Effort to end Wisconsin's fuel tax indexing advances

| 12/8/2005

The Wisconsin Senate has voted to end the state’s automatic fuel tax indexing formula that was adopted two decades ago.

Senators voted 20-13 Tuesday, Dec. 6, to end the automatic increases and require lawmakers to annually vote on any tax changes. The bill now heads to the Assembly where it is expected to gain approval.

The automatic increase in the tax has been adjusted for inflation on April 1 each year since 1985. This year, the tax increased 0.8 cents a gallon.

In the 20 years since the automatic indexing was implemented, fuel taxes have risen from 19.5 cents per gallon to 32.9 cents. The non-partisan Legislative Fiscal Bureau estimates the latest increase will cost taxpayers an additional $366 million this year alone.

With the new tax rate, Wisconsin claims the highest average fuel tax in the nation. Revenue from the tax, which is almost 14 cents per gallon higher than the national average, is primarily used to build roads.

Sponsored by Sen. Tom Reynolds, R-West Allis, the bill would permit one more automatic increase in April 2006 before implementing the new restriction.

The bill – SB331 – also would move up by one month a penny cut in the portion of the tax that is used to replace leaking underground fuel tanks.

In addition, it would protect the transportation fund from future attempts to use money earmarked for roads to fund other state programs.

“For too long the transportation fund has been used as a slush fund to pay for other state programs. Our action today will help put an end to that problem,” Sen. Scott Fitzgerald, R-Juneau, said in a written statement.

The office of Democratic Gov. Jim Doyle was non-committal about the governor’s stance, telling the Milwaukee Journal Sentinel he would review the bill if it makes it to his desk.

Doyle previously has said he wants to stay away from any effort that would cut into the state’s ability to generate revenue for roads.