Wisconsin state budget approved, minus oil company tax

| 7/2/2009

An effort to attach a first-of-its-kind tax on big oil companies in the Wisconsin two-year budget has been quashed.

The result was welcome news for the Owner-Operator Independent Drivers Association. The Association was quick to act in opposition to the effort several weeks ago because of concern about the effect it could have on pump prices.

The Assembly passed the budget, without the oil tax, on a 51-46 vote Friday, June 26. That followed a 17-15 Senate vote earlier in the day for the same package. The budget – AB75 – was then forwarded to Gov. Jim Doyle’s desk where he signed it Monday, June 29.

Budget negotiators working to hammer out a deal on the state’s 2009-2011 budget removed the oil company tax in hopes of ensuring legislative approval in time for the start of the new fiscal year, which began Wednesday, July 1.

At the urging of Gov. Jim Doyle, the Legislature’s Budget Committee previously added the provision to apply a franchise fee on oil companies doing business in the state. The projected $260 million in revenue the fee would generate during the next two years was pegged for roads.

Advocates said the oil company tax also would help the state cope with a projected $6.6 billion budget shortfall.

The tax is a percentage based on revenues of the oil companies. Companies would have been prohibited from passing the tax along, but even supporters weren’t sure whether that could be enforced.

Critics, of whom there were many, were also concerned about the proposal’s legality. Others said the state would have to fork over millions fighting for it in court.

OOIDA issued a Call to Action to its Wisconsin members in early June urging opposition to the franchise fee. The Association had concerns about the tax being passed along by the oil companies to consumers. At $2.50 per gallon, OOIDA pointed out the tax would add more than 6 cents to the state’s 32.9-cent-per-gallon tax on diesel and gas. If prices continue to increase, the per-gallon tax would only climb higher.

Among the provisions that did make it into the budget is a measure that puts the state in line to get $15 million in federal funds for permitting police to pull over drivers solely for not buckling up.

In addition, Wisconsin drivers will be required to have liability insurance beginning in a year. Currently, Wisconsin and New Hampshire are the only two states that don’t have the mandate.

To view other legislative activities of interest for Wisconsin in 2009, click here.

– By Keith Goble, state legislative editor

Editor’s Note: Please share your thoughts with us about the legislation included in this story. Comments may be sent to statelegislativedesk@ooida.com.