Here & Now

Kooyenga Explains GOP Transportation Plan

Frederica Freyberg:

A first look tonight at an Assembly Republican plan to fund Wisconsin roads. The majority-lead Joint Finance Committee rejected Governor Scott Walker’s budget plans for transportation to fashion its own. Tonight Joint Finance Committee member Republican Representative Dale Kooyenga walks us through his multi-pronged funding proposal. He joins us by phone. Thank you for doing so.

Dale Kooyenga:

Thank you for having me. Appreciate it.

Frederica Freyberg:

Take us through what your transportation package does?

Dale Kooyenga:

Well I think Wisconsin has some improvements to be made in both our transportation and income tax codes. It’s one of the few problems that we’ve not made significant progress on in the last couple years. And so what we’re proposing is Wisconsin is actually of the 50 states has the most generous law in place for gas stations called the minimum mark-up law. We’re only one of two states that actually specifically say this is what your gross margin has to be on the sale of gas and that adds up to 9.2% approximately. What we’re saying is, in a pragmatic fashion, is let’s lower that mark-up from 9.2% to 3%. This will save hundreds of millions of dollars for people at the pump. And I have gas station owners actually who have gas stations in Wisconsin and Michigan who testify that would be a penny for penny reduction in the price of gas. And then what we do is we apply the sales tax to gas. Sales tax applies to most things you purchase but for some reason it does not apply to gas. While we’re lowering the price pressure at the pump by doing some business reforms, what we’re doing is applying the sales tax and then what we do is we have enough money left over to actually do two things. What we’re going to do is lower Wisconsin's gas tax and we’re going to lower the amount of bonding we do for our roads. The amount of bonding for roads is reaching unhealthy levels which will put significant pressure on the transportation fund going forward. And the Assembly Republican position is that we’d rather have money spent for concrete and labor to improve our roads than paying in interest to bond holders. While we’re doing that we’re doing a lot of different reforms to make sure the state runs more efficiently. And also doing income tax reforms which are going to lower income tax to a single rate in Wisconsin of 3.95%. Everybody will see a reduction. But what we’re doing is we’re paying for that by one, simplifying the code and by two, taking a portion, a portion that’s less than inflation in future growth and using that to make sure that government does not grow at a rate faster than inflation and putting that towards relief for Wisconsin taxpayers.

Frederica Freyberg:

So on that flat tax that is part of this whole transportation plan, how is that related to road funding?

Dale Kooyenga:

What we’re looking at is the tax mix in Wisconsin. And what’s happening right now is the transportation fund is being supported by the general fund. This is the opposite of what used to happen. The transportation fund was being used to fund the general fund and now the general fund is being used to fund the transportation fund. And what that does is puts significant pressure going forward on our schools. It puts significant pressure going forward on more debt and other cost. On our income tax code. And so when we actually propose is a transportation solution, what that does in the general fund is it frees up money. And with that freed-up money what we’re doing is income tax cuts. We believe Wisconsin is a high-tax state. When we’re looking at the right revenue mix between transportation fund and our general fund needs, that’s the tax reform that comes in to take a comprehensive look at all the money going into the state and where that money should be directed.

Frederica Freyberg:

Tell me if I'm right on this when all is said and done with package, transportation and flat tax, you’d increase revenue by about $300 million over two years. How far does this go to fill that billion-dollar shortfall and find that long term, sustainable source for funding of Wisconsin highways?

Dale Kooyenga:

Yeah, I think you have to look at it over the long term and it’s $300 million in this biannual. And then you have to look going forward. And so if you’re looking at the one-time cost of infrastructure, you’re looking about billions of dollars over the next decade. And we have the billions come in and you’re also looking at actual revenue now that you can leverage. You’re still going to have to use some bonding. I think you’re looking at a position where you say, hey, we’re reaching a reasonable point where we could actually pay to make sure we have 21st century infrastructure.

Frederica Freyberg:

We'll be watching this as it goes forward. Thanks very much.

Dale Kooyenga:

Thank you.