My column for the West Bend Daily News is online. Here you go:
You have probably read the headlines by now — “State transportation budget faces $1 billion shortfall!” they scream. It is part of the well-financed, orchestrated campaign by the road builders and their supporters to squeeze more taxes out of Wisconsin’s taxpayers in the next budget.
The root of the breathless headlines is a memo from the Legislative Fiscal Bureau that shows the state would fall $939 million short (the headlines round up) if we spend as much in the next budget as we do in the current one. The LFB is a number-crunching body that simply answers the questions posed to it by members of the Legislature. In this case, the question came from Rep. John Nygren, the Republican Assembly co-chairman of the Joint Finance Committee, and he asked the LFB to include two key assumptions.
First, the LFB assumes the state will not use any debt whatsoever. That accounts for more than $855 million of the projected shortfall. The second assumption is that the level of spending matches only the second year of the current budget spending. Wisconsin has a biennial budget and the current transportation budget actually spent a bit more in the first year than the second. That assumption accounts for the remaining $83.3 million of the shortfall. More accurately stated, the LFB memo states the state would fall more than $855 million short if it tried to match transportation spending in the next budget without taking on any debt.
The road builders and their allies, like Nygren, are using this projected shortfall to begin advocating for a tax increase on Wisconsinites. The only way to fill the budget pothole, they contend, is to raise taxes. Nothing could be further from the truth.
The first assumption that needs to be addressed is the one of debt. While paying for things as we go without any debt is admirable for some pieces of the budget, it makes little sense for large capital projects. A good deal of the spending in the transportation budget is slated for massive infrastructure projects, like rebuilding the Zoo Interchange, which will be used for decades. It makes perfect fiscal sense to spread the spending for those projects over those same decades. We will certainly need to debate the appropriate level of overall debt and be prudent in managing the state’s debt service, but some debt is both necessary and sensible.
The second assumption that needs to be torn down is that the state cannot address the alleged shortfall through some policy changes instead of resorting to tax increases. For example, Wisconsin’s prevailing wage laws inflate the cost of construction by mandating the state pay inflated wages for labor instead of being able to pay the local market wage for the same labor. State legislators took the step to repeal the prevailing wage law for local governments last year, but kept them in place for the state. While the actual amount of savings is difficult to estimate, studies show the state could save hundreds of millions of dollars in each budget by simply paying normal market wages for construction projects.
Another example of ways to fill the shortfall without raising taxes rests in the everyday decisions made in designing and planning transportation projects. Gov. Scott Walker cited the example in his letter to Transportation Secretary Mark Gottlieb that the state saved $580 million on the Zoo Interchange through some changes to the design. Imagine if similar design changes were considered on every project.
The final assumption the tax increasers always ignore is that Wisconsin must spend as much or more than it always has. It does not. The fact Wisconsin is a state with high government spending and high taxes is the result of millions of decisions made by Wisconsin politicians for decades. It is a choice. It is also a choice to tax and spend less, like most other states do.
Wisconsin should make the choice to spend less on transportation. The state could make the choice to spend within our means. Would there be consequences? Of course. Some of those consequences may be of no consequence at all. For example, a report from a consortium of environmental groups highlights the fact the $836 million project to expand I-90 between Madison and Illinois was based on 2008 traffic estimates that said the number of cars would increase by 29 percent by 2010 and double by 2013, as compared to a baseline of 2000. In 2012, the number of cars had increased by only 1 percent since 2000, yet the expansion continues apace despite the fact the traffic estimated used to justify it was woefully wrong. This is happening with projects all over Wisconsin. Suspending this one project would save hundreds of millions of dollars.
Repealing the prevailing wage laws for the state, implementing design changes and reconsidering projects that were based on faulty projections would save hundreds of millions of dollars each. That projected shortfall disappears pretty quickly by only plucking the low-hanging fruit highlighted here. Imagine if the smart people in the Legislature actually rolled up their sleeves and put some effort into saving the taxpayers’ money.
Taxing and spending is easy. Discipline and math is hard. Be hard, Wisconsin. Be hard.