How to pay for roads? It’s a question states across the country are struggling with, including in Wisconsin. While some Republicans are pushing for all revenue options to be on the table, Governor Walker has said he will not raise taxes, including the gas tax, unless there’s a corresponding decline somewhere else in the budget.
Thursday, some members of the GOP may unveil a new transportation funding scheme. It involves placing a sales tax on gasoline, flattening the income tax and moving away from the state’s Great Depression-era minimum mark-up law.
Every time you purchase a gallon of gas in Wisconsin, the state collects 32.9 cents per gallon. That tax hasn’t budged since 2006, and according to the National Council on State Legislatures, Wisconsin’s gas tax makes up about 60 percent of the transportation budget. Kevin Pula is a policy specialist with the council.
“The gasoline tax is viewed by many as a dying revenue source,” Pula says.
Dying, because of more fuel efficient cars, and in the future, electric cars would only increase the impact. So Pula says states have been enacting a variety of plans to try to raise the money they need to pay for their roads.
Here in Wisconsin, the plan a few Republicans are now putting forward would be a significant change, according to Todd Berry with the Wisconsin Taxpayers Alliance.
“The proposal takes the sales tax, which is 5 percent statewide, and applies it to motor fuel. Motor fuel is currently exempt from the sales tax,” Berry says.
Berry says the GOP plan would then cut the gas tax and lower the amount of money retailers must mark-up their prices.
“Those two other elements have the effect of being able to absorb the sales tax increase so that consumers, more or less, may not see the effect in their gas prices that they pay at the pump,” Berry says.
So how would Wisconsin then collect more money for transportation?
Berry says that by applying the sales tax to fuel, when the price of gas goes up – people would pay more in sales taxes. He calls it a backhanded way to index the gas tax to inflation, which the state used to do about a decade and a half ago.
“This is a lot of hoop jumping to apparently bring along some legislators and the governor to some sort of transportation finance fix that would do more than just kick the can down the road, which we’ve been doing for, 20 years,” Berry says.
Berry says Wisconsin’s gas tax and vehicle registration fees have not been reliable sources of revenue for years, and the problem will only worsen, if the state doesn’t come up with a new plan.
Money from the transportation fund pays for state road and freeway projects and is given to municipalities to maintain their streets.