Paying for Road Borrowing out of General Fund Would Reduce Resources for Important Wisconsin Priorities
Governor Walker has requested additional borrowing to pay for the construction and repair of highways. He requests that the repayment costs for the additional borrowing be paid out of the state’s main fund that supports the state’s public school system, university system, and health care system, increasing the likelihood that Wisconsin will need to make future cuts to those important priorities.
Normally, the state uses money from the gas tax, placed in the Transportation Fund, to pay for highway construction and repair. But there is not enough money in the Transportation Fund to pay for all the highway projects that lawmakers want to fund. This imbalance occurs mostly because the state’s gas tax has been frozen for many years, and as inflation slowly erodes the value of the per-gallon tax, revenues directed to the Transportation Fund shrink.
Lawmakers seem determined not to find a permanent solution to the imbalance in the Transportation Fund. Common sense would dictate that lawmakers should either increase the revenues that go into the Transportation Fund or significantly rein in spending on highways. However, Republican lawmakers and Governor Walker have ruled out adjusting the gas tax so that it is in line with historical levels, and lawmakers of both parties are seeking to avoid delaying planned highway projects.
The request for additional borrowing keeps with lawmakers’ practice of not addressing the imbalance in the Transportation Fund head on. Governor Walker has asked the legislature’s budget committee to approve $200 million in additional borrowing for roads, with – here’s the catch – repayment costs to come out of the state’s General Fund rather than the Transportation Fund. Governor Walker has said that if lawmakers approve his request, the state will be able to proceed with several highway projects that would otherwise be delayed for lack of funds.
(This $200 million request stems from a provision included in the budget passed in July, in which lawmakers allowed Governor Walker to request up to $350 million in borrowing for highways over two years, with the request subject to approval by the legislature’s budget committee. The budget specifies that at least half the additional borrowing should be repaid from the General Fund.)
The downside of Governor Walker’s approach is that using money from the General Fund to underwrite highway construction takes resources away from other state priorities that make Wisconsin a great place to live – priorities like excellent public schools, safe communities, and accessible higher education. Using money from the General Fund gives lawmakers the luxury of putting off finding a permanent solution to the imbalance in the Transportation Fund, and shortchanges Wisconsin school children, families, and workers.
Wisconsin has already made significant cuts to public schools, the University of Wisconsin System, and other resources for families. Increasing the amount of borrowing for highways, and paying for it out of the General Fund, increases the likelihood that Wisconsin will need to make more of those kinds of cuts in the future.