Wisconsin governor signs bill ending fuel tax indexing

| Tuesday, January 03, 2006

Gov. Jim Doyle signed a bill into law Dec. 22, 2005, ending Wisconsin’s automatic indexing formula of the fuel tax adopted two decades ago.

But, Doyle said lawmakers might have to raise vehicle registration fees to compensate for the drop in funding for the state’s roads and bridges.

The Republican-led Legislature voted in early December 2005 to end the automatic increases and require lawmakers to annually vote on any tax changes.

The automatic increase in the tax has been adjusted for inflation on April 1 each year since 1985. In 2005, the tax increased 0.8 cents a gallon.

In the 20 years since the automatic indexing was implemented, fuel taxes have increased 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.

Cutting off the annual increase would cost the state $5.1 million in the current two-year budget that ends in mid-2007, The Associated Press reported. The tax hit will increase to $75 million by mid-2009.

The Democratic governor said he did not believe ending the automatic increase would lead to a slowdown in transportation projects.

Wisconsin has 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 used primarily to build roads.

Sponsored by Sen. Tom Reynolds, R-West Allis, the law permits one more automatic increase in April before implementing the new restriction.

The new law, previously SB331, also moves up by one month a May 1 penny cut in the portion of the tax that is used to replace leaking underground fuel tanks.

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

Doyle previously had expressed some reservations about the bill, noting the $5.1 million that would come out of the transportation budget. However, he said lawmakers would now have to make the tough decisions on how to fund the state’s roads and bridges.

His Republican opponents in this year’s gubernatorial election – Milwaukee County Executive Scott Walker and U.S. Rep. Mark Green – support the repeal of the automatic fuel tax increase.

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