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JFC to Vote on WisDOT Request
An objection has been raised by a member of the Joint Committee on Finance to the WisDOT request to use $200 million of the contingency bonding made available by the 2015-17 budget. This objection puts to rest the hope of approval with a 14-day passive review. The JFC will schedule a meeting in the near future to vote on the issue.
The budget provides a total of $350 million in contingency bonding – $200 million available in year one of the budget and $150 million in the second. This bonding can be released with JFC approval of a WisDOT request.
The WisDOT request and Gov. Walker’s call for the JFC to release the bonding came after heavy press coverage of project delays. Five Major Highway Program projects have been delayed at least 2 years along with varying delays for scores of Rehabilitation Program projects.
According to WisDOT, the delay in the Major projects can be reduced to one year under the following conditions: 1) release of this round of bonding, 2) release of the remaining $150 million in year two and 3) ongoing funding for the Majors Program equal to the average in the current biennium including the contingency bonding, with purchasing power maintained.
The request also points out the impact the current budget will have on quantities, and therefore, Wisconsin’s ability to maintain a healthy and competitive construction industry.
Compilation of press coverage
Fixing Wisconsin's Transportation Finance Shortfall
By Jason Culotta, Wisconsin Manufacturers & Commerce
July marked the end of a contentious state budget process. Providing more funding for transportation needs was widely discussed, but reductions in the level of borrowing and delays in highway projects were the result.
This year, many states adopted new revenues to keep up with costs, yet Wisconsin was not among them. Wisconsin has long relied on user fees to finance such spending, principally the gas tax (about $1 billion annually) and vehicle registration fees ($670 million). Neither of those sources has seen rate increases since 2006 and 2007, respectively.
Without new money, borrowing has been used to cover growing expenses. The 2013-15 budget provided $991 million in infrastructure borrowing, compared to $780 million prior.
Wisconsin provides local road aids to counties, towns and municipalities and aid to local bus systems as well as rail and harbor improvements. However, most transportation appropriations are for highways.
The highway program consists of three main pillars: State highway rehabilitation (about $800 million in annual expenditures for smaller projects), major highway development (about $370 million for larger projects outside Milwaukee such as State 441 in the Fox Cities and Interstate 90 from Beloit to Madison) and the Southeast Wisconsin freeway megaprojects (about $300 million last year).
The megaprojects consist of 116 miles of freeways in and around Milwaukee that were first built in the 1950s and '60s. Only 23 miles has so far been rehabilitated or reconstructed.
State officials hoped to conclude the "megas" with $350 million annually over 15 years. Net costs could be reduced by literally billions of dollars compared to stretching these projects over three decades. But paying for the megas cannot happen without increased funding. When the demands of "rehab" and "majors" and other infrastructure spending are taken into consideration, current revenues are clearly inadequate.
What options does Wisconsin realistically have? Efficiencies can always (and should) be pursued, though they are unlikely to generate sufficient offsets. Projects can be delayed, except that only adds to the price tag of projects which must be done. Tolling is a limited option; Wisconsin would require an act of Congress to toll an existing interstate. Other areas of the country have succeeded in similar requests, although it is a heavy lift. Tracking vehicle miles traveled is a new idea that has not been put into practice and draws strong public opposition, yet likely has a future in financing transportation.
Many states dedicate a significant portion of the general fund to infrastructure. Wisconsin will transfer $38 million this year from its principal account, which is helpful, but not enough to meet the demand. Shifting more general fund money is nearly impossible in an age of exploding entitlement costs. Wisconsin's share of BadgerCare and related programs swelled by $1.4 billion in the 2011-13 budget, $850 million in 2013-15, and over $650 million in the current document. This expense alone consumes most of the growth in tax collections, crowding out other priorities like schools and roads.
The vehicle registration fee, currently $75 per year for most vehicles, could be raised. Boosting the fee by $25 would add $87 million annually, comprising part of the solution and similar to charges elsewhere. A 5-cent addition to the gas tax would generate about $160 million more each year.
It's easy to see why seven states have boosted the gas tax since January: other options aren't as viable. If Wisconsin is to address its substantial transportation needs, we will be forced to consider a similar revenue increase ó probably in the next budget.
Jason Culotta is director of tax and transportation policy for Wisconsin Manufacturers & Commerce and serves on the TDA Board of Directors.†
TDA Reports Highlights Benefits of Highway Modernization
Earlier this month, TDA released a new report which quantified the benefit of four highway projects on Wisconsinís economy. The report, entitled The Benefits of Modernizing Wisconsinís Highway Corridors, details not only the short-term impact of the construction of the projects but the on-going benefits to businesses.
The University of Wisconsin-Whitewater Fiscal and Economic Research Center (FERC) was contracted to conduct analysis of the economic impact of the remaining amounts to be spent on the highway improvements and the growth of ancillary businesses in the affected communities.
