My column for the West Bend Daily News is online. Readers of this blog will find some of it familiar. Here it is:
A gap in the budget cycle will try the Legislature
The Republicans in the Legislature were hoping for a reprieve. Gov. Scott Walker’s budget proposal had some big cuts in it along with some big borrowing that they were hoping to avoid. There were also some big new expenditures that they wanted to make, like $150 million or so in an arena for the Milwaukee Bucks. The projected tax revenues for the next couple of years were not going to be enough to cover everything they wanted to do and they were hoping beyond hope that the May projection would be higher to make their jobs easier.
The projection came in and it was not what they had hoped. They stayed the same as they were in January. The projection from the Legislative Fiscal Bureau is that tax collections will increase over the next three years, but not enough to cover the proposed spending.
This means the Republican legislators have some tough choices to make. Nowhere is this more evident than in the transportation budget.
There is a gap in the next budget cycle of $1.3 billion between what the Department of Transportation wants to spend and the tax revenue that is projected to be available. There are only three ways to deal with this gap.
The first way is to increase revenue. This means raising taxes. Transportation is funded with a segregated fund filled primarily with the gas tax and registration fees. Walker has said that he does not support an increase in registration fees and there does not appear to be any appetite for a gas tax increase in the Republican caucus. There has been some talk of some new taxes like a mileage fee or toll roads, but there is not any serious effort behind those either. In short, a tax increase seems to be off the table, which is a good and expected thing from this legislature.
The second way to fill the gap is with borrowing. This is what Walker has proposed with $1.3 billion in additional borrowing to fully fund transportation spending. Republicans in the legislature are pushing back on so much borrowing — especially in the face of an improving economy — and floating the idea of “only” borrowing a billion dollars instead. That is still far too much additional debt, but even at that it leaves a $300 million gap.
The third way to address the spending gap is to reduce the spending, which is where the real problem lies. Wisconsin needs a high-quality transportation system, but we simply spend more than we have to on it. To their credit, the last two Republican state budgets have improved the state’s transportation spending. According to Reason’s Annual Report on the Performance of State Highway Systems, which measures how much bang each state gets for their transportation buck, Wisconsin has jumped 10 spots to 15th place in the country since 2011, but it ranks 36th in spending per state-controlled mile. Wisconsin spends a whopping $226,901 per mile — way more than every other Midwestern state except Illinois. Iowa and Minnesota manage to spend less than $134,000 per mile.
Consider that if Wisconsin could reduce its spending per mile to just the same level as our neighboring states, there would be a surplus of transportation funding. To do this, the Republican legislators are going to have to take a hard look at the reasons for that bloated spending, but so far they are not showing much appetite for that. One of the most obvious causes of bloated spending are the prevailing wage laws that studies show inflate labor prices by as much as 45 percent, but the repeal of those laws died in committee last week thanks to the vote of newly elected Republicans and all of the Democrats.
The debate over the transportation budget is a microcosm of the entire budget debate. The Republican legislature does not want to raise taxes; is willing to add some debt as long as it is not too much; and except for a feisty minority of valiant conservatives, they lack the political will to enact real spending reform.
The next few weeks are going to be test of leadership for Republicans and a measure of how conservative they really are.
(Owen Robinson is a West Bend resident.)