By Tom Still

MADISON – People love well-kept roads, bridges, mass transit systems and bike paths to help them get around – but they’re usually much less enamored about paying for them. Until Wisconsin determines a better way to pay for those transportation necessities, the road ahead could prove much bumpier.

Three years ago, the Legislature voted for and Gov. Jim Doyle signed a repeal of gasoline tax “indexing,” a formula that had provided predictable increases in tax revenue since the early 1980s. Opponents said automatic pump tax increases were unfair to consumers and an abdication of legislative responsibilities to vote on increases, one at a time. Advocates of indexing said the notion of regular increases had been generally accepted by state consumers who recognized the need to keep up with road repairs and new construction.

The opponents won, at least in part, because Doyle had previously pulled money from the state transportation fund to help relieve a state budget deficit. Once the political barrier of “no raids” on the separate state transportation fund had been broken, the unspoken bipartisan consensus around indexing evaporated like gasoline on hot pavement.

Today, gas tax indexing is looking much better in hindsight. When gasoline prices shot up to $4 last year and consumption declined, so did gasoline tax receipts for the state, which collects 32.9 cents per gallon. Because fuel taxes are the primary way Wisconsin pays for road repairs and new construction, there is growing concern that many projects might be delayed or not undertaken at all.

While federal stimulus money may help states such as Wisconsin get some work done, most transportation experts believe that’s no substitute for a consistent state financing plan. Without safe and reliable roads, bridges and more, goods and services don’t move as quickly or efficiently, workers spend more time getting to their jobs, tourists have more trouble navigating their way through Wisconsin, and there’s more costly wear and tear on vehicles and people.

It may come as no surprise that state associations with a stake in transportation would support a return to indexing – but so does Wisconsin Manufacturers & Commerce, the state’s largest business lobby and a group that doesn’t take higher taxes lightly.

A history of gas-tax indexing in Wisconsin helps to explain why it’s being reconsidered. The system was born during the 1982 campaign for governor, when Democrat Anthony Earl and Republican Lowell Jackson engaged in a series of primary-election debates. Improving a recession-damaged economy was a recurring theme in the Earl-Jackson debates, and both candidates agreed a more reliable taxing system was needed to protect Wisconsin’s investment in its roads.

Today, as then, investing in core infrastructure is viewed as a recession fighter. Long-term benefits accrue to the economy because the roads and bridges last for years – and there’s a short-term benefit, as well, as construction-related jobs are maintained and new economic efficiencies are created.

Of course, there must be jobs at the end of those well-maintained roads, so investing in infrastructure alone isn’t the answer.
Trade groups such as WMC are far less concerned about a return of indexing than they are with Doyle’s revived proposal to enact an oil company gross receipts tax. They see that tax as being passed through to consumers without the benefit of being collected for a specific purpose – road repairs and construction. They also doubt it’s constitutional.

Doyle appears ready to reverse his previous opposition to gas-tax indexing, saying he now believes indexing “served us pretty well for a long period of time.” While some legislative Republicans will disagree, a return to indexing in some form may win broader support if it’s clear the money will be used for transportation purposes.

Other ideas for financing transportation may surface, as well. Some states are exploring ways to tax drivers based on the number of miles they drive versus how much gas they use, which is a concession to the fact that more fuel-efficient cars (such as hybrids) will drive down fuel use but not use of the roads. Adopting a toll system, such as now exists in Illinois, is a recurring suggestion. Registration fees based on the value of the vehicle, in contrast to the current flat fee, is another idea. Dedication of motor vehicle sales taxes to the transportation fund has also been discussed.

Over time, Wisconsin may want to completely rethink its reliance on fuel taxes for transportation repairs. Taxes and fees that reflect changing consumer use and which are dedicated to specific needs is preferable to letting our transportation system go to seed.

Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.