llustratios by Tim Czerniakowski
Asphalt Addiction
Almost everyone who has traveled Wisconsin highways, whether for commuting or for pleasure, has likely encountered an occasional bone jarring, vehicle rattling and tire challenging ride over rough and pothole covered pavement. But tackling the problem requires lots of money and finding such funding has vexed many a government administration. Highways are expensive to build and maintain, after all, and the pressing issue facing the state is how to remedy an antiquated funding mechanism.
There is growing pressure to change the way the state funds construction and repairs to deal with what will be an ever more problematic budgeting issue as traditional methods of paying for highways have become inadequate and unsustainable. Here, we’ll look at how we got to where we are and whether we should wean ourselves from the idea that we even need more major highway construction projects. We’ll also look at some proposed long-term solutions.
While the state has targeted most of its transportation dollars to infrastructure designed for personal vehicles, mass transit has been largely ignored by leadership. Proposals to build rail corridors which would connect major population hubs like Milwaukee, Madison and the Fox Valley have languished. Most notably, after Republican Governor Tommy Thompson and then Democratic Governor Jim Doyle began investing in a project to build a high-speed passenger rail line between Milwaukee and Madison, the project was killed by GOP Gov. Scott Walker in 2010. The state was slated to receive $810 million in federal funds for the project, but Walker insisted that the money be spent instead on highway construction. It was a colossal miscalculation, however, because the federal government retracted the money from Wisconsin and awarded it to other states. The Feds told Walker that, by law, those funds had to be used for passenger rail systems, not highways.
The project included development of a passenger rail car manufacturing plant in a distressed area near Capitol Drive and North 27th Street in Milwaukee in cooperation with the Spanish manufacturer Talgo. While Talgo still operates the plant, the rail cars intended for use in Wisconsin sat idle for years.
Republicans who controlled the state legislature could not agree on a plan to use the rail cars for Amtrak’s Hiawatha train service which connects Milwaukee and Chicago. Finally, only last year, some cars were purchased by Nigeria. But Wisconsin lost millions of dollars in canceled contracts. The Talgo plant employs about 120 people, and its owner says he is optimistic that Wisconsin will again look at high speed rail given a renewed priority on mass transit and federal funding under the Biden administration. However, that will require the state to get on board with such plans and that prospect does not appear likely with Republicans still in control of the legislature.
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Take the Train
By contrast, Wisconsin Senate Minority Leader Chris Larson (D-Milwaukee) said he supports development of more passenger rail between population hubs and also an expanded streetcar system within the City of Milwaukee. “I think it would be smart and I’ve been advocating for that for the last 15 years,” Larson said. “The way we fund transportation currently shows where the real priority is, and I would hope that would change in Wisconsin. But we’ve unfortunately had a few Neanderthals in charge who are scared of rail and refuse to look toward the future of transportation. It’s absolutely ludicrous. We could have been way ahead of other states in that respect, but Walker threw it away.”
The attitude among Republicans about mass transit doesn’t appear to have changed. The GOP-sponsored shared revenue bill, which passed on a partisan vote in the Assembly on May 17, includes a provision barring the City of Milwaukee from using sales tax revenue to extend its streetcar line. “They have not learned their lesson. They are still very much against the idea of using mass transit,” Larson said. “It falls along party lines for whatever reason.”
There is real world evidence that urban light rail mass transit can work to alleviate pressure on highway systems. When Minneapolis invested in a light rail system which connects its suburbs to the downtown and neighboring St. Paul, critics called it a boondoggle which would negatively impact impoverished neighborhoods much as major freeway construction has in cities like Milwaukee. Freeways have created physical barriers which divide communities and cause further transportation difficulties for residents of limited means. But ridership on the light rail system has steadily increased each year in Minneapolis and businesses near the rail lines say they have seen increased commercial activity because people have better and easier access to them. The city is in the process of expanding its rail lines.
