When the 2025-26 Legislature convenes in January, funding the state’s transportation system is likely to be high on the agenda of key issues.

According to a recent report by the Wisconsin Policy Forum, policymakers are “nearing a crossroads on how to fund the state’s transportation system.”

The report cites data that shows revenue to fund transportation has slowed or declined in recent years, while the cost to support the state’s transportation system continues to increase.

The Wisconsin Policy Report concludes that the repeal of indexing the motor fuel tax is largely responsible for the decline in transportation funding.

Specifically, according to the report, the gas tax brought in 65 percent of transportation fund revenue in 2004, but only 38 percent in 2024. The gas tax would have generated $2.9 billion more from April 2007 to June 2022 – if the gas tax had not been repealed.

The Forum report lists the following options for funding the transportation fund:

• Increasing the amount of revenue transferred from the general fund to the transportation fund.
• Increase the tax on motor fuel and increase registration fees.
• Create a mileage based fee on motor vehicles
• Create a highway tolling system.
• Extend the sales tax to motor fuel.
• Allow local governments the option to enact a local sales tax.
• Modify registration fees from a flat fee one based on vehicles value or weight.
• Right of way development fees.

The report concludes, “As state leaders idle at the current crossroads, they are weighing decisions with major implications for driver’s pocketbooks and the economy as a whole. The state now risks falling behind on transportation funding, and it has few if any shortcuts that it can take. Either the state will have to forego spending and sacrifice road quality over time, or it will have to tap into funding sources such as the gas tax, vehicle registration or title fees, general tax dollars, mileage fees, local taxes for fees.”