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COVID-19 pandemic takes toll on Wisconsin transportation fund revenues
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COVID-19 | FUEL TAXES, VEHICLE REGISTRATION

COVID-19 pandemic takes toll on Wisconsin transportation fund revenues

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The COVID-19 pandemic kept many Wisconsin residents off the roads in 2020 as they telecommuted and bypassed travel plans, taking a considerable toll on the state’s transportation fund revenue, according to a new report.

The top two revenue sources for the state’s transportation fund — fuel taxes and vehicle registration fees — fell short of projections by more than $116 million combined in fiscal year 2020, which ended June 30, the nonpartisan Wisconsin Policy Forum reported Friday. The transportation fund is Wisconsin’s primary source for road and infrastructure projects.

Governors and lieutenant governors from Illinois, Wisconsin, Indiana, Michigan, Kentucky, Minnesota and Ohio are encouraging residents to make a plan for how they can get the coronavirus vaccine once they become eligible.

The revenue shortfall is expected to continue into the current fiscal year, though the pending infusion of transportation dollars included in a federal relief package passed in December, which the American Association of State Highway and Transportation Officials estimates will provide Wisconsin with about $188 million in transportation funding, could erase much of the gap.

“Taken together these developments, while consequential, are not catastrophic for a fund that took in more than $2.1 billion in revenue in the last fiscal year, while beginning the two-year budget cycle with an unappropriated balance of about $97 million,” the report stated.

“But the future remains murky,” the report continued. “Even if the virus is in retreat by late 2021, it remains unclear if more widespread adoption of remote work or online shopping may cause longer-term changes in travel patterns after July 1, the start of the next two-year budget cycle.”

While increased deployment of COVID-19 vaccines could help residents return to a more normal lifestyle, including increased travel, state officials expect the trend of reduced driving habits to continue into the 2022 fiscal year. Late last year, the Wisconsin Department of Transportation projected fuel tax revenues would remain below 2020 levels for next two years and total revenues in 2022 are expected to be the lowest since 2013.

Even before the pandemic hit, Wisconsin’s transportation finances were experiencing a change, with revenue from vehicle registration fees increasing from about $700 million in 2019 to almost $840 million in fiscal year 2020. At the same time, fuel tax revenue dropped for the first time since 2013, falling from $1.07 billion in 2019 to $1.02 billion last year. Figures do not include local wheel taxes, which have been passed in at least a dozen Wisconsin counties and two dozen cities, including Madison.

“On one hand, a heightened reliance on vehicle fees would appear to strengthen the financial position of the transportation fund in a future dominated by fuel efficient and electric vehicles,” according to WPF. “Conversely, some say fuel taxes are a more equitable way to pay for transportation programs because the amount paid by a taxpayer is linked, through fuel consumption, to the amount of miles driven and choice of vehicle.”

Environmental groups also typically advocate for increased fuel taxes as a means to incentivize better fuel efficiency and reduce carbon emissions.

Another potential revenue stream could be through state tollways, which the state Legislature directed the DOT to study in 2016, but ultimately never pursued.

Gov. Tony Evers proposed in his 2019-21 budget a nearly 10-cent fuel tax increase over a two-year span, but the GOP-led Legislature ultimately scrapped the idea, choosing instead to increase vehicle registration fees to generate roughly the same $500 million in new transportation funds that the governor had sought to do with a fuel tax.

Evers plans to unveil his 2021-23 budget on Tuesday, though it remains to be seen if he will try again to pass a fuel tax increase.

American Society of Civil Engineers Fellow Martin Hanson took part in a 2013 transportation, finance and policy initiative commissioned by the Legislature and governor that proposed multiple ideas aimed at modifying the state’s gas tax revenue.

“None of that was ever really considered,” Hanson said. “It’s been a long time since we’ve taken any action on changing how we collect funds to fund transportation infrastructure and it has caught up to us by now.”

The society’s 2020 infrastructure report card grades Wisconsin’s roads as poor and at risk based on measurements like capacity, condition, funding, future needs, operation and maintenance, safety, resiliency and innovation.

The report also recommends a continued study, and potential pilot program, of mileage-based user fees and toll roads to address stagnant fuel tax revenue.

Fave 5: State government reporter Mitchell Schmidt shares his top stories of 2020

Choosing my five favorite stories of 2020 seems almost paradoxical.

This year has felt like one exhausting slog of pandemic stories, state Legislature updates and, oh yeah, a presidential election thrown in for good measure. Thanks to a split government, there's been no shortage of politically-charged stories here in Wisconsin and the partisan divide has, maybe unsurprisingly, felt as wide as ever throughout the COVID-19 pandemic.

I don't know if "favorite" is the best way to describe them, but here are a few stories from 2020 that stood out to me:

Back in March, Gov. Tony Evers issued the state's first public health emergency in response to the then-emerging pandemic. At the time, Wisconsin had reported eight total cases of COVID-19.

As the pandemic progressed, positive cases and deaths climbed and state lawmakers battled over the appropriate response. In May, the Wisconsin Supreme Court struck down Evers' stay-at-home order, a decision that still resonates today with the state's coronavirus-related measures.

One story I was particularly excited about before I officially started working for the State Journal was the 2020 Democratic National Convention in Milwaukee. However, like most things this year, the pandemic drastically altered that plan.

In non-pandemic news, the state in October formally denied billions of dollars in state tax credits to Foxconn Technology Group — a story we managed to get before any other outlet in the state through records requests and sourcing.

Lastly, in November I worked on a story about how GOP-drawn legislative maps once again disproportionately benefited Republicans in state elections. Wisconsin is headed toward another legal battle next year when the next batch of 10-year maps are drawn.

Feel free to read my top stories below, or check out my other state government articles from this year, (by my count, there have been more than 300 so far).

Also, thanks to all the subscribers out there. This year has been challenging on so many people, so your support is so much appreciated.

"Even if the virus is in retreat by late 2021, it remains unclear if more widespread adoption of remote work or online shopping may cause longer-term changes in travel patterns after July 1."

Wisconsin Policy Forum

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