Larson said state and local governments need to be proactive in the way they fund transportation infrastructure and must include mass transit in future planning, especially in the Milwaukee area. “Milwaukee County doesn’t have dedicated funding for its transit system and we’re one of the only transit systems in the country to be that way,” he said. “We’re one of the last 5% not to have dedicated funding for transit so it’s always on the chopping block when it comes to the things the county needs to fund. It’s just not a smart way to go about it. Instead, we just keep adding more lanes to highways which studies show doesn’t ease traffic congestion. We spend hundreds of millions of dollars where we would get more bang for our buck by investing in mass transit at the local level.”
Studies have also shown that mass transit is mostly used by people of limited means who have no other options. But attitudes are changing in that regard, especially among people who now realize that their gas-powered vehicles contribute mightily to carbon emissions and climate change. To ensure that such systems are successful, Larson said it will require an extensive marketing effort to encourage people to consider mass transit instead.
New Options?
So, because the state will not be able to afford to maintain its existing highways and roads under a funding system which cannot provide the revenue it will require in the near and long-term future, are there any other options? The answer is an emphatic maybe. There are experiments underway in several states which would shift highway funding away from gas taxes and toward a mileage-based system in which drivers would pay according to actual road use. But Larson said such an approach belies the actual contributor to most road damage, heavy trucks. He said a universal per-miles traveled method of highway funding puts an unfair burden on regular motorists. He said he prefers a higher usage fee on operators of heavy trucks. “If we’re going to talk about a mileage-based fee, it could make sense. But it has to be structured around vehicle weight, around the ones which are causing the most road damage,” he said. “But every time we talk to the DOT about it, they aren’t even looking at that even though it would make the most practical sense.”
If Wisconsin and other states don’t address the funding dilemma and allow highway maintenance budgets to fall behind what is required to keep highways in good condition, the economic cost could be catastrophic. The worse a road becomes, the more it costs to repair in the long run. To that we'll have to add in increased costs to residents and businesses from vehicle damage caused by poor highways. Quality transportation infrastructure which allows workers to get to their places of employment are factors considered by businesses when seeking locations to establish or expand offices or manufacturing plants. If those needs aren’t addressed, the eventual result could devastate the Wisconsin economy. The data shows that the current structure simply will not suffice.
In Wisconsin, highway construction and maintenance are funded by a combination of gasoline taxes and vehicle registration fees. However, revenue from those sources is not keeping up with expenditures and the gap is widening. Most transportation experts and many lawmakers believe state and federal governments must create alternative revenue streams to replace declining dollars from per gallon gasoline taxes.
There are several factors behind a decline in gas tax revenues. Among them is the increased popularity of hybrid and fully electric vehicles. They don’t use nearly as much gasoline, if any at all. Electric car drivers won’t gas and won’t pay gas taxes. Growth in the market share for EVs is increasing quickly and dramatically. According to a Bloomberg report, global EV sales climbed from 450,000 in 2015 to 1.7 million in 2020 and are expected to reach 54 million by 2040. At least 10 automakers are promising to make only electric options in the coming years, one of them slated to cease offering gasoline engine options as soon as 2025. Even using a relatively conservative market penetration estimate, it’s expected that EV sales and use will reduce fuel tax revenue by as much as 43% by 2050.
The state legislature has attempted to create a revenue stream to replace that which will increasingly be lost because of hybrid and electric vehicles through a surcharge on registration fees for them. But the surcharge currently generates only about $8.5 million each year, just a tiny fraction of the revenue which comes from gas taxes.
High Mileage
Of course, most of us still drive cars or trucks with internal combustion engines and they will still be with us for decades. But modern gas-powered vehicles get far better mileage than they did in the past as fuel efficiency standards have forced manufacturers to build cars and trucks designed to go further on less fossil fuel. When vehicles don’t need as much gas, operators won’t be paying as much in fuel taxes.
