Boots & Sabers

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Tag: Transportation

The Cost of Transportation

The debate about the transportation budget in Wisconsin is still raging. Essentially, there isn’t enough money projected to come in to pay for all of the spending that the state wants to do. The governor wants to borrow $1.3 billion to cover the difference. The legislative Republicans want a combination of some borrowing, possibly some tax and fee increases, and possible some spending reductions. Some of that spending is being driven by the reconstruction of the Zoo Interchange, which is the state’s busiest intersection and critical to the state’s transportation system. That may justify some borrowing in the short term. But even outside of that, it’s hard for me to justify the level of spending that the state wants for transportation.

As the debate rages, there is one number that I can’t reconcile. According to Reason’s Annual Highway Report, the state spends $226,901 per state-controlled mile. That compares with a low of $39,403 per mile in South Carolina and a weighted average of all states of $162,202 per mile.

Wisconsin spends almost $65k more per mile than the average. Why? It is true that Wisconsin has to build roads differently than states in warmer climates because of the harsh winters, so that may drive up some cost. But let’s take a look at other cold weather states that manages to build their roads for less. Michigan spends $206,114 per mile. Iowa spends $133,409 per mile. North Dakota spends $95,898 per mile. Minnesota spends $132,230 per mile.

I have driven extensively in each of the states I listed that spend less per mile of state-controlled roads and their roads are fine. In the same report, North Dakota’s roads rank better in terms of performance and the other states are within spitting distance.

Looking into the details a little more, Wisconsin spends below the average for maintenance – $17,816 per mile as compared to a weighted average of $26,079 per mile. But Wisconsin spends 50% more than the weighted average on administrative costs per mile ($15,709 compared to $10,579) and 42% more for new roads and bridges ($122,272 as compared to $86,153).

What does the data tell us? Wisconsin spends far more than our neighbors on building new roads and administration and far less than our neighbors on maintaining the roads we have (the numerous accidents and damaged cars due to potholes on I-43 yesterday will attest to that).

Just imagine, if Wisconsin spent the same amount on roads per mile as Iowa – a state with similar weather and economic needs – Wisconsin would spend $1,098,967,932 less PER YEAR for the same amount of infrastructure ($93,402 less per mile multiplied by 11,766 miles of Wisconsin roads). That more than solves the budget problem. If fact, it would solve the $1.3 billion gap and save an additional $900 million out of the two-year budget.

Similarly, if Wisconsin spent the same amount on roads per mile as Minnesota, Wisconsin would spend $1,113,898,986 less PER YEAR on transportation infrastructure. Minnesota has almost the same number of road miles as Wisconsin (11,833 vs. 11,766) and manages to spend $94,671 less per mile. Is anyone going to argue that weather conditions in Minnesota make road building less expensive than Wisconsin?

So, as the transportation debate rages, I will not support any borrowing or tax increases until they take a serious look at the spending. The taxpayers should expect to get the same value for the same money because other states have demonstrated that it can be done.

Roads We Don’t Need

As the transportation budget continues to be debated, this story is timely.

Their idea: Wisconsin, in this year’s budget, should consider not wasting a bunch of money on highway expansion projects we don’t need.

Take a close look at the traffic projections used by the state Department of Transportation, Hiniker said. They just don’t hold up. The 1000 Friends, an environmental advocacy group, had published a study of the data that found that WisDOT consistently overstated what future traffic would be.

Because the projections were wrong, at least some of the highway expansions that the department was always recommending — and by the way, state highway expansions is a distinct category of government spending, not the same as the money spent on fixing potholes and maintaining our local roads — were unnecessary.

Of course, the study is from a lefty advocacy group. Their study is hardly exhaustive, but does have a lot of good examples of roads that were expanded to accommodate traffic that never came. It confirms the anecdotal experiences that many of us who drive a lot around the state have seen of beautiful, wide, smooth roads with nobody on them.

Again, the “problem” with the transportation budget is a spending problem driven by a powerful road building lobby. It has nothing to do with “adequate” funding.

Choices, Choices

I admit, I feel very little sympathy for their plight.

Madison— GOP lawmakers want to cut Gov. Scott Walker’s borrowing plan by $300 million, but the only way to do that may be to cut highway projects.

