Don Vincent spent his career teaching science at Madison West High School and he thinks it’s absolute madness Wisconsin may soon discourage buying efficient cars.
“Our government should be doing the exact opposite, encouraging people to burn less fossil fuel,” says Vincent, who, with his wife Patty McCormick, own a hybrid Toyota Prius that clocks nearly 55 miles per gallon.
In a state that has long depended on fuel taxes and registration fees to cover 90 percent of its transportation budget, the old model is no longer working. A combination of the growing popularity of high-mileage vehicles, fewer miles being traveled and politicians leery of any tax hikes has Wisconsin at a transportation crossroads.
Last month, the Wisconsin Department of Transportation came out with its solution: a plan to raise fees and taxes by more than $750 million over two years.
The plan includes a new way to tax gasoline, tying part of the tax to wholesale prices, plus an extra 2.5 percent tax on all new vehicle purchases and a $50 annual charge for owners of electric or hybrid cars. It also includes higher taxes on diesel fuel, an acknowledgement that trucks put a lot more wear and tear on the road than cars.
Without those changes, the DOT would face a roughly $680 million budget shortfall it says would push back scheduled road projects and affect funding for everything from snowplowing to the State Patrol.
Despite those realities, however, the proposal is facing a tough road ahead with everyone from business leaders to environmental groups raising red flags.
Already, a coalition of 10 influential Wisconsin business groups has come out against the DOT proposal, saying it would put the state at a competitive disadvantage. Wisconsin Manufacturers & Commerce joined with representatives of restaurants, convenience stores, truckers and car dealers in criticizing the increase in taxes and fees.
“If this goes ahead as proposed it’s going to hurt not only new car dealers but the entire local economy,” says Allen Foster, general manager of Smart Motors in Madison which employs about 250 people.
As the largest Toyota hybrid dealer in the U.S., Smart Motors could see its customers take a double hit with the higher sales tax — about $800 on a $32,000 car — plus the annual hybrid vehicle fee.
State Sen. Alberta Darling, R-River Hills, co-chair of the Legislature’s Joint Finance Committee, has also cast aspersions on the plan and says lawmakers will have a hard time getting behind a tax increase.
At the same time, groups like 1000 Friends of Wisconsin are questioning the need for spending more on highways at a time when younger people are driving less and flocking to cities like Minneapolis, Denver and San Francisco for their modern transit systems.
“This (DOT proposal) is nothing more than a road builders manifesto” says Steve Hiniker, executive director of the smart growth land use organization. “It does everything they want at the expense of everybody else.”
Caught in the middle is Gov. Scott Walker, who is philosophically opposed to raising taxes but is also tied to the road building industry. Like other governors before him, Walker has watched his campaign coffers fill with contributions from firms that specialize in new highway construction.
Hybrid driver Vincent feels particularly slighted. He and his wife bought a Prius in 2010 for both the fuel savings and the reduced emissions. The choice of vehicle dovetails nicely with their home near Glenway Golf Course which features energy-efficient upgrades.
Now, Vincent is looking at paying both higher taxes when he buys fuel – their second car is gasoline powered — along with the extra $50 annually for owning a hybrid. Money issues aside, he says cleaner vehicles are the future for a variety of reasons including reduced medical costs.
“The public health risks of air pollution are extremely serious,” says Vincent, 64, citing figures from the Union of Concerned Scientists that “particulate matter” — the soot and metals that give smog its murky color— is singlehandedly responsible for up to 30,000 premature deaths each year from lung cancer and other ailments.
Shahla Werner, director of the Wisconsin chapter of the Sierra Club, says the issue goes beyond environmental concerns.
“This hurts American automakers like Chevy who are working hard to innovate to meet new fuel efficiency standards,” she says.
Kevin Traas, director of policy with the Wisconsin Transportation Builders Association is sympathetic to those arguments but says hybrid owners, by paying less in gasoline taxes, are getting something of a free ride on the public roadways.
