Lawmakers Pave Way for Wisc. Tax Relief

Published February 1, 2006

Late-year legislative sessions often result in less-than-pleasant surprises for taxpayers, but recently in Wisconsin the outcome was pleasantly surprising. Both chambers of the state legislature voted in December to end automatic yearly increases in the gasoline excise tax, and Gov. Jim Doyle (D) signed the bill into law.

Due to a formula established in 1985, Wisconsin motorists have seen their state tax on fuel indexed upwards for inflation every April 1. The annual increase has cost Wisconsin residents $3.2 billion in additional taxes over the past 20 years.

Discontent with the arrangement spurred state Sen. Tom Reynolds (R-West Allis) to sponsor a bill (SB 331) to put a stop to the automatic yearly increases, starting in April 2007. Taxpayers will save a projected $5.1 million over the current two-year budget (July 1, 2005 through June 30, 2007) and another $75.1 million over the next two-year budget.

At 29.1 cents per gallon, the state gas tax burden on Wisconsin motorists is third-highest in the nation, according to the Federation of Tax Administrators. Combined with the 18.4 cents-per-gallon federal gas tax, Wisconsin residents pay about $7.12 in taxes on a 15-gallon fill-up.

Avoided Tax Votes

While most states require elected officials to vote on proposed tax increases, Wisconsin law allows its legislators to spend increased revenues without having to face the political consequences of voting for higher taxes.

“It has always bothered me that we here in Wisconsin have a tax that goes up automatically with no one having to vote on it,” said Reynolds. “This is a black and white issue. Should an automatic tax increase be on the books without a recorded vote or not?”

Despite stiff resistance from transportation contractors and construction unions, on December 6 Reynolds’ bill passed in the Senate 20-13, and a week later the state Assembly followed suit by passing the bill with a 74-23 vote during an all-night session.

Doyle had been noncommittal, but he signed the bill on December 22.

“The essential purpose of this bill is to say that the legislature cannot just rely on an automatic increase in the gas tax as they have supported for many years, but in fact they will have to face this issue directly and honestly,” Doyle said at a news conference in Milwaukee.

Two Republicans who hope to challenge Doyle for governor–Milwaukee County Executive Scott Walker and U.S. Rep. Mark Green–supported repeal of the automatic tax increase.

Calls Deluged Capital

Incensed at having to endure increased gas taxes at the pump every year without due consideration from policymakers, grassroots activists in Wisconsin used talk radio and Internet “blogs” to inform and mobilize residents as the vote approached.

“This has been one of the most highly publicized votes in recent times in Wisconsin, and talk radio stations throughout the state brought it to the attention of voters,” said Reynolds. “Offices in Madison (the Wisconsin state capital) have been overwhelmed with phone calls from voters encouraging state senators to vote for repealing the automatic tax increase.”

As word spread among limited-government activists, many citizens groups came to the aid of lawmakers trying to secure passage of the bill. The National Taxpayers Union sent an open letter to the state Assembly urging legislators to join their colleagues in the state Senate by voting to end the “unfair and undemocratic tax-hike mechanism that ensnares motorists.”

When asked about the chances of Doyle signing the bill into law, state Rep. Frank Lasee (R-Bellevue) said, “The governor has been doing his polling, and the polls show that 80 percent of voters feel strongly that it is the legislature’s job to vote on tax increases.”

Kristina Rasmussen ([email protected]) is government affairs manager for the 350,000-member National Taxpayers Union.