakers had a tough time agreeing on how much to borrow for transportation projects. In his 2015-17 budget proposal, Governor Walker recommended borrowing $1.3 billion for transportation, but legislators balked at that amount. Instead, the legislature approved a budget that included up to $850 million in borrowing for transportation, and delayed a number of planned highway projects around the state to trim spending.
Of the up to $850 million in new borrowing for transportation, as much as $307 million of that amount could be repaid from the General Fund rather than from the Transportation Fund. Read more
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. Read more
The head of Wisconsin’s Department of Transportation has proposed diverting resources usually used to build strong schools, communities, and health care systems, and use the money instead to construct and repair highways.
An efficient transportation network can’t exist entirely of one-way streets. It needs to be adaptable, with multiple modes of transportation and some areas where traffic flows in different directions. Likewise, the financing for a good transportation network needs flexibility, and it shouldn’t invariably be restricted to one-way flows of revenue.
Next week Wisconsin voters will cast ballots on a proposed constitutional amendment that we think would be too restrictive. Although it would allow state lawmakers to continue to make transfers between many state funds, such as supplementing the Transportation Fund with money from the state’s General Fund, it would prohibit ever moving Transportation Fund revenue in the opposite direction. That would create a double standard for state revenue transfers. It would be a mistake to lock an inflexible policy for state budgeting into the Wisconsin Constitution, as this editorial explains.
Some who favor a constitutional amendment point to past transfers that reduced resources for transportation programs. Read more
A close look at Wisconsin’s annual fiscal report released last week reveals that state officials delayed a $25.75* million transfer, which made the budget balance larger than it otherwise would have been at the end of fiscal year 2013-14. However, that’s a cosmetic and deceptive improvement in the budget balance, since the payment will still be made during the current biennium. And because the Department of Administration (DOA) report buries mention of the delay in a footnote, that document presents a somewhat misleading picture of the difficulty of avoiding a budget shortfall in the current fiscal year. [*That figure is a correction to the original post, in which I incorrectly wrote that the delayed amount was $27.5 million.]
According to the DOA’s fiscal report released on Oct. 15, the General Fund balance at the end of the last fiscal year was about $517 million, which was $207.5 million lower than what state lawmakers were anticipating when they passed a tax cut bill early this year. Read more
Governor Walker floated the idea this week of replacing the current gas tax with a sales tax on motor fuel. It’s an interesting idea, but I don’t think it would be good public policy because it would replace a stable revenue stream with a tax source that is far less predictable. (You can read more about the idea in this Journal Sentinel article.)
Although we don’t have details of what the plan would look like, the Governor said it would be revenue neutral – at least at first. But clearly the intent is that the sales tax approach would generate more revenue over time, as gas prices increase, and I think that’s a reasonable assumption to make. However, fluctuations in gas prices mean that in any given year this source of revenue could fall well short of the anticipated level.
From a political perspective the chief virtue of the plan, perhaps the sole virtue, is that it offers a way of potentially raising more revenue for transportation projects without periodically asking elected lawmakers to vote on gas tax increases. Read more
LFB Memo Shows Budget Shifts up to $383 Million from Intended Purposes
When Scott Walker was running for office three years ago, he vowed to “end the practice of raiding segregated state funds to pay for other programs.” Walker added, “If taxpayer revenue is collected for a specific purpose such as building and maintaining roads, it should be used for that purpose and that purpose only.”
What constitutes a “fund raid” is a subjective matter, which seems to depend in part on the beholder’s opinions about the importance of the funding being shifting or “raided” and also on how that funding source is labeled. Putting semantics aside, the nonpartisan Legislative Fiscal Bureau prepares a summary of budget provisions that shift sources of revenue with the intent of using those funding sources “for purposes other than those for which the fund has traditionally been used.” A Fiscal Bureau memo issued in mid-June tallied 14 such funding transfers, which authorize the shifting of up to $383 million. Read more
The Joint Finance Committee (JFC) meets again this week on Thursday, May 23, starting at 10:00 in Room 412 E. Some of the major areas coming up on Thursday are the Department of Justice, DOT, and the UW System. (It appears that the committee will not meet on Friday, May 24.)
A full list of the items on the May 23 agenda can be found here, with links to each of the papers. The outline below includes links to a few of the many Legislative Fiscal Bureau papers:
- Internet Crimes Against Children Taskforce (Paper #392)
- GPS Tracking Grant Program for Individuals Subject to Domestic Abuse or Harassment Restraining Orders or Injunctions (Paper #415)
- Transfer the Office of Justice Assistance (Paper #405)
- DNA Collection at Arrest and the DNA Analysis Surcharge (Paper #410)
- Mass Transit Operating Assistance — Convert Funding to GPR and Mass Transit Funding Level (Paper #640)
- Major Highway Development Funding (Paper #652)
- State Highway Maintenance — Routine Maintenance Funding and Program Restructuring and Traffic Signal and Intelligent Transportation System Installation, Replacement, and Rehabilitation (Paper #657)
- PR Appropriation Balances (Paper #675)
- GPR Funding Increase and Compensation Plans (Paper #676)
- Incentive Grants (Paper #677)
Jon Peacock Read more
Americans are driving fewer miles than they did ten years ago, reversing a decades-long trend. Given the magnitude of the change and the implications for the future of transportation, state legislators should think about moving away from policies that support expanding highways at the expense of support for communities, schools, and health care.
“The Driving Boom is over,” declares U.S. PIRG, in their new report A New Direction. Americans drove more miles nearly every year between the end of World War II and 2004, according to the report. But after 2004, something unusual happened: Americans began driving less, both on a per capita basis and overall. Young people, especially, are driving fewer miles than their predecessors.
The chart below, taken from the report, shows the recent decline in miles driven, which started before the recession.
This recent New York Times article also describes the decrease in miles driven. The article profiles one professional in Charlotte, North Carolina, who uses his car so infrequently that he occasionally misplaces it. Read more
Next Tuesday’s Agenda Includes Shift of General Purpose Revenue to the Transportation Fund
The Joint Finance Committee (JFC) is settling into the long process of working through the budget bill, agency by agency and issue by issue. The JFC co-chairs announced today that the committee’s second session of debate and votes on the budget will be held on Tuesday April 30, starting at 10:00 a.m. in the JFC hearing room – 412 East.
Here’s a partial list of what the JFC plans to consider on the 30th, with links to some of the new Legislative Fiscal Bureau papers on those issues. One of the significant papers on the agenda is # 636, relating to bonding for transportation and the proposed transfer of state General Purpose Revenue to the Transportation Fund. For a full list of agencies and papers, click here.
- Compensation Reserves Overview (Paper #155) (There are also 4 other papers in this are.)
- Fund Condition Statement (Paper #635)
- Transportation Bond Summary and Use of Revenues from Other Funds to Support Transportation Programs (Paper #636)
Some of the other areas on the April 30th agenda include the following:
- Board for People with Developmental Disabilities (no papers)
- State Fair Park
- Historical Society
- Transportation — Local Transportation Assistance
- Transportation — State Patrol
- Veterans Affairs — Departmentwide, Veterans Programs, and Museums
Jon Peacock Read more