Just Two Problems with Big Oil Tax
Opinion column by State Senator Dale Schultz
Transportation Fund Transfers |
|
2003-05 |
$675,000,000 |
2005-07 |
$430,800,000 |
2007-09 |
$155,000,000 |
2009-11 (proposed) |
$139,712,200 |
There’s an old joke about a football team with just two problems – its offense and its defense. Like that football team, the oil tax in the pending state budget has just two problems – it’s unenforceable and most likely unconstitutional.
No one I've spoke to on the issue is fooled into believing big oil companies would bear the cost of the tax. Laws of economics tell us the tax will be passed through to individuals at the gas pump. Even though the gas tax proposal contains "anti-pass-through" provisions, economists have concluded it unenforceable. Those same economists say even if the language worked, it could create an worse situation for consumers by increasing the cost of doing business here. As a result, fuel supply to our state would likely shrink and gas prices will rise.
If enacted, the oil tax will promptly involve the state in lengthy and costly litigation. Legal experts say the tax violates the commerce clause of the federal constitution. Losing in court would shut off the expected tax revenue and Wisconsin taxpayers could be asked to fill the couple hundred million dollar budget hole.
The oil tax particularly punishes cooperative members. The tax is based on an oil company’s revenue, not its profits. Agricultural coops across the state distributed over $36 million to their member owners in 2007-2008, according to the Cooperative Network. If enacted, the oil tax is likely to eliminate those revenue distributions, hurting the local economy in rural communities across Wisconsin.
The “Oil Franchise Fee” is symptomatic of our state’s transportation funding crisis which results from six years of misplaced priorities and bad budget practices. For example, a total of $1.2 billion has been diverted from the transportation trust fund and spent on non-transportation programs. No wonder there’s no trust left in that trust fund!
The consequence of our transportation funding crisis is that road projects are now regularly delayed from one to three years. While the benefit of a road project is immediate, we now shift the cost to the next generation with long-term borrowing debt. Plus, revenue taken from the transportation fund and spent on other programs has raised expectations for those programs because it sets spending at unsustainable levels. That increases the temptation to continue raiding the transportation and other special purpose funds. Case in point, the pending budget raids $140 million more from our transportation fund.
I want better priorities for Wisconsin. Foremost, I want a Wisconsin that lives within its means. As one step toward that goal, I am a co-author of a constitutional amendment to prevent a Wisconsin governor or legislature from transferring segregated transportation funds for non-transportation use.
Rather than causing a transportation funding crisis and disguising an added burden on motor fuel consumers and coop members, I call on the governor and legislature to redouble efforts to develop alternatives to imported petroleum fuels. Toward that goal, I will continue to champion home grown energy like biofuels, solar and wind that keep more dollars in the local economy and benefit our environment.