Declining gas tax revenues require a fair and sustainable replacement
Assembly Speaker Robin Vos on Wednesday renewed a call for Wisconsin to adopt tolling as a way to pay for state infrastructure projects.
An alternative is needed, he said, as increased fuel efficiency and an increase in electric cars on the road are contributing to declining gas tax revenues.
“We have got to decide as a state and as a society how we are going to pay for our roads,” Vos said at a legislative roundtable hosted by the Wisconsin Counties Association Conference. “The gas tax is declining. … We’ve got to find an alternate revenue source.”
For more than a dozen years, the Badger Institute has worked with Robert W. Poole Jr., director of transportation policy at the Reason Foundation, to identify free-market, users-pay approaches for funding state highways and bridges. Tolling, or other mileage-based user fees, have worked in other states and would provide sustainable transportation funding as a replacement for fuel taxes well into the future, Poole’s research shows.
“I’m glad to see Speaker Vos raising this idea again,” said Poole. “In January, Michigan’s Department of Transportation unveiled a major study finding that eight of its Interstate highways could be rebuilt and modernized via toll revenue financing over the next 10 years. That would free up state fuel tax revenues for all the state’s other roads.”
The Badger Institute’s latest research on the topic, Future-Proofing Wisconsin’s Highway Funding System, was authored by Poole and Benita Cotton-Orr, both Badger Institute visiting scholars. The report was part of the institute’s Mandate for Madison.
In the report, Poole and Cotton-Orr propose a mileage-based user fee that can phase in as a replacement for, not an addition to, the gas tax. Their options take advantage of advances in technology that would avoid the costs and hassles of old-fashioned tolling while protecting drivers’ privacy. It also maintains the principle that highways are funded by their users, which can help keep road funding from having to compete with other priorities for a share of general state tax revenue.
Wisconsin is one of only 15 states that fails to take advantage of tolling to cover the costs of its highways.
Vos has promoted tolling for over a decade, including a first-phase tolling study in the last budget. Gov. Tony Evers vetoed the study.
“I feel like people are ignoring the problem because it’s not acute yet,” Vos said.
Of the four funding sources for roads in Wisconsin — federal funding, state gas taxes, vehicle registrations and driver’s license fees — three are relatively static, he said. With the federal government promoting the manufacture and use of electric vehicles, “there will be fewer gasoline powered vehicles on the road, but not fewer vehicles on the road. We’re going to figure out ways of making up for that lost revenue.”
In Wisconsin, electric vehicle buyers pay a differential, but Vos said that amount is “probably not enough to make up for that lost tax revenue.”
“If I were in Congress, I would not support the federal policy to transition to electric vehicles,” Vos said.
Poole noted that in Washington, D.C., this week, Rep. Rick Crawford, chair of the House Highways and Transit Subcommittee, called for Congress to give states greater flexibility to implement tolling on their highways.
Michael Jahr is the Vice President of Communications and Government Relations at the Badger Institute. Permission to reprint is granted as long as the author and Badger Institute are properly cited.