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AASHTO Journal

Wisconsin DOT Facing $300 Million Budget Shortfall
Wisconsin transportation officials are recommending pulling back more than $300 million in state support for road projects over the next two fiscal years because revenue from the gas tax and vehicle registration fees is dropping off.

State officials say the deficit in the road fund will be mitigated by a likely increase in federal aid, but that money can't be counted on, the Milwaukee Journal Sentinel reported. The current transportation budget, which runs through June 2011, faces a shortfall of $91 million, according to the Wisconsin Department of Transportation.

"If we can't fill these holes, we're not going to be able to do these projects," said state Sen. Alberta Darling, R-River Hills, incoming chairwoman of the budget-writing Joint Finance Committee.

Wisconsin's gas tax brought in more than $1 billion in Fiscal Year 2007. That dropped to $972 million in the last fiscal year. Registration fees are coming in far below projections this year. Officials originally expected to bring in $657 million with the fees, but now believe they will generate $591 million. Collections in the next two fiscal years are expected to rise slightly from there.

Gas-tax collections have been hampered in part because Wisconsin in 2005 stopped annual automatic increases in the gas tax. The system of automatic increases had been in place for 20 years, but those who repealed it said it was unfair for taxes to rise without a vote of the Legislature. During outgoing Gov. Jim Doyle's eight years in office, $1.3 billion was diverted from the transportation fund to pay for schools and other programs.

WisDOT's deficit, revealed in a recent budget request, has so far gotten little attention from lawmakers as they focus on a separate two-year shortfall of up to $3.3 billion in the general fund.

The transportation fund is also expected to take a hit because Gov.-elect Scott Walker has said he will stop development of a passenger-rail line from Madison to Milwaukee. The federal government had committed to pay the $810 million cost of building the line with American Recovery and Reinvestment Act funds, but that money has now been redirected to 13 other states. (see related story) By pulling out of the project, the state will have to use its own funds to pay at least $14 million for work that has already been performed and cancellation fees, according to estimates by the Doyle administration.

Most of the proposed budget cuts are in WisDOT's rehabilitation program, which covers everything from simple resurfacing jobs to large projects that rip out and replace large sections of highways. The department has not identified any projects it would delay, because it is counting on extra federal help.

"For Wisconsin, traditional revenue sources for transportation are not providing the natural growth they once did," Transportation Secretary Frank Busalacchi wrote in his budget request. "The same trend is occurring nationally -- growth in gas-tax revenues is holding steady at best, or declining. Long-term national and state solutions are needed."

Walker supports helping to shore up the transportation fund by taking a portion of the sales tax generated from vehicle sales and directing it into the transportation fund. That might have to be phased in over a few years because of the state's overall budget problems, he said.

Walker said he had not ruled out raising vehicle registration fees, but that doing so was not a high priority. He said during the campaign he would never raise any taxes. Wisconsin's gas tax is 32.9 cents per gallon, and registering a car costs $75 a year. The state ranks 33rd when taking into account all taxes and fees on vehicles in each state's largest city, according to WisDOT.

12/10/2010
Questions regarding this article may be directed to editor@aashtojournal.org.