The GOP governor proposed borrowing a record $1.3 billion for transportation over the next two years, but Republicans who control the Legislature have groused at the plan, saying they want a long-term solution to how to fund roads.

This week, they floated the idea of raising vehicle registration fees to bring down bonding levels. Walker, who is preparing to launch his presidential campaign, all but ruled out that idea.

Here’s the thing… the transportation department wants a lot more spending than the taxpayers have available for transportation projects. That is the “problem.” There are only three ways to go about solving it.

First, they can increase revenue. That means a tax increase. Walker has ruled out an increase in the registration fee and the legislature has ruled out an increase in the gas tax. Also, there does not appear to be any appetite in the legislature for new taxes for transportation like a distance tax or toll roads. So it appears that an increase in revenue is no longer an option. This is a good thing because Wisconsin’s taxes are too high and we shouldn’t be looking for ways to make them higher.

Second, they can borrow. This is essentially what Walker has proposed but the legislature is balking at the amount. Ideally, they would not borrow anything, but the debate between Walker and the legislature seems to be about the amount of borrowing – not the prospect of it. Some borrowing will be part of the equation. This is unfortunate since Wisconsin should not be adding to our debt in a time of economic prosperity. While it is true that the economy could be better, we are not in a recession and should not be borrowing to pay our bills.

Third, they can decrease spending. This is, mathematically, the easiest solution, but the most politically difficult one. The legislature could cut projects, as the story suggests, but that means that individual legislators have to go home to their districts and explain why their districts’ projects are being cut and not someone else’s. Barring cutting the number of projects, the legislature must find ways to reduce the cost of each project so that they can accomplish the same projects for less money. One way they could do this is by repealing the prevailing wage laws, thus lowering the labor cost of each project, but then the politicians anger the road builders’ lobby. Thus far, the Republican leadership in the legislature has shown little interest in angering their political benefactors in the road builders’ lobby.

So here we are. Revenue increases are off the table (hopefully and thankfully). There isn’t the will to borrow to completely fill the gap. When it comes to ways to reduce the spending, the legislators are faced with a political choice. They can anger their constituents by cutting projects, or they can anger the road builders’ lobby by repealing prevailing wage. So far, it appears that the legislature is leaning toward angering their constituents. This tells us who is closest to their hearts.

Funding Transportation

This is something with which we need to deal.

Lawmakers agreed earlier this year to use $27.4 million from the state’s general fund to help county governments cover higher-than-expected winter road maintenance costs and salt purchases. Vos and Mason, who serves on the budget committee, said they weren’t opposed to doing something similar next year.

Vos said he would consider toll roads or certain fee increases to help pay for transportation projects.

“As people use the system, they should pay for it,” he said, adding, “I’m not necessarily a big supporter of increasing the gas tax because that’s a declining revenue source over time as cars become more fuel efficient.”

Maintaining a quality transportation system is a vital interest of government that needs to be done right. Transportation is the life blood of our economy. To date, Wisconsin has chosen to fund transportation needs through a segregated fund that is filled with gas taxes and vehicle registration fees. It makes sense because it makes sure that the people using the transportation system more pay more for it. The problem is that as vehicles become more efficient, the revenue from gas taxes isn’t keeping up with funding needs.

The state is faced with one of two choices. The state can keep the transportation funding separate and look for a new funding mechanism like tolls, mileage taxes, or just increasing the existing taxes. Or the state can just give up on keeping transportation funding separate and consider it a general fund expense. This would allow the state to use income, sales, and property taxes to pay for transportation needs, but those needs would be balanced against other general fund needs like education and prisons. It’s a big discussion and there are good arguments on both sides.

Whatever the decisions made regarding the funding mechanisms, they do not absolve the state from controlling spending. Transportation spending in Wisconsin has increased faster than population growth, personal income, or inflation. The increase in the cost of the raw materials of road building is part of the reason, but so is poor prioritization and plain old budgetary fat. The transportation lobby is strong in this state and the government spending shows it.

In discussing the appropriate revenue sources for transportation needs, let us not use it as an excuse to increase spending. We can change the funding mix while still frugally cutting spending.

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