Frederica Freyberg:

From hunting season, we turn to road construction season. Earlier this week, the State Transportation Commission approved three projects totaling about $670 million. That money would fund road work on I-43 in Milwaukee and Ozaukee counties, a stretch of I-94 in St. Croix County, and a portion of Highway 50 in Kenosha County. This comes on the heels of recommendations by Wisconsin's Secretary of transportation, Mark Gottlieb, to boost taxes and fees by more than $750 million to help pay for road work. Secretary Gottlieb joins us this week. Thanks very much for doing so.

Mark Gottlieb:

Thanks for having me.

Frederica Freyberg:

Well, you know, it does occur to us that your budget recommendation has kind of taken hits from various people, including kind of anti-tax legislators, to environmentalists concerned about that $50 fee on hybrids and electric cars. Even tax expert, Todd Berry, suggested a couple of weeks ago here that maybe your budget is, trying too hard, that perhaps you should just go to the gas tax instead of all these other kinds of maneuvers, hikes in registration and fees, and call it a day. What’s your reaction to the idea of just using the gas tax?

Mark Gottlieb:

Well, I think we tried to put together a balanced approach. Just to look at it from a gas tax perspective, the Transportation Finance and Policy Commission, which made its recommendations in 2013 and upon which we based a lot of this budget, said that we needed to raise about an average of $680 million a year in new revenue in transportation to meet our needs. If you were to recover an entire amount like that through the gas tax, you would have a gas tax increase of over 20 cents per gallon and I think that would create a number of equity issues. I think people would not be happy with that. It would certainly potentially create border state issues, you know, with our retailers on the state border. So I think, frankly, we’ve reached the point where the problem is of such a magnitude that solving it from one source alone like that is no longer a practical option.

Frederica Freyberg:

One thing that Todd Berry suggested, seemed to suggest, was that there was potentially a lack of transparency with all of these kind of smaller, perhaps, increases in different fees, like a new car fee and that kind of thing.

Mark Gottlieb:

Well, I think we’ve been real open and transparent. Obviously, this was a submittal we made to the governor and he’ll have to put it in the context of his overall statewide priorities and introduce a budget bill to the legislature and the finance committee of the legislature will have to act on it. But I think we’ve been very upfront about how we’ve tried to really meet three goals with putting this plan together, and we've referred to those as adequacy, sustainability and equity. We think when you look at the package as a whole, we’ve accomplished that.

Frederica Freyberg:

Now, if the transportation fund is now kind of airtight against raids why do you need to take nearly $600 million from general purpose revenue?

Mark Gottlieb:

We will still continue to have a predominantly user fee-funded transportation system. And you're correct, the constitutional amendment did pass. But we believe there are still benefits from a safe and efficient transportation system that accrue to our economy as a whole and that accrue to people who are not necessarily user fee payers. They may not own a vehicle, they may not pay gas taxes, but yet their groceries get to the store somehow, their packages get delivered to their house. Our transportation system really does a lot to grow our economy, create jobs, help us be competitive. Those are broad-based benefits that we think is appropriate to use some of the general tax dollars that are actually created by that kind of growth. And I would point out to you that even after the proposal that we’ve made, we’re actually going to be receiving 16% of our revenues from general purpose funds. So we are still an overwhelmingly user fee-funded system.

Frederica Freyberg:

How loud are you sounding the alarm on the funding problems facing transportation in Wisconsin?

Mark Gottlieb:

We’ve done a lot of work on this. As I mentioned before, we had this bipartisan commission that was appointed by Democrats and Republicans, reported in 2013 unanimously that we had a significant shortfall, $6.8 billion over ten years. And we’ve done some modeling. If we don’t address this issue from the revenue side, what’s going to happen is we are going to see a deterioration in the condition of our highway system. We are going to see additional congestion and delay-related economic costs. And we will not be able to make some of the investments we have wanted to make in helping our local partners to improve their local road systems. We’ve heard that loud and clear that that's a need, improvements in public transit. And both of those, transit improvements and local road improvements, are a big parts of the investment package that we have in our budget.

Frederica Freyberg:

What would happen in the state of Wisconsin if we just didn’t expand highways, build new ones or repair old ones?

Mark Gottlieb:

Sure. You know, some people have argued that our problem stems from the fact that we spend too much money on system expansion and new highways. I’ll give you two facts about that. Over 85% of the money in our state highway program is spent on preservation and maintenance of our existing system, over 85%. And of the 15% that we do spend on expansion, we spend it on projects that are the highest priority, congestion relief needs, and that congestion has a cost to our state’s economy. We released a report just a few months ago that was called the Travel Time Reliability and Delay report. And it revealed basically two things. On our urban freeway systems, like where we’re doing expansions in the Milwaukee area, we have significant issues with travel time reliability for travelers. And on a statewide basis, looking at just the interstate system, user delay costs are over $225 million a year. That’s a hit to our state’s economy. It affects the efficiency of shippers, of our manufacturers in agriculture and tourism industry to be competitive. So we’re making expansion investments. But we're doing them in a targeted way where the benefits of congestion relief significantly exceed the costs to our system users.

Frederica Freyberg:

How do you respond to critics who say, I'm quoting now from the Capital Times, a hybrid tax is like raising taxes on ex-smokers because they’ve caused tobacco revenues to go down?

Mark Gottlieb:

Our transportation finance system has been and will continue to be a predominantly based, or the greatest source of revenue that we get, will be from motor fuel taxes. We want– Someday that may change, okay? There are other options out there for the long term. But for the short and intermediate term we are going to rely on motor fuel taxes. We want to keep those taxes as a viable source of funding. The fact is what we did with the hybrid tax proposal, we compared a– it was actually a Ford Fusion gas-powered to a Ford Fusion hybrid-powered vehicle, looked at the difference in gas taxes that they paid, just the taxes, and came up with that $50 a year number. The people that are driving those vehicles, that’s great for the environment, it’s great for their pocketbook, and we think that’s excellent. But the fact of the matter is they are using those fuel taxes that they’re not paying are what funds our system and plows it and lights it and maintains it and builds it. So we think that they ought to pay an equitable part of those costs. So we’re just asking to recover that tax difference. And so I say to a hybrid or electric vehicle owner, you’re still going to realize a lot of cost savings from your lower fuel costs and so forth. But what we want you to make up, really for us, is that tax increment that you’re not paying, because that is how the system that you rely on, that you drive your vehicle on, that’s how that system is built and maintained.

Frederica Freyberg:

We leave it there. Secretary Gottlieb, thanks very much.

Mark Gottlieb:

Thanks for having me.