Wisconsin Budget in Limbo

The completion of the 2017-19 Wisconsin biennial budget remains in limbo. The new fiscal year started on July 1, and with no new budget, the state continues to operate under last fiscal year’s budget. The Joint Committee on Finance (JFC) last met on June 15, and has not set another meeting date to take up the final issue sets in the budget – including three big items: K-12 education, taxes and transportation.

After several weeks of bottleneck, transportation appears to be the outstanding sticking point. This comes as no surprise, as the Senate has remained closely aligned to the governor’s position of no tax or fee increases, while the Assembly has strongly pushed back on the bonding levels in the governor’s budget ($500 million) and prefers new revenues.

On Thursday July 6, Governor Walker offered a proposal to break the budget impasse. He outlined a proposal that lowers bonding by $200 million to $300 million, to appease Assembly Republicans, and includes contingency bonding for the Southeast Freeway Megaproject, if there is additional federal funds for the mega projects. He states this component “is a win for Senate leadership.” Lastly, he urges a transportation budget without a gas tax or vehicle fee increase, but that still funds local roads and bridges, safety and maintenance and highway rehabilitation.

The legislative response to the governor’s proposal was lukewarm. The Senate Majority Leader commented to the press that the megaprojects were a key piece to moving the budget through the Senate. Assembly Republican leadership called this move a “positive step,” but reiterated their position that transportation revenue increases are needed to keep projects on track.

The governor’s transportation compromise proposal comes after a ton-per-mile heavy-truck tax emerged last week as an option to break the budget stalemate. Assembly Republicans pitched the new tax as a way to bridge the transportation budget gap.

Soon after the option was floated, a broad swath of the Wisconsin business community (including motor carriers, grocers, retailers and manufacturers) came out against it. In response to the group’s memo opposing the heavy-truck tax, Assembly leadership sent a letter back, publicly requesting the various opposing groups to provide ideas to address transportation funding.

On the Friday before the Fourth of July week, five Senate Republicans issued a statement opposing the ton-per-mile heavy-truck tax, essentially eliminating the prospects for the heavy-truck tax proposal going forward.

The public back-and-forth between the Assembly, Senate and governor, with outside groups weighing in, continues on an almost daily basis. On Friday July 7, Wisconsin Manufacturers and Commerce, one of the groups opposing the ton-per-mile heavy-truck tax, answered Assembly leadership’s request and provided a list of transportation savings measures, and revenue enhancement measures, while noting that the revenue uppers are “not politically viable in this budget cycle.”

It is hard to predict how and when the budget will be resolved. But with each passing day into the new fiscal year, the urgency for a new budget increases.