Senate Majority Leader Scott Fitzgerald has panned an Assembly GOP proposal to change how fuel sales are taxed, raise more money for roads and implement a flat income tax in Wisconsin — a sign the sweeping plan, also criticized by Gov. Scott Walker, may be dead days after its arrival.
“I don’t see the momentum for that plan ultimately being adopted,” Fitzgerald told reporters Wednesday.
Fitzgerald said increasing fuel taxes or vehicle fees, the former a centerpiece of the Assembly plan, are effectively off the table for the next state budget because Walker won’t support them.
But Fitzgerald said one element of the Assembly plan — seeking federal approval to charge tolls on Wisconsin’s interstate highways — “is something that needs to be explored.”
He also said additional borrowing to fund highway projects, another point of contention with his Assembly GOP counterparts, may be in the offing.
Fitzgerald’s comments came shortly after the state Senate passed a bill to change how the Department of Transportation provides public updates on the cost of ongoing highway projects.
The transportation debate threatens to derail talks over the next state budget, for the two-year period starting July 1. Stagnant revenues, rising highway construction costs and a backlog of highway projects mean lawmakers must delay projects or borrow or find new revenue to pay for them.
Rep. Dale Kooyenga, R-Brookfield, and other Assembly Republicans introduced their plan last week. It would extend the 5 percent state sales tax to fuel, cut the 30.9-cent-per-gallon fuel tax to 26.1 cents, and remove a minimum markup requirement on fuel sales.
The net impact would be an increase of about $380 million in revenue for roads, bridges and transit over the next two years, nonpartisan estimates show.
Fitzgerald said that in his conversations with GOP senators, “there didn’t seem to be a lot of interest in going that direction.”
Borrowing at issue
Fitzgerald said Senate Republicans are discussing ways to use the state’s general fund, supported by income and sales taxes, to support borrowing for road and bridge projects. That’s a departure from how road and bridge projects typically are financed: through the state transportation fund, the revenue for which comes mostly from fuel taxes and vehicle registration fees.
Fitzgerald said the departure is needed because the transportation fund already supports too much borrowing.
The specter of more borrowing could spark tension with Assembly Republicans, who have rejected putting significantly more on the state’s credit card in the next transportation budget.
Rep. John Nygren, R-Marinette, who co-chairs the Legislature’s budget-writing committee, said the Assembly GOP doesn’t favor borrowing backed by the general fund because it forces transportation to compete for funding with other budget areas such as K-12 schools.
Assembly Speaker Robin Vos told reporters Wednesday that “there is certainly no support” for high borrowing levels for transportation and promised it would not be in the next budget.
“I look forward for the Senate putting out their plan and we can all sit at the table and negotiate,” Vos said.
Fitzgerald said Wednesday that he’s “indifferent” to the income-tax provisions in the Assembly plan. They would transition Wisconsin to a flat income tax over a 12-year period while eliminating certain tax credits and deductions.
Meanwhile, Senate Democratic Leader Jennifer Shilling, D-La Crosse, criticized Republicans for what she described as “budget blunders” dealing with transportation.
“Once again, the right hand and the far right hand don’t seem to be in sync with each other,” Shilling said in a statement.
Bill imposes new requirements
Shortly before Fitzgerald spoke, the state Senate passed a bill to change how the Department of Transportation provides public updates on the cost and progress of ongoing highway projects.
The bill’s next stop would be a vote in the state Assembly.
The bill follows a blueprint laid out earlier this year by the state’s nonpartisan Legislative Audit Bureau. The bureau audited the Department of Transportation and found it had underestimated the combined cost of ongoing large highway projects by more than $3 billion over a period of decades.
In response, the audit recommended — and the bill would require — that DOT be required to account for inflation and all other expected costs when providing future cost estimates for major highway projects.
It also requires all parts of a project be accounted for as part of updates on its expected cost.
Senate and Assembly committees removed one major audit recommendation from the bill: a provision permitting DOT, on a limited scale, to design and build highway projects without bidding them out, as current law requires.
The audit found the Minnesota DOT has used a construction manager-general contractor method to realize savings on some highway projects.
But Assembly Transportation Committee chairman Keith Ripp, R-Lodi, recently said the provision was removed “to allow for further discussion about WisDOT bidding standards.”
State Journal reporter Molly Beck contributed to this report.