Saturday, December 3rd, 2016

Ain’t gonna steal no more

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This week’s perspective piece for the MacIver Institute looks at the state budget and the changes in the way transportation is funded. The good news is that the state will finally stop raiding the transportation fund for other priorities.

When Walker unveiled his proposed biennial state budget on Tuesday, he kept his campaign promise of ending the raids on segregated funds. Raiding segregated funds is never a good idea, as the state learned the hard way when Wisconsin’s Supreme Court ordered the state to pay back the $200 million it had taken out of the medical malpractice fund in 2007.

To keep Walker’s promise, the state budget proposed on Tuesday does not take money from the state’s transportation fund to use as general purpose revenue. Under Walker’s predecessor Jim Doyle, the state transportation fund was raided for nearly $1.3 billion over eight years.

To make up for the shortfall, the state would allow the transportation fund to borrow money. In the last Doyle budget, the state authorized bonding of $1.34 billion.

This borrowing by the transportation fund allowed the state to get around the prohibition on the state borrowing for general fund expenditures. Instead of borrowing directly for ongoing operating costs, the money was essentially laundered through the transportation fund.

As Waukesha County Executive Dan Vrakas pointed out in an interview last year, taking money out of the transportation fund increases the sense of distrust by taxpayers who expect that revenue generated via gas taxes and license fees to actually be used for the intended purpose.

Aside from the dishonest nature of using the transportation fund to do backdoor borrowing for the state’s general fund, it also contributed to the state’s failure to address the structural deficit. As long as there was a short-term source of money, the spending spree could continue.

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