Should Wisconsin’s state constitution be amended to stop raids on the Transportation Fund?
Voters will be asked that question as part of a referendum that will appear on the Nov. 4 ballot.
If the majority of voters approve the referendum, the constitution will require that revenues from gas taxes, registration fees and other transportation user charges be used exclusively for transportation.
Advocates of the proposed amendment say a constitutional restriction on how the fund is used is needed in order to avoid further transfers from the Transportation Fund to the General Fund.
According to the Wisconsin Taxpayers Alliance (WISTAX), “In every year from 2002 through 2011, lawmakers transferred money from the transportation fund to the general fund – a 10-year total of more than $1.4 billion.”
Opponents of the amendment say a constitutional amendment would limit the ability of lawmakers to shift state revenues to other priorities during a recession.
They ask why road construction should be considered sacrosanct, while funding for education or law enforcement must be cut when state revenues fall.
Wisconsin began separating its transportation fund from its general fund in 1945.
Dave Zweifel, with The Capital Times, reported that when the original bill to segregate highway spending was vetoed by Republican Gov. Walter Goodland, the legislature overturned his veto by one vote.
Since then, gas taxes, vehicle and license registration fees, aviation taxes, aircraft registration fees, property taxes on air carriers and railroad property taxes have been viewed as transportation user fees rather than as taxes.
From this perspective, only those who use the transportation system pay the user fees. Therefore, they should benefit from the revenues, which should go exclusively to maintaining the system their fees are supporting.
“The gas tax and the registration fees we pay should remain in the transportation fund,” according to John Edlebeck, the pubic works director for the city of Waupaca. “Short of the state referendum passing, that is not the case. Those segregated funds can be used for other purposes.”
Edelbeck noted that state funding for Waupaca’s transportation needs has been steadily declining.
Segregating transportation fees from other revenue sources, such as property or income taxes, means that funding for road construction and maintenance is outside of the normal state budget process.
When revenues from income or property taxes drop during a recession, the governor and legislature make cuts in public services and programs as part of the budgeting process. Or it looks for other sources of revenue.
Wisconsin law prohibits the state from running deficits and borrowing money to cover general operational costs.
However, the state is allowed to borrow funds for transportation projects.
From 2001 to 2011, Gov. Jim Doyle and the legislature shifted revenues from the transportation fund to the general fund to avoid cutting services. They then borrowed money to pay for transportation projects.
“Use of transportation fund revenue to help balance the general fund budget” was a major factor in the shift to borrowing, according to a May 2013 study by WISTAX.
The transfers resulted in a growing portion of the transportation fund’s revenues going to service debt.
WISTAX found that the debt payments rose from $93.3 million in 2002 to $306.9 million in 2012.
Gov. Scott Walker is no longer shifting funds from the transportation fund to the general fund. However, he is shifting revenues from the general fund to the transportation fund, largely through borrowing.
Walker and the legislature are filling the transportation funding hole created by Doyle by borrowing nearly $1 billion in the current budget, according to a WISTAX study of the current state budget.
“The budget shifts $213.7 million from the general fund and $44.5 million from the petroleum inspection fund to pay for transportation needs,” WISTAX reports. “It also pays for $200 million in transportation bonding with general fund revenues. Those are dollars that, in the past, that would have funded schools and local aid.”
Amending the constitution
Before the referendum could be placed on the ballot, the state legislature had to pass a joint resolution on the proposed amendment during two consecutive sessions.
The resolutions passed with broad, bipartisan majorities in both houses, both times.
In 2011, the Assembly voted 82-11 and the Senate voted 26-6 in favor of the amendment. Nearly identical legislative majorities voted for the amendment in 2013.
The state’s two largest newspapers, the Wisconsin State Journal and the Milwaukee Journal Sentinel, have taken opposing sides on the referendum for a constitutional amendment.
The Wisconsin State Journal has endorsed the referendum, while noting that it represents only an initial step toward providing adequate funding for Wisconsin’s transportation system.
“Drivers pay more than 30 cents to the state for every gallon of gas they pump. They shell out $75 a year to register every car,” according to the State Journal. “All of that money — more than $1.65 billion annually — should be spent on roads, bridges and other transportation needs as intended.”
In an editorial against the constitutional amendment, the Journal Sentinel asks, “What makes the road builders so special?”
The Milwaukee paper argues that there are no ironclad guarantees for other state services and programs.
“A constitutional amendment that outright bans such raids for one industry is an awfully big tool to fix this problem,” the Journal Sentinel editorial says.