A primer on Wisconsin’s unsustainable transportation revenues
Over the past 15 years, a variety of decisions by elected state officials have affected transportation finance in Wisconsin. The net result is a transportation revenue stream growing slower than inflation, debt service eating up one of every five transportation-fund dollars, delay of some projects due to lack of funds and shrinking aids to local governments.
Among those decisions were:
- To use transportation dollars to balance the state’s general fund during 2004-’11, which directly resulted in more borrowing;
- Elimination of gas tax indexing in 2006. While generally popular, this is one of the main factors behind the sluggish growth in transportation revenues;
- Continuing to borrow at historically high rates to compensate for slow revenue growth; and
- Not adequately accounting for inflation when some projects were enumerated. Combined with modest revenue growth, this caused project delays due to lack of funding.
On the revenue side of the ledger, the impacts are clear. Since 2009, collections from gas taxes increased an average of 1.1 percent per year, while vehicle registration fee revenues rose 1.8 percent annually. These are the main revenue sources for the state transportation fund, which averaged 1.7 percent growth during 2009-’18.
During this period, the federal transportation cost index (2.2 percent annually) increased faster, as did the consumer price index (1.8 percent annually) and the state’s general fund (3.2 percent per year).
Wisconsin also faces challenges on the spending side of the ledger. Due to increased use of debt, spending on debt service is claiming a growing share of revenues, rising from 7.1 percent in 2000 to 19.3 percent in 2018. This in- crease means fewer dollars available for ongoing projects. Transportation fund revenues, net of debt service, have in- creased an average of just 0.6 percent annually since 2009.
Over the past 15 years, the state also has committed to rehabilitating and rebuilding Interstates in southeastern Wisconsin. These projects have, on average, accounted for about 14 percent of state spending on highways and may have crowded out other projects.