If you read the news today, you may know about a so-called “$700 million transportation shortfall” that Scott Walker talked about at an economic development conference in Janesville on Tuesday. Yes, WISDOT has plans to spend $700 million more than is projected to come in from gasoline taxes in the next two years. Typically when Republicans talk about a gap between program costs and revenue, they look at the benefits of the project and check to see where they can make cuts before resorting to raising taxes. Unfortunately it seems as if Scott Walker is too wrapped up in supporting his big donors that benefit from highway expansion to spend time analyzing the return on investment of those projects.
So what do the studies say? A study produced by the Transportation Development Association of Wisconsin suggests that for every $1 spent beyond basic maintenance, $3 in benefits accrue to the people of Wisconsin. Sounds good enough for Scott Walker to run on as a great way to help the economy, right? Well there is a catch: That 300% return accrues over 20 years, which averages out to about 5% a year. Now if that money was left in the private sector, it would double in 5 years (using the current 5-year performance of the DOW industrial average as a guide), which works out to a return of about 14% per year, or a 20-year return of $16 for every $1 invested. So basically, Scott Walker’s plan to grow Wisconsin’s economy with highway expansion will cost the Wisconsin Economy $13 for every $1 spent on highways.
So as Scott Walker tours the state preparing to sell taxpayers on the idea of a sales tax on gasoline to fund highway expansions, remember that $700 million times 13 is $9.1 billion (per biennium!) in lost economic opportunity for the people of Wisconsin.
But wait, there is more! Rumors are circulating in the transportation industry that the Doyle Administration low-balled the cost estimates of the I39/90 expansion project (that is now underway) in order to get the project enumerated. If these rumors are true, you can expect a significant upward revision in the “shortfall”, which you can then multiply by 13 to determine how much Wisconsin’s economy will suffer as a result!
It’s Working!
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