Annual revenue from Wisconsin’s gas tax brings in a little over a billion dollars each year but the state’s existing road construction and repair schedule will require far more funding than it provides. Some lawmakers tout a simplistic solution to just raise the taxes on gas which have remained at the same level for decades. The federal tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel. There has been no increase since 1993 when Congress ended yearly indexing which accounted for inflation. Likewise, the state gas tax in Wisconsin of 30.9 cents per gallon hasn’t seen an increase since 2006. Before 1983, any hike in the state gas tax required specific action by the legislature. From 1983 to 2006, annual increases in the tax were automatically indexed to inflation. Indexing was ended by the legislature in 2006, though, and the tax has remained unchanged since despite numerous proposals to increase it.
In 2016, Assembly Speaker Robin Vos (R-Rochester) distributed a transportation funding report to fellow Republicans which suggested a five cent per gallon increase in the gas tax along with hikes in vehicle registration fees and other measures. But then Governor Scott Walker rejected those ideas and instead relied on transfers from the state’s general fund and massive borrowing to make up for transportation funding shortfalls. When his successor, Democratic Governor Tony Evers, proposed an eight-cent gas tax hike in 2019, Vos and other Republicans who had floated their own gas tax increase proposal only a few years earlier rejected Evers’ initiative and even used it against him in campaign ads.
Walker’s Solution was Always to Increase Our Debt
Under Walker, interest payments for debt service on borrowing for highways spiked dramatically, reaching 20 percent of the Department of Transportation’s entire budget in 2018. Under Evers, debt service has declined somewhat, falling to 18 percent of the DOT budget in 2021.
“That’s always an eyebrow raiser when we get the budget briefing and find out how much is going just for covering the debt,” said Chris Larson. He proposes using the state’s $7 billion surplus to help pay for some current major highway construction projects, adding that Evers is also using some of the surplus to pay down the level of transportation debt. He said that helps lower future borrowing costs. “Right now, that surplus is kind of saving the day but in reality, we’re going to have to figure out something,” Larson said. “It’s not sustainable to continue to go down the path of borrowing for projects we may not even really need.”
Larson said he believes the Department of Transportation needs to shift its emphasis away from freeway expansion because its projected vehicle traffic count models have proven to be well off the mark, with traffic counts coming in well below the predictions used to justify the expansion projects. “Seldom does the DOT put out traffic estimates that actually reflect where the public wants to go or where actual use is going,” he said.
Larson points to the Milwaukee area as a prime example of a place where the state has prioritized unnecessary freeway expansion. He referred directly to discussions about expanding I-94 to eight lanes between the Zoo and (former) Miller Park interchanges. “We’re spending so much money on huge projects that aren’t going to be used the way the DOT projects and don’t solve the problem they say they’re going to,” Larson said. “They put out an estimate for that project at two billion dollars to build it up to eight lanes but won’t tell us how much less it would cost to keep it at six lanes.”
Unfortunately, the DOT is in the Road Builders’ Pocket
Larson said an expansion of the freeway would “flush at least a billion dollars down the drain,” pointing to multiple studies which show extra freeway lanes don’t reduce traffic congestion anyway.”
Larson said DOT policy is based on outdated notions which don’t reflect where society is headed. “Younger people don’t have the same ability as the generation before us to have two cars and to drive everywhere. Nor do they want to do that,” Larson said. “They always rely on predictions that use will go up at a steep incline when, in reality, more and more households are looking to get by with just one car or no cars. There needs to be a shift in the way DOT operates because it’s very much behind the times.”
Evers campaigned on “fixing the damned roads” and has fulfilled some of that promise by using a combination of normal transportation revenues and a one-time influx of federal dollars from the Infrastructure Investment and Jobs Act of 2021. It brought nearly a billion dollars to Wisconsin in 2022 alone. Evers has directed some of those federal dollars toward repairs to more than 5,000 miles of Wisconsin highways and 1,500 bridges. But those one-time dollars will not be regularly available going forward.
