All levels of government seek more highway revenues
By Roger Pitt
Problems threatening future transportation projects extend beyond the borders of Waupaca County.
It is an issue with other local governments and also on the federal and state level – all facing too many transportation needs and too little money.
A revenue source not widely used in Wisconsin being explored by the Waupaca County Board is a wheel tax.
Wisconsin law allows a municipality or county to collect an annual vehicle registration fee, wheel tax, in addition to the annual fee. The tax applies to vehicles kept in the municipality or county.
If Waupaca County approves a wheel tax, as a revenue source to help pay for road maintenance and construction, it will be added to the $75 state fee.
Nothing strikes fear in a politician more than the mere mention of tax.
Americans for Tax Reform, organized by Grover Norquist, “opposes all tax increases as a matter of principle.” He has never been elected or held a political office, but his “no tax” rule has an extraordinary impact on our government.
A wheel tax will provide some needed revenue for Waupaca County, but the no tax policy is a state and national problem. State and federal funds are a main source for funds for maintenance and construction on local major roadways – and are either frozen, like the state biennial budget, or suffer dwindling revenue from highway funding sources.
State law does not specify the amount of the wheel tax. However, the revenue from the wheel tax must all be used for transportation related purposes. The state transportation fund was routinely raided as revenue to balance the state biennial budget. A recent state referendum ended that practice.
Increasing the registration fee was one of the options proposed by a special Transportation Commission, discarded in building the 2015-17 biennial state budget. Also discarded were increases in the gas tax, driver’s license fees and sales tax and tolls on major highways.
Obviously the “no tax” rule has impacted transportation revenue.
Funds raised by the state gas tax, about one billion dollars a year. It accounts for about 55 percent of revenue in the State Transportation Fund.
The state fuel tax was established in 1925 at two cents and was raised by the state Legislature nine times, four in the early 1980s, to 16 cents in 1984. An index adjustment, based on inflation, was put in place the next year.
The legislature used its statutory power three times – with additional tax rates in 1987 and 1997 and freezing the current rate of 30.9 cents in 2006.
Major transportation projects usually are funded by federal, state and local sources.
The National Highway Trust Fund is in peril and the U.S. DOT could scale back payments to states. The fund, established in the 1956 Federal Highway Act, receives money from a federal fuel tax of 18.4 cents on gasoline, 24.4 cents on diesel fuel and related excise taxes.
The act directed the fuel tax to be used exclusively for highway construction and maintenance. It was amended years later to include mass transit and a leaking underground storage fund.
The $72.7 billion 2015-17 biennial state budget doesn’t raise taxes.
The budget has $652 million in new borrowing. Overall bonding was down from $2 billion in the prior biennial budget. In the last year of the next budget almost 23 cents of every transportation dollar will go to paying off debt, an analyst reports.
I prefer pay as you go over borrowing, because interest is an added expense with no tangible value and becomes a deferred tax as it is amortized.
Wheel tax is not commonly used in Wisconsin. The closest to our area Appleton, adopted a $20 tax early this year. Janesville, Beloit and St. Croix County have a $10 wheel tax, while Milwaukee has a $20 tax.
The Appleton wheel tax will raise an estimated $1.7 million on the 85,657 cars that fit the wheel tax category (under 8,000 pounds) registered in the city.
Discussion on wheel tax eliminates any doubts fee is just another three letter word for tax.