Who pays for roads in Wisconsin?

Transportation is one of the biggest-ticket items for state and local government. The cost is high, and so is misunderstanding of who pays for what. Taxpayers cover costs that should be borne by road users. Road subsidies push up tax rates, squeeze government services, and skew the market for transportation.

MYTH
Roads in Wisconsin pay for themselves through user fees: gas tax, tolls, and licensing.
The Wisconsin road lobby likes to pretend that users pay the cost of roads in Wisconsin: Wisconsin has a history of funding its transportation system by charging the users of that system, the road lobbys Finding Forward coalition declares.

MYTH
Roads are being short-changed by diversion of user fees.
The highway lobby wants a state constitutional amendment devoting road-user fees for transportation. The governor has gone further, with a proposal to even bar these revenues from funding transportation via public transit.

FACT
Roads in Wisconsin are heavily subsidized by taxpayers.
What the lobby and others espousing this view dont emphasize is that this statement only applies to the 10 percent of the road network made up of state-owned highways. The full picture is much different. Between 2004 and 2008, roads in the state cost an average of $4.24 billion annually. Of this, $1.74 billion came from revenue sources unrelated to road useprimarily property and sales taxeswhile another $600 million was borrowed. So, even counting federal aid as user-basedwhich is generally but not always truebetween 41 and 55 percent of road money, depending on how borrowing is repaid, comes from non-users.

FACT
The cash flowing into roads from taxpayers far outweighs user-based proceeds going to non-roads.
Each year roads consume $779 per Wisconsin household in non-user taxes. The comparable figures for user fees "diverted" to transit and other uses is $50 and $34, respectively. Wisconsin could fully fund its roads by raising the gas tax by about 50 cents per gallon, or by imposing highway tolls, turning over more gas tax money to local government. Regardless of new revenues, the state could cut costs for highways by reining in expensive new projects. The fact is, until we cut costs or raise feesor boththe big diversion is from taxpayers to roads, not the other way around.

The fact is, roads constitute one of the biggest tax burdens we face.

Transportation Revenues and Expenditures

REVENUE

User-Revenue1,5 Non-User Revenue2,6 Federal

3,7 4,8

FY 2004-2008

STATE
$7,380,886,691 $536,292,215 $3,099,231,000 $984,701,000 $12,001,110,906

LOCAL
$2,847,000 $8,175,340,000 $2,484,000 $2,033,549,000 $10,214,220,000

Borrowing TOTAL

INTERGOVERNMENTAL TRANSFERS

Transfers of State Highway-user Fee Revenue to Local Governments9 Transfers of State Non-User Revenue to Local Governements10 Transfers of Local Government Revenue to State Government11 Net transfer from the State to Local Governments $542,033,000 $1,719,862,000

STATE

LOCAL
$2,061,566,000 $200,329,000

DISBURSEMENTS

Capital Expenditures12,20 Maintenance and Services13,21 Other Services

14,22 15,23 16

STATE
$5,824,698,000 $933,478,000 $1,160,115,000 $421,197,000 $380,098,691 $562,073,000 $428,549,000
19,24

LOCAL
$3,547,043,000 $3,116,802,000 $3,276,606,000 $464,555,000 $1,533,392,000 $11,938,398,000

Interest Payments

Collection of User Revenue

Contributions to Mass Transit17 General

18

Bond Retirement TOTAL

FOOTNOTES
1 2

$456,793,000 $10,167,001,691

All fuel tax, motor vehicle tax, motor carrier tax, and toll revenue collected by the state. Source: Table SDF, Disposition of State Highway-User Revenue, FHWA. Adjusted based on discussion with WisDOT.

Revenue identified as coming from the state's general fund, from other state taxes and fees, or from miscellaneous sources. Source: Table SF-1, Revenues Used by States for Highways, FHWA. 2008 miscellaneous revenues for highways was adjusted downward from $240 million to $102 million based on data from the Wisconsin Department of Transportation. Funds from the FHWA and other Federal agencies provided to the state for highways. The vast majority of these funds are generated through the federal fuel tax. Source: Table SF-1, Revenues Used by States for Highways, FHWA. Revenue from original bond issues. Bonds issued for and retired by refunding are excluded. Source: Table SF-1, Revenues Used by States for Highways, FHWA. Highway-user fee revenues from local fuel taxes and tolls. Source: Table LDF, Disposition of Local Government Receipts from State and Local Highway-User Revenues, FHWA.

3 4 5 6

Revenue from local property taxes, special assessments, other taxes and fees, miscellaneous sources, and general fund appropriations. Sources: Table LGF-1, Revenues Used by Local Governments for Highways, and Table LGF-21, Revenues Used by Local Governments for Highways-Summary, FHWA. Funds from the FHWA and other Federal agencies provided to local governments for highways. Sources: Table LGF-1, Revenues Used by Local Governments for Highways, and Table LGF-21, Revenues Used by Local Governments for Highways-Summary, FHWA. Revenue from bond issues. Bonds issued for and retired by refunding are excluded. Sources: Table LGF-1, Revenues Used by Local Governments for Highways, and Table LGF-21, Revenues Used by Local Governments for HighwaysSummary, FHWA. State highway-user fee revenues distributed to local governments. Sources: Table LGF-1, Revenues Used By Local Governments for Highways, and Table LGF-21, Revenues Used by Local Governments for Highways-Summary, FHWA. Non-user fee revenues transferred to local governments. Source: Table LDF, Disposition of Local Government Receipts From State and Local Highway-User Revenues, FHWA. Revenue derived from local shares on state and local system projects constructed by WisDOT. Source: Table SF-1, Revenues Used By States for Highways, FHWA. Total capital expenditures by the state for state highways and local roads and streets. Source: Table SF-2, State Disbursements for Highways, FHWA. Total expenditures for maintenance as well as services, such as lawn mowing and snow removal, by the state. Source: Table SF-2, State Disbursements for Highways, FHWA. Administration, research, planning, law enforcement, and safety. Source: Table SF-2, State Disbursements for Highways, FHWA. Interest paid on bonds issued. Source: Table SF-2, State Disbursements for Highways, FHWA. State user fee revenues used for user fee collection. Source: Table SDF, Disposition of State Highway-User Revenue, FHWA. Adjusted based on discussion with Wisconsin Department of Transportation. State user fee revenues used for mass transit purposes. Source: Table SDF, Disposition of State Highway-User Revenue, FHWA. User fee revenues allocated for uses other than transportation. Source: Table SDF, Disposition of State Highway-User Revenue, FHWA. Current revenues or sinking funds for bond retirement. Bond refunding excluded. Source: Table SF-2, State Disbursements for Highways, FHWA. Total capital expenditures by local governments for roadways. Source: Table LGF-2, Local Government Disbursements for Highways, FHWA. Total roadway maintenance expenditures by local governments. Source: Table LGF-2, Local Government Disbursements for Highways, FHWA. Interest paid on bonds issued. Source: Table LGF-2, Local Government Disbursements for Highways, FHWA. Law enforcement, snow removal, administration, safety, miscellaneous, and other services. Source: Table LGF-2, Local Government Disbursements for Highways, FHWA. Current revenues or sinking funds for bond retirement. Bond refunding excluded. Source: Table LGF-2, State Disbursements for Highways, FHWA.

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

ResearchbyStateSmartTransportationInitiative,UniversityofWisconsinMadison, for1000FriendsofWisconsin.