Wisconsin Set to Consider Sales Tax to Fund Transportation Projects

Prior to the Elections on November 4th, Wisconsin Governor Scott Walker (Republican) indicated that he is considering replacing all or parts of the State’s gas tax with a sales tax on gasoline and alternative vehicle fuel purchases. Wisconsin has a flat State gas tax of 30.9 cents-per-gallon that has not been increased since 2006. Governor Walker has indicated that the transition to a sales tax would be a neutral conversion that would provide a more sustainable funding option for the State’s transportation projects.

Wisconsin is facing a $6.8 billion transportation funding shortfall over the next decade, and a $68-million shortfall for the State’s Department of Transportation for the 2015-2017 alone. Not only is Governor Walker a potential 2016 Republican Presidential hopeful, what happens in Wisconsin could play a major role in how Congress ultimately agrees on how to fund a multi-year transportation reauthorization bill, which expires in May 2015.

Surveys conducted by the American Road and Transportation Builders Association, the National Conference of State Legislatures and AASHTO's Center for Excellence in Project Finance have identified more than 30 states that have passed transportation-related fiscal initiatives in the past three years. The surveys show that state governments have become veritable laboratories for fiscal innovation. Six states have increased local fuel taxes (Maryland, Wyoming, Massachusetts, Vermont, New Hampshire, Maine). Others have introduced fuel taxes at the wholesale level (e.g., Pennyslvania, Virginia), floated toll revenue bonds (e.g., Ohio) or raised highway tolls (e.g., Delaware, Florida). Still others have enacted or contemplate enacting dedicated sales taxes for transportation (Arkansas, Vermont, Wisconsin, Minnesota).