A Message from President Mike Theo: Needs vs. Wants

 Mike Theo  |    April 06, 2016

A lot of budgeting involves deciding what you need versus what you want. This is true whether the budget is personal, business or government. When it comes to government budgets, not all spending is absolutely necessary. That’s probably painfully obvious. But some government spending is truly necessary. Investing in critical infrastructure is one such necessity.

On March 2, over 300 REALTORS¬ģ came to Madison for our annual REALTOR¬ģ & Government Day. Attendees invested a day of their busy schedules to meet with their state lawmakers and discuss key public policy issues that impact Wisconsin‚Äôs real estate industry. One issue they covered was investing in our transportation infrastructure.

Why, you might ask, would REALTORS¬ģ be talking to lawmakers about investing ‚ÄĒ which is spending taxpayers‚Äô dollars ‚ÄĒ on transportation? Good question. For starters, the WRA‚Äôs strategic plan includes a directive for us to take a leadership role in making Wisconsin‚Äôs economy prosper. Wisconsin‚Äôs real estate market cannot be strong with a weak statewide economy ‚ÄĒ and vice versa. And Wisconsin‚Äôs economy cannot be strong without a modern, viable transportation system. Our message to lawmakers was clear: the WRA supports an adequate and permanent increase in funding for transportation projects to maintain existing infrastructure and provide new highways, roads, airports, railroads, public transit, bike paths and bridges that support our state‚Äôs economic development and quality of life. These are necessities for economic and real estate prosperity in Wisconsin. And while we have yet to endorse a specific funding source or sources, we told legislators of both parties that we are willing to work with them and other stakeholders in finding an appropriate funding solution in the next state budget.

As we explained in our Government Day materials, the need for improved transportation infrastructure is real. Wisconsin’s economic future and the safety of its residents and visitors depends on a high-quality transportation network that can efficiently move people to jobs, raw materials to factories, finished products to markets, and tourists to their destinations. But our transportation systems and networks are getting older and more congested. Our people are getting older too and are becoming increasingly more dependent on public transportation. As a state, we need to recognize this need and fund solutions.

But funding is a big problem. We rely heavily on the gas tax and vehicle registration fees to fund our transportation infrastructure ‚ÄĒ outdated funding models that do not address current or future demands. Gas tax revenues have actually decreased because of two reasons: gas tax indexing was eliminated in 2006 and vehicles have become more fuel-efficient.

Faced with increasing needs and stagnant funds, the legislature has borrowed the money for transportation infrastructure through bonding. In fact, the entire state budget last summer came to a grinding stop for weeks over this question of taxing versus borrowing for transportation. While some bonding for roads and other transportation needs makes some sense, given the long-term nature of transportation projects, payments for debt service on those bonds are consuming far too large a percentage of our transportation funding. 

So what’s the fix? A 2014 report from the Wisconsin Transportation Finance and Policy Commission proposed the following possible funding sources: 

  • Raise the state gas tax by 5 cents a gallon and index it to inflation.
  • Adopt a new mileage-based registration fee for cars and light trucks.
  • Increase the annual vehicle registration fee for commercial vehicles by 73 percent.
  • Increase the fees for an eight-year drivers‚Äô license by $20.
  • Eliminate the sales tax exemption for the trade-in value of a vehicle.¬†

The commission also recommended encouraging the federal government to allow states more flexibility in creating toll roads on the national highway system.

It‚Äôs unclear how these critical issues will be resolved, but resolve them we must. Not all government spending is investing, but all investing does require spending. The next state budget will have to spend more on our critical transportation infrastructure. It is a need ‚ÄĒ not a want ‚ÄĒ and the WRA should support this effort.

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