“All of our vehicles are becoming more fuel efficient, which is a good thing,” he says. “But if you are driving an electric or hybrid car you still need to have the snow plowed or the State Patrol to show up if you have an accident on the Interstate.”
Transportation analysts in Wisconsin have been warning of a funding crisis ever since former governors Tommy Thompson and Jim Doyle started dipping into the state Transportation Fund (fuel taxes and registration fee monies) to cover shortfalls in other areas more than a decade ago. In 2006, the state Legislature also froze the gas tax and eliminated an annual increase pegged to the inflation rate, further adding to the transportation budget shortfalls.
That reduced level of regular funding left the state in a position where it had to borrow more and more money each year to cover road costs. Debt service now accounts for 14 percent of the DOT’s $3.2 billion annual budget, up from just 5 percent in 2000.
Those issues have not been lost on Walker, who in 2011 convened a bipartisan commission to look at long-term transportation funding options. The commission eventually came up with a sweeping proposal that included ideas like raising the gas tax, charging vehicles owners based on how many miles they drive and introducing toll roads.
States like Wisconsin that used federal money to build their Interstate system in the 1950s and 1960s are prohibited from tolling on those roads, but the 2005 Federal Highway Act provided a series of exemptions, including allowing tolls on new lanes added to existing Interstate highways.
But the commission report, with its call to raise gas taxes and add new fees, was dead on arrival when it was unveiled in early 2013. Walker and the Republican Legislature were gearing to cut income taxes in the new state budget. Moreover, any kind of gas tax hike would have been politically risky in advance of the 2014 election.
Democrats were quick to rail against the latest transportation proposal — which was unveiled by DOT Secretary Mark Gottlieb and Walker at a joint press conference, just 10 days after the governor defeated challenger Mary Burke.
“No wonder Scott Walker didn’t want to talk about what his second term agenda would look like — he’s just doubling down on the broken promises of his first, failed term by again raising taxes on working families as soon as he possibly could,” state Democratic Party chairman Mike Tate said in a statement.
For his part, Walker has tried to steer clear of the issue and said through press secretary Laurel Patrick that everything will be on the table when putting his budget proposal together over the next month.
Still, insiders say Walker must walk a tightrope between holding the line on taxes and rewarding the road builders, who have poured money into his campaign coffers over the past several years.
Figures from the Wisconsin Democracy Campaign show Walker has received over $730,000 from the highway lobby between 2011 and July 2014 after getting almost no money during his days in the state Assembly.
Democracy Campaign director Mike McCabe notes that as a legislator, Walker was known for standing up to the road builders in opposing higher fees and taxes. But that changed when Walker was viewed as the front-runner in the 2010 campaign and money began to flow in from asphalt contractor Payne & Dolan, cement maker Zignego Co. and machinery dealer FABCO Equipment, among others.
“He has considerably changed his tune on transportation issues in general and road building in particular since becoming governor,” McCabe says.
Walker is not alone in that regard. Many of his predecessors have benefitted from attention by the road-building lobby.
“The road builders are one of those interests that have hedged their bets and given to both sides,” says McCabe. “They don’t care which party is in power. They figure both Republicans and Democrats can pour concrete. Because they throw so much money around in political circles, governors and legislators from both parties have been deeply beholden to them.”
Others say the problem isn’t funding the highway system, it’s the amount of new pavement.
Hiniker of 1000 Friends says the emphasis on expensive highway projects —the latest is the proposed double-decking of Interstate 94 at the Miller Park interchange, projected to cost $1.2 billion — is hurting cities, towns and villages as state support for local road maintenance dwindles. He also decries the cuts in transit funding, which has hit Milwaukee especially hard.
“You’ve got thousands of unemployed people in the city who can’t get to (a job)because they don’t have a car,” he says.
