During the deliberation about Wisconsin’s current budget, the most contentious issue was about whether or not we should increase spending on the state’s transportation infrastructure. One reason that the debate was so heated is because with Wisconsin’s segregated transportation fund, increasing spending means an unpopular increase in taxes. As we begin debating Wisconsin’s next budget, transportation spending is again a hot issue, but the lines of battle need to move.
The state of Wisconsin first segregated the transportation fund from the general fund in 1945, some 22 years before the Department of Transportation was created. Wisconsin has several taxes and fees that shovel money into the transportation fund including gas taxes, registration fees, fees on rental vehicles, airline property taxes, railroad property taxes, outdoor advertising revenue, etc. The two primary transportation funding sources are the gas tax and vehicle registration fees.
All of these funding sources have one thing in common. They are meant to serve as a proxy for usage. The underlying philosophy of transportation funding in Wisconsin is that people who use Wisconsin’s transportation infrastructure more should pay more for it. The difficulty is that as the technology of transportation has advanced and diversified, usage proxies like fuel consumption have become less valid.
Setting aside for the moment the debate over whether or not Wisconsin needs to spend more on transportation (we do not), in the current paradigm, if Wisconsin wants to spend more, then we need to raise existing taxes or find new ones. Neither of those options has been popular.
Several states have implemented toll roads to generate more revenue, but the idea has been almost universally rejected in Wisconsin. The idea of a tax on actual mileage has been floated in Wisconsin and elsewhere, but the thought of the government tracking our vehicles is distasteful.
The friction between the opposition to increased taxes grinding against the push for more transportation spending is what creates the heat for the political debate. The friction is misplaced. The heart of the debate is centered on the supposition that only the people who directly use Wisconsin’s transportation infrastructure should be the ones to pay for it. That is why the transportation fund is segregated and that is why all of the supporting taxes and fees are targeted at people who use the transportation system. The supposition is flawed.
Everyone in Wisconsin benefits from Wisconsin’s transportation infrastructure irrespective of how much they actually use it themselves. Every Wisconsinites benefits either directly or indirectly from the commerce that relies on our transportation infrastructure, the goods and services delivered to our homes and retailers, the accessibility of emergency services, and so much more. The person who does not own a car and has everything delivered to their home benefits just as much as the avid driver who is on the road several times a day.
If everyone benefits from our transportation infrastructure, why are we getting twisted around the axle of who pays for it? Shouldn’t we all pay for it? Wisconsinites have long since agreed that we all benefit from, and all should pay for, education, law enforcement, environmental protections, etc. It is time for transportation to join the club.
While some taxes and fees are designated for transportation needs and lawmakers are constitutionally prohibited from spending that revenue on other needs, the spending for transportation can come from any source. Over the years, it has been quite common for the budget to transfer tax revenue from the general fund to the transportation fund to supplement the spending. In the current budget, over $82 million was spent on transportation from the general fund.
If lawmakers want to spend more on transportation in the next budget, there is no need to raise taxes, implement toll roads, or create new taxes. All they have to do is designate more money from the general fund. The taxes and fees that feed the transportation fund create a spending floor, but lawmakers can spend as much as they want above and beyond that by using the general fund.
The rub is that the general fund, fueled by income, sales, and other taxes, is what is used to fund all of the other state’s priorities like education, environmental protection, law enforcement, and so much more. If lawmakers want to spend more on transportation from the general fund, they will need to explain why transportation needs the money more than all of the other budget needs. In other words, lawmakers will need to prioritize transportation spending along with all of the other needs of the state.
This is part of the normal budgeting process. Budgets are statements of priorities. There is always an infinite list of spending needs and wants and a limited amount of money to go around. Lawmakers are elected and paid to set those priorities and make the hard choices on behalf of their constituents.
The segregation of transportation funding all of these years has let lawmakers off the hook from the responsibility of prioritizing transportation spending. By having designated taxes for transportation, lawmakers could just spend every dollar generated by those taxes without having to explain why putting a dollar into concrete is more important than keeping a felon locked up or paying a teacher. The debate should not be about which transportation taxes need to be increased to support more spending. The debate should be about why spending more money on transportation is more important than spending that money on something else.
Wisconsin does not need to spend more on transportation infrastructure, but if lawmakers think it does, they do not need to raise taxes. They can easily use the general fund to increase spending and explain to the taxpayers why it is a priority. That is their job.
Everything but tech support.