Madison and D.C. not so different on transportation policy, unfortunately
The U.S. Capitol building and the Wisconsin State Capitol look very similar. The State Capitol is 284 feet, 5 inches tall from the ground floor to the top of the statue on the dome, making it 3 feet shorter than the U.S. Capitol in Washington, D.C.
Unfortunately, the transportation policies emanating from these magnificent buildings are becoming eerily similar as well — varying more in size than substance.
Politicians at both levels have grown fond of paying for the upkeep of our aging transportation systems with something other than traditional user fees. At the federal level, this has taken the form of deficit spending. In Wisconsin, it has taken the form of bonding.
The state and federal gas taxes are flat fees per gallon. If these traditional user fees are not adjusted, they don’t move with the growth in wages and cost of living like income, sales, or property taxes do. The feds haven’t adjusted the federal user fee in almost 25 years, and in Wisconsin, it has been a decade.
During that time, we have continued to fund the upkeep of our current system as well as the reconstruction of major arteries. In Wisconsin, we rebuilt the Marquette Interchange and are in the midst of other generational projects like the Zoo Interchange. Granted, funding to locals has eroded and projects have been delayed, but there has still been more done than the incoming revenue would have supported.
This has made taxpayers skeptical about the need to adjust the user fee.
At the federal level, we have authorized transportation budgets that are propped up with transfers from the general fund (aka deficit spending) to the tune of more than 30% of the overall transportation budget. In Wisconsin, we have fallen back on borrowing without adjusting the revenue source to pay the debt service. As a result, debt service is becoming the Pac-Man of the state transportation budget.
This problem is not lost on all of our state and federal officials. As conservative state Sen. Howard Marklein (R-Spring Green) pointed out at a recent Joint Finance Committee briefing, the worst part about this practice is it “masks the underlying problem.” U.S. Rep. Reid Ribble (R-Appleton), who sits on the House Transportation and Infrastructure Committee, has pointed out that continuing to kick the can down the road amounts to a tax increase. It’s just a tax increase on people who are currently too young to vote.
Wisconsin is, of course, beginning its budget debate for the next biennium. Gov. Walker proposed increasing bonding for transportation another 30% above Wisconsin’s already high level of transportation bonding. Legislators have expressed concern about this approach, but no alternatives have been proposed yet.
The federal government is facing an ominous deadline for the surface transportation program. The current authorization period will run out at the end of May. Congress is, once again, going to have to decide whether to come up with a long-term plan to finance the nation’s road and transit systems or plug in more deficit spending. The third option would be simply to reduce funding for roads by about 30% and transit by about 60%.
Across the country, the average breakdown for state transportation funding comes out to about 35% local funding, 40% state funding, and 25% federal funding. Wisconsin is not far from that average.
With the help of that federal-state-local partnership, this country built a transportation network that has provided businesses with a huge competitive advantage. But that partnership and that network are only as strong as the weakest link.
Let me give you just one idea of what those words “competitive advantage” mean in today’s world. Brazil has exploded on the scene in recent years in terms of agricultural production, becoming a primary rival to the U.S. — specifically in soybean production. But according to Institutional Investor, it costs about $190 per ton to transport soybeans to China from central Brazil. On the other hand, it costs about $102 per ton to transport soybeans from Argentina to China. The cost of transporting soybeans from the United States? Just $64 per ton.
We have our parents and grandparents to thank for that competitive advantage. They had the vision to construct and the fortitude to pay for this tremendous transportation network.
There are reasons to believe we may be waking from our slumber. Eight states have adjusted their transportation user fees in the past two years. Iowa, South Dakota, and Utah just passed transportation revenue packages in the past several weeks. About a dozen more states are in the midst of debating significant transportation packages.
We will have to wait and see whether Wisconsin and Washington, D.C., will follow suit.
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