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A road fix desperately needed in Michigan

Thursday, November 10, 2011   (0 Comments)
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Michigan needs $5.6 billion in the next four years to maintain the roads it already has, let alone build new ones or widen highways that are congested.

And by 2023, according to Legislature-sponsored research, the need for more road money nearly doubles.

That's a huge obstacle in the way of this state's climb out of a decade-long recession. Good roads tell the world Michigan is open for business. Bad ones boggle commerce and convey the image of a state still living in the past.

"Michigan's infrastructure is living on borrowed time," Gov. Rick Snyder said in a special message to lawmakers while rolling out a comprehensive plan for improving the state's roads and bridges in late October. "We must reinvest in it if we are to reinvent our economy."

The solution, however, has remained elusive.

A case for bolder investment in Michigan roads was made in a 2010 Anderson Engineering Group report commissioned by the Michigan Chamber of Commerce. The Anderson report said spending $4.37 billion a year on road improvements would provide better support for the state's manufacturing, tourism and agriculture industries, and, as a bonus, create 15,000 jobs.

"The results of this analysis are clear: the benefits to the state and its residents are very large, and far offset the cost of the higher gas taxes necessary to support that expenditure," wrote company CEO Patrick L. Anderson in a forward to the report.

Problems abound

The problem increased when a Senate committee last month rejected Snyder's proposed new international bridge linking freeways in Detroit and Windsor. That project included a pact with the White House in which Canada would have paid Michigan's $550 million share of the work, yet the state would be able to count that as part of its matching money for federal transportation funds. The state currently spends $3 billion a year on infrastructure.

Now, because of declining road revenue from the fuel tax and vehicle registration fees, Michigan can't raise enough state money to draw its full annual allotment of federal transportation funds. About $2 billion in federal funds is at risk over the next few years unless lawmakers come up with an added revenue source to fill the hole.

The state chamber has favored a gradual increase in the state gasoline tax. The Legislature last boosted the gas tax in 1997 — to 19 cents a gallon from 15 cents a gallon — with support from then-Gov. John Engler. But neither the GOP legislative majority nor Snyder is interested in reprising that approach this year.

Michigan also suffers because of its archaic distribution formula, which favors funding based on road miles over traffic volumes, spreads state money among 617 road agencies in Michigan.

The Citizens Research Council found that in 2006, the formula resulted in a distribution of state road funds at a rate of $270 per resident in low-population Baraga County in the Upper Peninsula, while populous Wayne County received the equivalent of $89 per resident. Engler sought a formula revision that would distribute the funding more efficiently, but it was defeated in the Legislature.

Wholesale change needed

Instead, Snyder's proposals include:

Replacing the flat 19-cents-a-gallon state gasoline tax and 15-cents-a-gallon diesel tax with a percentage fuel tax levied on wholesalers. The new tax, with upper and lower limits to reduce volatility, would increase state revenues with inflation.

A possible hike in motor vehicle registration fees — he tossed out the idea without necessarily recommending it. His example suggested the state could realize about $1 billion more in road revenue if everybody's registration fees went up by $10 per month, or $120 per year, per vehicle.

Law changes letting counties, municipalities or metropolitan regions tack on their own special vehicle registration fees to raise more money for local road repairs. Local fees of up to $40 per vehicle could be levied, but they'd have to be approved by voters.

Updating a 1951 law that governs state transportation revenue distribution, directing more of it to the upkeep of busy urban roads.

Holding down costs through expanded bidding procedures; public agencies and private firms would compete for road maintenance contracts.

Saving on administrative expenses by letting county governments dissolve county road commissions and assume direct responsibility of local roads.

Requiring employees of local road agencies to pay at least 20 percent of their health coverage costs and giving state government the authority to audit spending by the local agencies.

Many of Snyder's proposed strategies have been discussed for years, but haven't led to any action by elected officials. Switching from a flat tax to a proportional tax on gasoline, for example, was among suggestions in the 2009 report and was briefly advocated by ex-Gov. Jennifer Granholm, but opposed by fuel wholesalers and ignored by legislative leaders.

Wayne State University transportation expert John Taylor, who four years ago called for a 6-cent gas tax increase and 10-cent diesel tax hike, likes a lot of Snyder's proposals. He believes the wholesale fuel tax is a good idea because it would help state revenues keep pace with increasing prices of asphalt, concrete and steel used in road work.

Taylor authored a 2007 report for the Mackinac Center for Public Policy in which he noted that Michigan is falling behind other states that have more aggressive programs for improving and expanding their highway capacity, particularly in urban areas. He said fuel taxes here are "quite low," compared with those of other states; the 19-cent gasoline tax ranked 31st, and the 15-cent diesel fuel tax was 45th in the country at the time his report was published.

The Citizens Research Council of Michigan says the state would have collected $12 billion more for road work had lawmakers opted for a switch to this type of a tax rather than a 4-cent increase in the flat tax on gasoline 14 years ago, owing to spiraling fuel prices. Researchers at the organization say future fuel prices appear more volatile, however, so having upper and lower limits as Snyder proposes makes sense.

Taylor also agrees with Snyder's proposed local-option registration fee proposal. Part of the reason other states have better roads, he said, is because their local governments are able to raise and spend more money on local roads.

Snyder's plan has gotten a mixed reaction from lawmakers. Still, he said he welcomes an exchange of views on road funding.

Senate Majority Leader Randy Richardville, R-Monroe, and Transportation Chairman Tom Casperson, R-Escanaba, acknowledged the need for better roads and pledged to work with the governor, but spoke cautiously of his ideas. Richardville said they'll "begin much-needed discussion." Casperson added that "simply throwing more money at a problem isn't going to fix it."

Senate Democratic Leader Gretchen Whitmer criticized the plan as "regurgitated ideas that amount to little more than a shell game."

State can't wait

Lawmakers, in fact, are skeptical that added road funding in the billion-dollar range can be approved. They are working on their own, more modest proposals.

Meanwhile, the time for sorting through the various options is running short.

Keith Ledbetter, legislative affairs director for the industry-based Michigan Infrastructure and Transportation Association, said solutions realistically should come in the remaining weeks of this year's legislative session. Approving more money for roads would be problematic in the politically charged environment of the 2012 presidential election season, he said.

"This is our chance," he said. "We've got about two months to get something done. If nothing happens, we have no idea what to do (next)."

Knowing this, lawmakers must roll up their sleeves. A decade of reluctance to take on difficult solutions, which likely include use tax increases, has left Michigan with a growing inventory of crumbling roads.

From The Detroit News:

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