Doyle’s Budget Puts Wisconsin on the Wrong Road

Last updated on May 13th, 2019 at 02:35 pm


As any businessperson knows, the appropriate use of debt can be a great asset. However, bonding only makes sense if the need for an expense occurs infrequently.
For the past several years, Wisconsin has become more dependent on debt to fund the ongoing costs of transportation. Debt has been used as a revenue stream to pay planned expenses or to offset the diversion of cash for other purposes.
This use of debt for transportation has been more like the use of a credit card to buy groceries than a mortgage. Today, 10 cents of every dollar paid into the Wisconsin Transportation Fund goes to pay interest on debt. It doesn’t buy any infrastructure.
The trend of escalating debt service will only continue. Wisconsin bonds approximately 55 percent of the cost of major highway projects year after year. Major highway bonding has become a revenue stream, rather than borrowing for a capital project with a fixed cost that can eventually be paid off. Debt service, which was $117 million in 2004, will double in less than a decade if the policy is unchanged.
Gov. Doyle’s budget for 2005-2007 will compound the problem. The budget transfers cash from the Marquette Interchange and the Major Highway Program to General Fund programs and replaces the cash with debt. The governor’s vetoes increase the percentage of the Major Highway Program bonding from the fiscally responsible 45 percent passed by the legislature to 55 percent.
Instead of cash financing the Marquette Interchange, the project will be completed with $213 million in long-term bonding. The related debt service will increase the cost of the Marquette Interchange by over $150 million.
If the Marquette Interchange were an isolated project, bonding for a portion of the construction would make sense. However, the Marquette Interchange is only the first installment of the $6 billion, 25-year reconstruction of the southeastern Wisconsin Freeway system.
By raiding the Transportation Fund and bonding for the Marquette Interchange, the governor misses a golden opportunity to pay cash for an ongoing cost instead of using the credit card. More importantly, this scheme puts the state in a position where borrowing for the remaining cost of the southeastern freeway reconstruction becomes more likely, potentially adding billions to the cost of the project.
Wisconsin must not fall into the debt trap. In the 1990s, many states financed transportation reconstruction and expansion with debt. Now, the bill is coming due, and there isn’t enough money to service the debt and fund continuing operations.
Beginning in July 2006, New Jersey’s entire $805 million transportation trust fund for roads and bridges will have to be used to pay off loans that New Jersey lawmakers relied on in the 1990s to pay for transportation projects.
Meanwhile, the state’s transportation infrastructure is crumbling so rapidly that New Jersey will have to more than double its gas tax to raise the funds necessary for basic maintenance. New Jersey’s transportation nightmare could happen in Wisconsin if we don’t put away the credit card and maintain our commitment to sustained investment in transportation infrastructure that moves our economy.

Bob Cook is the executive Director of the Transportation Development Association of Wisconsin, an organization devoted to improving the state’s transportation systems. Many of its members are road contractors and vendors.

August 5, 2005, Small Business Times, Milwaukee, WI

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