Gov. Scott Walker and Republican lawmakers have run into a traffic jam on their way to wrapping up work on the 2015-17 state budget.
Joint Finance Committee co-chairman Rep. John Nygren, R-Marinette, said Friday, after the committee approved large cuts to the University of Wisconsin System and Department of Natural Resources, that GOP lawmakers have reached an impasse with Walker and amongst themselves on the transportation budget.
“We need to come to an agreement with the governor,” Nygren said. “He’s pretty much taken all of our options off the table and we don’t see the bonding out there as a great option.”
Historically, the state has paid for road building and maintenance through a mix of revenues from the gas tax and vehicle registration, driver’s license and other fees. In recent years, both Republican and Democratic administrations have increasingly turned to borrowing supported by general fund taxes to pay for roads, but that is viewed as a less desirable option.
A bipartisan state transportation commission reported two years ago that if Wisconsin wants to maintain current service, traffic flow and road condition levels under the existing funding system, the state will be short $15.3 billion over the next decade. Part of the problem is more fuel-efficient vehicles are diminishing the amount of gas taxes collected. The commission recommended a mix of tax and fee increases as a solution.
Walker, a likely 2016 presidential candidate who has said he won’t get into the race until after he signs the state budget, bypassed a long-term fix in his initial budget proposal, opting instead for a record $1.3 billion in borrowing for roads over the next two years. Lawmakers have expressed concern at that much borrowing.
On Thursday, Walker told reporters he could support an increase in the gas tax or vehicle registration fees if it’s offset by tax cuts elsewhere. But Nygren isn’t holding out much hope for that possibility, and even wouldn’t rule out working with Democrats to override a Walker veto of any possible fee increases.
“Our goal in the Assembly is to reduce bonding by about $300 to $400 million,” Nygren said. “You’re talking some pretty substantial tax cuts to get to that point and I don’t see it, especially when the revenue numbers aren’t necessarily looking that strong either here or nationally.”
Walker spokeswoman Laurel Patrick said, “We will continue working with legislators to ensure continued investment in the vital infrastructure the state needs to continue growing our economy.”
Walker introduced his budget proposal in early February with an eye on wrapping it up quickly. That possibility took a hit earlier this month when the nonpartisan Legislative Fiscal Bureau reported weak national economic forecasts meant it could project no additional revenue for lawmakers to reduce the borrowing levels and cuts to K-12 education and the university that Walker proposed.
The budget is already based on a projected 4.7 percent increase in revenues next year, up from the 3.7 percent increase projected for the current fiscal year ending June 30. According to the Department of Revenue, revenues are up only 3.3 percent through April. Walker has said his administration will be able to balance the current budget, though one way it has done so is by deferring more than $100 million in debt payments.
Republicans have been wringing their hands for months about a slate of unpalatable options for addressing transportation.
Rep. Dale Kooyenga, R-Brookfield, a budget committee member, laid out the three options as sticking with Walker’s plan: reducing borrowing by cutting projects or reducing borrowing by increasing revenue, either through increasing the vehicle registration fee or title transfer fee.
He said increasing the gas tax and imposing a new tax on bicycles are off the table.
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“Leadership is still trying to figure it out,” Kooyenga said, calling the current state of the discussion a “stalemate.”
The road-building industry has lobbied hard against accepting Walker’s proposal to increase borrowing. Patrick Goss, executive director of the Transportation Builders Association, said his organization will not support borrowing to fund transportation.
“I wish I had an answer,” Goss said. “At the level of bonding proposed, it’s mortgaging the future, and that is not acceptable.”
In addition to borrowing for roads, Walker’s capital budget sought to borrow $220 million for a new Milwaukee Bucks arena. Overall borrowing is down from about $2 billion in the last budget, which Walker achieved by cutting $50 million in annual borrowing for the Knowles-Nelson Stewardship Program and eliminating other borrowing proposals, such as funding to renovate UW-Madison’s chemistry building.
Walker, lawmakers and Milwaukee-area local political leaders have zeroed in on a Bucks arena solution that would reduce the state’s share of borrowing by $165 million, the Milwaukee Journal Sentinel reported. But the budget committee has already committed much of the savings to other priorities, such as $33 million a year for the conservation fund, $86.2 million for the chemistry building and $15 million for a Chippewa Valley performing arts center.
Cutting projects is another unsavory option for the Assembly’s 63-member Republican majority, Nygren said.
In March, Transportation Secretary Mark Gottlieb laid out how his department would manage a $500 million reduction in borrowing, including a 12 percent reduction in road miles scheduled for rehabilitation over the next six years and delaying by two years a widening of Interstate 39/90 from Madison to the Illinois border and completion of the Verona Road interchange project.
Nygren said Gottlieb’s proposal was not a good guide because nearly 80 percent of the maintenance projects affected would be outside southeast Wisconsin. Meanwhile most of the transportation funding in recent budgets has gone to projects in that region.
“Most of our guys who have hesitancy about fee increases — not that any of us are excited about it — most of the guys in southeast Wisconsin, they’re the ones that are most hesitant about it,” Nygren said. “If we get to the point where we’ve done all our projects in southeast Wisconsin, where is their motivation (to increase fees)?”
Nygren said a week ago that he hoped to wrap up his committee’s work on the budget last Friday, a week earlier than the 2013 budget. The three major outstanding items — transportation, taxes and bonding for a new Milwaukee Bucks arena — were originally scheduled to be taken up that day.
But action on the Department of Revenue’s budget was scuttled until Tuesday, and Nygren and fellow co-chairwoman Sen. Alberta Darling, R-River Hills, said they don’t have a date set for taking up transportation.
If an agreement is hashed out by week’s end, that would still put the Legislature on pace to wrap up the budget on the same schedule it did two years ago. Walker signed that budget June 30.
“Stay tuned,” Darling said.
State Journal reporter Dee J. Hall contributed to this report.