The four projects analyzed are I-39/90 from Madison to the Wisconsin-Illinois state line, U.S. Highway 10/State Highway 441 in the Fox River Valley, U.S. Highway 151/Verona Road on Madisonís west side, State Highway 23 between Fond du Lac and Plymouth.
Key findings of the report include:
- The four road projects investigated in this study are expected to have a combined, short-term impact on Wisconsinís economy of close to $3 billion from the construction of the projects.
- The construction activity will lead to the creation of over 4,100 jobs in the state from the road construction industry and their suppliers.
- After completion of the projects, businesses will benefit by almost $185 million annually as a result of increased accessibility, reliability and road quality.
- The increased business will support more than 1,700 jobs going forward.
The Wisconsin Department of Transportation has announced the delay, by at least two years, of the four projects in the study and one other project not included.
Looking at average annual construction inflation over the last fifteen years and the remaining amount to be spent on these projects, TDA estimates each year of delay could increase the total cost of the projects by $80 million.
The report was part of TDAís efforts to bring press coverage to these delays and the costs associated with failing to address Wisconsinís ongoing transportation funding issue.
Congress Passes Extension of Surface Transportation Programs
Congress has approved an extension of the current authorization for surface transportation programs to November 20. President Obama is expected to sign the measure.
The bill also includes a three-year extension for the implementation of positive train control, with individual railroads eligible for two one-year extensions at the discretionary of the Secretary of Transportation.
Congress now has three weeks to come to agreement on a long-term bill before heading out for a week-long Thanksgiving holiday break.
Next week, the House is expected to take up the reauthorization bill passed by the House Transportation & Infrastructure Committee on October 22. The six-year bill, the Surface Transportation Reauthorization and Reform Act (STRRA), primarily keeps programs at current funding levels with inflationary increases, while the Senate bill includes approximately $16 billion in additional spending.
Before the House bill can go to the floor, someone has to come up with a way to pay for the spending in the bill. According to the Congressional Budget Office, a bill at baseline spending levels, like the House bill, will require an additional $32 billion in order to fund the first three years of the bill and $75 billion for the entire duration of the bill. As repatriation seems to have fallen to the wayside, the House “payfors” will likely be similar to the ones contained in the Senate bill passed in July.
Like the Senate-passed DRIVE Act, the House bill provides six years of contract authority but has a mechanism to prevent any funding in the last three years if there is not a subsequent infusion of cash to fund the last three years.
With the budget deal reached and the debt-limit crisis averted in the short term, it is possible Congress will pass a surface transportation reauthorization this year. Just not one with funding levels necessary to address our nation’s infrastructure backlog or a sustainable funding source.
Interesting News Coverage
NBCNews.com, October 26, 2015 – “Transport system shrinks as agencies stop fixing rural roads, bridges"
FinanceCommerce.com, October 26, 2015 – “Report: Businesses [Minnesota] oppose new transportation taxes”
WPR.com, October 22, 2015 – "How should Wisconsin pay for road construction and repair?"
Detroit Free Press, October 21, 2015 – “House [Michigan] passes sweeping roads plan raising gas tax, fees”
TireBusiness.com, October 20, 2015 – “ATA poll shows widespread support for infrastructure investment”
The Hill.com, October 13, 2015 – “Poll: 70 percent of US residents want more road funding”
U.S. News and World Report, October 8, 2015 – “Bringing 'Sexy' Back to Infrastructure. American infrastructure is doomed to dilapidation without more interest in paying for necessary upgrades”
The Pew Charitable Trusts, October 7, 2015 - "Is this the way states can sell tax hikes for transportation?"
Jerry Derr TDA's 39th President
Jerry Derr from the Town of Bristol was elected the Transportation Development Associationís 39th president at the annual business meeting held in Madison last month. He will serve a one-year term.
Derr, a lifelong resident of Dane County, has served on the Town of Bristol Board for almost 40 years and been chairman for thirty of those years. He has also been active in many Dane County and statewide organizations including: the Dane County Towns Association, the Wisconsin Towns Association, and the Wisconsin County Mutual Insurance Corporation.
He was first elected to the TDA Board in 2008 and joined the organizationís executive committee in 2011.
Other members of the 2016 TDA Executive Committee:
- 1st Vice President: David Brose, EMCS
- 2nd Vice President: Bill Johnson, Johnson Timber Corporation
- Secretary: Tom Bressner, Wisconsin Agri-Business Association
- Treasurer: Tim Peterson, James Peterson Sons, Inc.
- Immediate Past President: Barb LaMue, Wisconsin Economic Development Corporation
Calendar of Events
- WisDOT Freight Rail Conference: Tuesday, November 17th.†Register†today.
- Midwest Transportation Workforce Summit: December 7th-8th. †Click here†for more information and to register.
- TDA Fly-in 2016: April 6th-7th†
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