DOT officials take issue with those claims, however, noting that the 2015-17 budget plan includes a significant increase in public transit funding targeted specifically to providing better access to employment centers.
“We are also proposing significant increases in aid provided to local cities, villages, towns and counties to maintain their roads and bridges,” says spokeswoman Peg Schmitt.
Schmitt also notes that 85 percent of state construction contracts are typically for preservation-related improvements, not expansions like the addition of a third lane of Interstate 39-90 between Madison and Beloit. That $800 million project, using 70 percent state money and 30 percent federal, is slated to begin in 2015 after a two-year delay.
“Expansion projects undergo an extensive review process that considers current and future traffic volumes, crash history, environmental and economic impacts and public input,” says Schmitt.
But the longer term issue, says Hiniker, is the simple fact that people are driving less. He notes that vehicle miles traveled per person peaked in 1994 in Wisconsin, but the state continues to plan based on unrealistic future traffic projections.
Miles driven per American peaked in 2005 and have declined nearly 9 percent since, according to the U.S. Department of Transportation.
“I’m not saying we don’t need to make highway improvements but we all need to take a step back and take a breath before moving forward on some of these projects,” he says.
Road builder representative Traas doesn’t buy that argument, however, and says most of the public continues to support newer, wider and safer highways. He points to the nearly 80 percent approval of the November referendum on a constitutional amendment that mandates money in the segregated Transportation Fund be used only for transportation purposes.
“You need to remember most of our highways and bridges were built in the 1950s or 1960s and now they need to be rebuilt to serve us for the next 50 to 75 years,” he says, adding that pushing projects into the future only raises the cost.
Traas also disputes the theory that Millennials are less interested in owning cars and prefer to use mass transit or ride bicycles.
“Millennials are buried under a boatload of debt right now and a lot of them can’t afford a car,” he says. “But as the economy improves I think you’ll see that change.”
But former Minneapolis Mayor R.T. Rybak thinks the tide has finally turned against the automobile. In remarks at the recent annual dinner of Downtown Madison, Inc., Rybak opined that younger people are voting with their feet to live in cities that favor public transit and human-powered transportation.
“To our parents, freedom meant having a car,” Rybak told the crowd of over 600 at Monona Terrace. “But to our kids, freedom means not being auto dependent.”
Wisconsin isn’t the only state facing some difficult choices in funding its transportation system as vehicles get more efficient and people are driving less.
A handful of other states — Washington, Colorado, North Carolina — have now imposed additional fees on electric and hybrid vehicles, although Virginia lawmakers recently voted to repeal a $64 annual license tax imposed last year on hybrids following a public backlash.
Amber Meyer Smith, director of government relations at Clean Wisconsin, is hoping lawmakers here get the same message. A hybrid tax, she says “is like raising taxes on ex-smokers because they’ve caused tobacco tax revenues go down.”
Wisconsin now counts nearly 48,000 hybrid and electric vehicles registered in the state, up more than 10-fold since 2005. But that still represents less than one percent of the 5.59 million total vehicles registered here.
On the other hand, in oil-rich Norway, electric vehicles have become so popular that government ministers are now facing increasing public pressure to reduce the many perks and tax breaks designed to encourage them.
Bus drivers in Oslo are complaining that electric cars, which are allowed to use dedicated bus lanes, are causing traffic snarls. The cleaner cars are also exempt from urban toll payments or fees at public parking spaces, where they can recharge batteries for fee.
And perhaps most significantly, electric vehicles are exempt from Norway’s sky-high sales and value added tax, which is one reason they now account for 13 percent of new vehicle sales in the Scandinavian nation.
Madison hybrid owner Vincent sure wouldn’t mind seeing lawmakers in Wisconsin get into a debate over the environmental impact of the automobile when they take up the gritty details of the DOT budget in 2015.
“More efficient vehicles are one of the most important tools we have to break our dependence on oil, clean up our air, improve our health and protect our climate,” he says. ￼