Transportation funding has been a buzzing topic around Michigan this year, and the issue is beginning to appear in meeting agendas in the Michigan legislature. It is clear that residents, organizations and many policy makers are realizing the importance of a strong comprehensive transportation system to Michigan’s future.
On May 7, voters in Kalamazoo County passed a property tax millage renewal for the Kalamazoo County Transit Authority. The renewal passed with 72% of voters in favor. In late April, the M1 Rail project in Detroit overcame a major hurdle when it received approval from the federal government to move forward. In addition, the first Southeast Michigan Regional Transit Authority Board meeting earlier this spring was a concrete step toward bringing a viable public transportation network to the region.
At the House Appropriations Subcommittee on Transportation on May 7, committee Chairman, Representative Rob VerHeulen indicated that he expected $19.3 million in funding for the Amtrak Wolverine service line to be included in the budget. This line item was initially reserved by a $100 placeholder in the House transportation budget (HB 4328), although it was included in the Senate transportation budget bill (SB 184).
At the Senate Committee on Infrastructure Modernization meeting on May 7, David Zin and Joe Carrasco of the Senate Fiscal Agency (SFA), presented their report titled, Background of Transportation Funding. Senator Rebekah Warren had requested a discussion on transportation funding on the meeting agenda. The report gave a breakdown of our state’s current mechanisms for funding transportation and the variables within that system. The presentation highlighted details on transactions and revenue from vehicle registration fees and taxes and motor fuel taxes which would provide funding for transportation. The report also included current expenditures of both general and specific transportation funds.
After an extensive question and answer session, it was clear that senators wanted a recommendation from the SFA regarding the best option for transportation funding in the future. The main debate seemed to be between motor fuel taxes and vehicle registration revenue as the primary method of funding public transportation. The figure below, presented to the committee, represents the relationship between the two funding mechanisms, although representatives from the SFA explained that both options include unknown variables.
The most significant argument for using registration fees and taxes for transportation funding – instead of motor fuel taxes – was centered on the increase in fuel efficient vehicles. Zin explained drivers of these vehicles spend less on fuel, and therefore less on fuel taxes. However, they spend more on the vehicles themselves, providing more in registration fees and taxes. On the other hand, the argument for utilizing motor fuel sales tax was backed by a prediction that motor fuel prices will continue to rise and that most consumers will continue to purchase the same amount.
Many other variables and priority options were discussed. It became clear that a decision, or even a recommendation, will require a much deeper economic analysis, understanding of current and future trends, and decisions about various priorities of state transportation funding. Furthermore, it could be valuable for policy makers to look outside the box at funding options that have not been explored up to this point.
The meeting represented a starting point by the Senate in the discussion of analyzing transportation funding in Michigan, and it is clear that the conversation will continue. We can hope that the current momentum from residents, organizations and policy makers will continue in the funding conversation to Move Michigan.
Written by: Elizabeth Treutel, Trans4M Fellow