Governor Walker (R) is requesting to borrow about $1.3 billion for transportation over the next two years. A look at borrowing authorizations in past budgets puts this figure in perspective.
Total bonding authorizations increased significantly over the past 15 years for several reasons. First, the state borrowed $1.6 billion against the proceeds of a late-1990s tobacco industry legal settlement, and used the funds to balance the state budget. Second, it borrowed $750 million to pay off unfunded pension and sick leave liabilities. Third, lawmakers used money from the transportation fund to balance the state’s general fund and then funded transportation projects with additional borrowing. The chart below shows bonding authorizations from 1997-99 through 2013-15. Total borrowing under the governor’s proposed budget is not yet known.
Traditionally, borrowing for transportation was done with revenue bonds—bonds that were paid off transportation fund revenues. That changed in 2003-05 when the state began to raid the transportation fund to balance general fund budgets. Additional general obligation (GO) debt was used to replace the money taken (see chart below). For example, during 2003-05, $867 million in GO debt was authorized for transportation, bringing total transportation borrowing to $1.2 billion, up from $305 million in 2001-03. In 2009-11, $925 million in GO bonds were authorized for transportation, bringing total transportation borrowing to $1.3 billion. The governor proposes to borrow this same amount over the next two years.
Large amounts of transportation borrowing are taking their toll on the state’s transportation fund. Gas taxes and vehicle registration fees are rising only slightly. But increased borrowing bring great debt service payments. During 1999-2003, debt service claimed less than 7.5% of transportation fund revenues. In 2013, that figure was 16.8%.