Transportation secretary defends $1.3 billion in road bonding in Gov. Walker's budget

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MADISON, Wisconsin — Wisconsin's top transportation official defended Gov. Scott Walker's plan to borrow $1.3 billion for road work in front of skeptical members of the Legislature's budget committee Wednesday, insisting the projects will outlive the payments by decades.

Walker's fellow Republicans have bristled at the plan. Joint Finance Committee members from both parties challenged state Department of Transportation Secretary Mark Gottlieb to justify the strategy and come up with a sustainable long-term solution for building roads during a hearing.

"We are in a crisis," said Sen. Luther Olsen, R-Ripon. "We are getting ourselves in a corner where we won't be able to afford anything. We will be paying for projects that are already done. As much as we don't like raising revenue, when we have an asset in the state of Wisconsin that is so important ... we have to man up and woman up and say we have to deal with this."

Gottlieb said the bonding plan is necessary because Walker doesn't want to raise the gas tax and vehicle registration fees. Interest rates on bonding are favorable right now and total borrowing in Walker's 2015-17 budget proposal is down from previous budgets, he said. Roads will keep deteriorating under Walker's plan, Gottlieb acknowledged, but if legislators reduce the borrowing they'll fall apart even faster, leading to higher costs in the future.

He added that many of the projects the borrowing would fund should last 50 years, easily outlasting the loans' terms.

"The budget does make the investment we need to make to keep projects on schedule and continue rehabilitation," Gottlieb said.

Wisconsin lawmakers have been grappling with how to fund road construction and repairs for the last several years. Currently, a transportation account built with gas taxes and vehicle registration fees covers road work. But more drivers have turned to fuel-efficient vehicles and the gas tax has stood at 30.9 cents per gallon since 2006, resulting in dwindling revenue as construction costs rise.

Walker has supplemented the transportation account with transfers from the state's general fund and increased bonding in his last two budgets.

In November, Gottlieb asked Walker for an additional $751 million generated through a higher gas tax and new fees on hybrid and electric vehicle drivers. The governor, who is mulling a 2016 presidential bid and doesn't want to face criticism for raising taxes, rejected those ideas and instead included the $1.3 billion borrowing figure in his 2015-17 budget proposal.

Finance committee co-chairman Rep. John Nygren, R-Marinette, asked Gottlieb during the hearing to estimate what the roads programs would look like if the borrowing was scaled back by $500 million, signaling the committee may revise the governor's proposal. He also mused about how to pull more money from out-of-state travelers to help fund roads.

Gottlieb said DOT would keep plans to finish the Interstate 94 Zoo Interchange in Milwaukee by 2017 but other major projects would be delayed by one to two years. As for generating more money from visitors, he said the only mechanism that exists now is the gas tax.

Rep. Chris Taylor, D-Madison, questioned why Walker's budget calls for borrowing more than a billion dollars for roads but freezes borrowing for buying state land for conservation.

"I just don't know how we can continue to justify bonding," she said. "We want to look at solution-oriented issues to address this problem long-term. What are we supposed to say to people who ask us why we continue to borrow and put this problem off for our kids to deal with?"

Gottlieb responded that Walker didn't want to raise taxes or fees.

"As distasteful as you might think it is," Gottlieb said, "it would be a worse outcome in the long-term to cut the highway program and not do the bonding."

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