Scott Walker will be delivering his third State of the State address tonight at 7pm. Infrastructure is among the five priorities he has been highlighting during the run-up to releasing the budget next month. With his focus on jobs, Scott Walker should be engaged in a thoughtful fact-driven process to determine the mix of infrastructure spending best promotes the creation of jobs in the state. Unfortunately, the trial balloons Scott Walker has been floating since October suggest we may be on the on-ramp to superhighway socialism.
The History
Why does Wisconsin have a department of transportation? To promote commerce in Wisconsin. That means WISDOT spending should be targeted at promoting commerce within the state. If programs do not promote commerce, they should be cut. Due to how we have chosen to fund WISDOT via a gas tax, a certain amount of spending outside the core purpose is necessary to obtain the political support required to operate.
New Realities
But we have two problems. First, the amount of gas tax revenue collected is not enough fund the planned projects in the state. Second, the return on investment in highways, once very good in the 1950’s, is now crossing below leaving the money in the private sector. The general response to a budget shortfall is to look for areas to cut and ways to increase funding. Unfortunately, the Governor has only addressed the funding side of the equation. What is missing is a serious look at reforming the project enumeration process to ensure the return justifies taking money out of the private sector.
Based on the trial balloons the Governor has floated, the most likely scenario to play out during tonight’s speech will be a promise to fund the largest highway expansion projects in the state and avoid any delay in construction. On the funding side, the only option the Governor seems to favor is dipping into General Purpose Revenue to fund those expansions. The Governor’s argument for subsidizing highway expansions is likely to involve repaying money “raided” from the transportation fund during Jim Doyle’s term as Governor.
While replenishing “raided” money makes sense on a basic fairness level, it does not make sense on the job creation level. Remember, the return on highway investments is dropping below the return of leaving the money in the private sector. If your mandate as Governor is to create jobs, fairness needs to take a back seat to ensuring the highest and best use of the taxpayer’s money. And that means leaving the money in the private sector instead of funding projects that don’t produce a better return on investment than the private sector.
So if the Governor is going to propose increasing funding in order to complete major highway expansion projects, we the people need to make him prove the return on investment justifies the additional expenditure. That proof needs to go well beyond WISDOT’s simplistic time savings and safety benefit analysis in a corridor, and instead look to how projects impact the state as a whole. For example : It does us no good to expand a highway to attract 200$ mil in benefits along a corridor if the project kills off $300 mil of economic activity elsewhere in the state.
Will it be superhighway socialism based on fairness, or will it be a budget based on creating jobs? Tune in to the Governor’s State of the State speech tonight at 7pm to find out!
