On one hand, House Speaker Jase Bolger’s (R-Marshall) $450 million road funding proposal is a step forward in breaking through the transportation funding gridlock that has immobilized the legislature in recent years. However, in bypassing the traditional funding formula, the plan also passes public transportation and gives money to roads only.
We’ll go over the mechanics of the proposal, show how it differs from the traditional funding formula and provide a historical perspective of transportation funding increases in Michigan.
This road funding plan would raise an estimated minimum of $450 million in 2015 to provide much-needed repairs to Michigan’s crumbling roads, though the Michigan Infrastructure and Transportation Association (MITA) states that this falls short of the $2 billion necessary to repair Michigan’s roads and highways. Fund-raising components of the plan include:
- Permanently dedicating 1% of the existing 6% Use Tax Revenue to roads
- Permanently dedicating all available revenue from the existing 6% Sales Tax on gas and diesel to roads
- Repealing a 15-cent-per-gallon tax on diesel fuel and replacing it with a 6% wholesale tax
- Several smaller changes to registration payments and permit fees.
The plan would also repeal the 19-cent-per-gallon tax on unleaded gasoline and replace it with a 6% wholesale tax, which would be revenue neutral for 2015.
The plan differs significantly from previous proposals in that it does not follow the entirety of the Act 51 formula, which controls how state transportation dollars are appropriated to various state and local agencies. Per Act 51, the Michigan Transportation Fund is the main collector for this money, primarily a combination of registration fees and motor fuel taxes. The Act first distributes money to several programs and funds, including MDOT Administration and Planning, grants that go to fixing bridges and rail crossings, an Economic Development Fund, and the Comprehensive Transportation Fund, which funds public transportation in the state. The remaining balance is divided between County Road Commissions (39.1%) Cities and Villages (21.8%) and State Trunklines (39.1%). The new plan funnels most of the $450 million to this second section, skipping the programs, funds (including public transportation and MDOT administration) and grants to which Act 51 provides funds. Pending House legislation included in the plan pass only 18% of this new revenue through the full formula, generating approximately an additional $6.9 million for the Comprehensive Transportation Fund. This excludes up to $31 million that would go to the Comprehensive Transportation Fund if the entire $450 million went through the full formula.
Several legislators have expressed concern about the proposal bypassing public transportation. At last week’s Kent County Legislative Lunch, Representative Brandon Dillon (D-Grand Rapids) said bypassing MDOT’s administration and planning could lead to transportation decisions lacking in professional judgment. “It is critically important that we don’t let the process be handled by politicians,” Dillon said. Representative Rob VerHeulen (R-Walker) said that MDOT’s planning and engineering expertise makes them the best entity to make transportation decisions.
This proposal’s public transportation approach is nothing new. A transportation funding increase (PA 83) passed by the legislature in 1997 raised $307.6 million, but it was used only for roads, and not public transportation. So, when was the last time public transportation (through the Comprehensive Transportation Fund) received an increase? Here are a few hints: That year, the Macintosh II debuted with an optional color display, the Bangles topped the charts with Walk Like an Egyptian, the Soviet Union was still testing nuclear weapons, and a gallon of gas hovered at just below one dollar. The year was 1987, when PA 236 dedicated a portion of the auto-related sales tax to public transportation.
Michigan’s roads desperately need to be fixed, and the Speaker’s proposal–while it provides less than half of what is needed per year to get our roads in good condition–would make progress toward that goal. But roads are only part of the problem. Michigan’s public transportation system has lagged behind comparable states for decades due to inadequate funding. Legislators have to decide whether funding roads for most users or funding roads and public transportation for all users is the best use of the state’s money.
The benefits of public transportation go far beyond the service line to reinvigorate communities and businesses and provide accessible and equitable transportation options to every individual in Michigan. It’s been 27 years and counting since the legislature passed a substantial increase in funding for public transportation. For Michigan to complete its comeback, better public transportation has to be an integral part.
Written by: Jeff Prygoski, Fellow, Transportation for Michigan