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Expecting Something for Nothing

May. 16, 2017
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Milwaukee County Transit System

Our transportation system desperately needs to be upgraded and in some cases completely rebuilt, but the Republicans in Madison who control state government do not want to pay for it. They have three choices: don’t spend any additional monies on transportation, borrow and spend the money as they have been doing for the past few budgets, or actually raise and spend some tax revenues to pay for the expenditures.   

Whether you own a house, a car or a business, you understand that you need to make repairs and improvements every year or you are failing to protect the value of your assets. Responsible people estimate the costs of these annual repairs and improvements and budget for them. If it were a major expenditure like a roof on a house that will last 20 years, you would borrow the money and budget enough money for the next 20 years to cover the debt service on the loan. That’s either Accounting 101 or, for those who never took an accounting course, it is just common sense.

 

Splits Forming within the Republican Caucuses

We assume the Republicans controlling the legislature do that budgeting for their personal or private business assets, but when it comes to social assets, like roads and bridges and many other government-owned resources for which they are currently custodians—resources for the rest of us—they seem to have trouble acting like responsible adults. They want to spend the money to make their constituents and the special interests happy, but they just don’t want to raise the money needed to pay for their expenditures. 

This year, it is becoming a more difficult issue for the Republicans because some of their members are balking at their irresponsible past practices of simply borrowing the money they need and passing the costs on to the future. After years of borrowing and borrowing, some of the Republican legislators are beginning to argue that they should assume the responsibility for these expenditures and not simply push the problem down the road. This very important issue is now causing splits not only within both the Senate and Assembly Republican caucuses but also between the two caucuses.

 

Republican Leadership at Odds on Taxes 

The Senate Majority Leader Scott Fitzgerald (R-Juneau) wants to continue the practice of borrowing and spending, and when questioned about how he is going to pay for the debt service on this borrowed money, he said it would come from the general fund revenues, the same money used for education, health care, senior care and veterans, for example. Essentially he would take from those programs to pay the annual principle and interests on the money borrowed for transportation.

Gov. Scott Walker is willing to negotiate with the legislature on funding transportation as long as he can say he didn’t raise taxes since he is now running for a third term as governor. 

The adults in the room seem to be in the Assembly. Speaker Robin Vos (R-Rochester) seems willing to discuss raising taxes. We applaud that because you can’t continue to run the state with rising costs throughout the economy yet be unwilling to raise more money to cover the costs. We can’t continue to cut education and other important state responsibilities without Wisconsin becoming another Alabama or Louisiana. Raising taxes is not popular with anyone, but any adult knows that you get what you pay for, and if Wisconsin wants to attract jobs and grow businesses, they must have very good infrastructure and an excellent education system. That’s what businesses need to be competitive and grow.

 

Some Tax Ideas Coming Out of the Republican Assembly Caucus 

If Wisconsin chooses to do the adult thing, it needs to raise some taxes to deal with our deferred maintenance and to invest in our state to make it competitive for the 21st century. Some members of the Assembly are working on ways to fund transportation without just borrowing more money; one proposal is the creation of toll roads. Unfortunately, at the same time they are talking about this they are again talking about a tax cut heavily skewed toward the wealthy and shortchanging the middle class. 

One member of the Assembly, Dale Kooyenga (R-Brookfield), wants to redo the entire tax system, cutting taxes by $2.7 billion by 2019, with over a third of that tax cut going to a small group of wealthiest citizens, those earning more than $300,000 per year. Yes, while the legislature is scrambling to pay for its current expenditures like education and veteran services, Kooyenga wants a massive tax cut. However, with respect to transportation, he is acting responsibly by coming up with a plan to raise more revenue. He wants to cut the gas tax, currently at 32.9 cents per gallon, by 4.8 cents to 28.1 cents per gallon, but apply the state sales tax to gas. If you are paying $2.50 per gallon, the state sales tax of 5% would be 12.5 cents per gallon. So under Kooyenga’s plan, the total tax on gas would be the new gas tax of 28.1 cents per gallon plus 12.5 cents sales tax for a total of 40.6 cents, an increase of 7.7 cents per gallon that could go for responsibly paying for our transportation needs. Unfortunately the rest of his plan is regressive and moves Wisconsin to a flat tax of about 3.9%, which again will benefit the wealthy. 

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