By PAT GOSS
What's the difference between a "tax" and a "user fee"? Is the distinction important to you as a taxpayer -- or simply as a citizen?
This question was at the center of the recent debate between state lawmakers as budget deliberations bogged down for months. Unfortunately, a growing segment of the population -- and, consequently, the elected officials who represent them -- make no distinction between "taxes" and "user fees." They see both of them as simply government's way of separating taxpayers from their money.
This is not a new debate; in fact, our 40th president, Ronald Reagan, was the master of understanding the difference between a tax and a user fee. The late president hated taxes but supported appropriate user fees. This month marks the 25th anniversary of his speech, which triggered a significant increase in transportation funding, an increase that at the time came from the least likely of proponents.
Reagan used his Nov. 27, 1982, radio address to promote an expanded highway, bridge and transit program that would be funded with a five-cent increase in the federal fuel tax. This, he believed, was a quintessential user fee. At the time, his proposal represented a 125 percent increase to a user fee that had been unchanged for 23 years.
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Reagan, a president who many consider the very embodiment of the American conservative movement, didn't mince words in pushing an expanded federal program at a time of economic uncertainty.
"America can't afford throw-away roads or disposable transit systems," Reagan said. "The bridges and highways we fail to repair today will have to be rebuilt tomorrow at many times the cost." He went on to explain that the cost to the average car owner to use the transportations system amounted to about $30 a year, "less than the cost of a couple of shock absorbers."
The four-year transportation bill Reagan eventually signed on Jan. 6, 1983, provided the additional resources to not only address a growing backlog of highway and bridge needs, but to create for the first time a dedicated source of funding for transit capital improvements. All due to a bi-partisan willingness to increase a user fee and dedicate those proceeds to making needed system improvements.
For the record, user fees are paid by someone who uses a government service, with the proceeds being used to maintain or improve that service. Taxes, on the other hand, are paid by everyone and are not directly tied to use of government services.
After months of haggling over the source and level of funding, the governor and legislators reached bi-partisan agreement to raise revenues from increased transportation fees for needed system improvements. This budget begins addressing the well documented investment needs in all modes of transportation. That is progress.
However, as we move forward, we must strive to restore the taxpayers' confidence that when they pay a user fee, that revenue is dedicated to the service for which it is intended.
President Reagan was right 25 years ago when he proposed to raise the federal gas tax and dedicate those revenues to transportation. Let's hope that our state and federal leaders can learn from the leadership Ronald Reagan provided and begin restoring the confidence of the public in our transportation user fee system.
Pat Goss is executive director of the Wisconsin Transportation Builders Association
