Gas tax short of covering roads

New study challenges common claims about transportation funding

From The Milwaukee Journal Sentintel
By Larry Sandler, Oct. 9, 2011

The state gas tax would have to rise 50 cents – a 152% increase, to nearly 83 cents a gallon – to cover road costs that are now being paid through property taxes or other general tax revenue, a new study by University of Wisconsin-Madison researchers say.

The study, commissioned by the environmental group 1,000 Friends of Wisconsin, challenges some common claims about how transportation is funded in this state.

Highway advocates typically contend roads pay for themselves, through gas taxes and user fees. But that’s only true of state-owned highways, which account for just 10% of all Wisconsin roads, the study says.

When local roads are included, property taxes and other general taxes cover 41% to 55% of road costs, says the study, “Who Pays for Roads in Wisconsin?” For local roads alone, property taxes paid 83% of costs, or $9.9 billion, over the five-year period that ended June 30, 2008, found the study, which is being released this week.

That comes out to 20% of the average property tax bill, said Steve Hiniker, executive director of 1,000 Friends of Wisconsin. If roads were fully funded by gas taxes and vehicle fees, local governments could afford to cut property taxes and increase services, instead of raising taxes and cutting services, the environmental group said.

“Taxpayers cover costs that should be borne by road users,” says the study by UW-Madison’s State Smart Transportation Initiative. By forcing local officials to choose between roads and other services, the study says, “Road subsidies push up tax rates, squeeze government services and skew the market for transportation.”

Opponents of public transit often use that kind of language, describing tax support for transit as a “subsidy” and arguing bus and train riders should pay all costs. But in the five-year period studied, state aid to transit systems accounted for less than 6% of the $10.2 billion that the state spent on transportation, the study found.

And while drivers pay just 17% of the cost of local roads, according to the study, bus riders paid almost 29% of transit costs in 2010, the Wisconsin Urban and Rural Transit Association says.

Roads take an average of $779 a year from each Wisconsin household in property taxes and other general taxes, while gas tax support for public transit amounts to $50 a year for each Wisconsin household, the study found.

Local officials see the study as support for their efforts to win a larger share of state transportation dollars. In the 2011-’13 state budget, Republican Gov. Scott Walker and the GOP-led Legislature increased spending on major highways while cutting aid to local roads and public transit.

Curt Witynski, assistant director of the League of Wisconsin Municipalities, said his group wants the state to pay 24% of local road costs, up from the 17% calculated by the study, and 42% of public transit costs. In 2010, before the aid cuts, the state paid 36% of transit costs, according to the transit association.

Environmentalists have joined forces with local officials to promote the “fix-it-first” approach to existing roads while opposing highway expansion.
Road builders seek more

Pat Goss, executive director of the Wisconsin Transportation Builders Association, said road builders believe both state highways and local transportation should have more revenue. He said the environmentalists “want to rob from Peter to pay Paul, when the needs of both are very legitimate.”

Goss said his group believes local governments should have the option of supporting transit systems through sales taxes, if approved in a referendum. He noted Milwaukee also has imposed a local vehicle fee, or “wheel tax,” to help pay for city streets.

Road builders also are pushing to amend the state constitution to prohibit money from being diverted from the state’s transportation fund to pay for expenses unrelated to transportation. Former Democratic Gov. Jim Doyle and lawmakers of both parties moved $1.4 billion from the transportation fund to the general fund and replaced only three-quarters of the money with borrowing.

Highway backers characterized those moves as a raid that depleted the transportation fund. But, excluding the part replaced with borrowing, such diversions amounted to $34 a year per household, or 4% of transportation spending, in the five years examined, the study found.

“This diversion is a distraction, really,” said Eric Sundquist, managing director of the UW-Madison transportation think tank.

The environmental group released its study just a week after the conservative Wisconsin Policy Research Institute issued the latest in a series of studies advocating tolls as a way to pay for rebuilding the state’s aging interstate highways.

Both studies examine how users should pay for roads at a time when gas tax revenue is declining. But while the Wisconsin Policy Research Institute study focuses on interstates, the 1,000 Friends of Wisconsin study includes all roads, big and small.

Goss said Wisconsin drivers want safe and efficient highways, and the state has to figure out how to pay for them. But Hiniker said drivers spend more time on local roads that they want to be properly maintained.

“When spring comes, people are going to be furious about all the potholes,” Hiniker said.

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