Increased Funding Push Is On

By Aram Kalousdian, Editor | September 28, 2010

Michigan's transportation infrastructure is headed for serious trouble unless additional funding for road improvements is provided. "The Drive MI Campaign" is a partnership of businesses, associations and citizens linked with the common goal of improving Michigan's transportation infrastructure.

Drive MI is committed to a communications program that raises the awareness of and support for transportation-related issues with the citizens of Michigan, the media and all public officials.

Approximately 14 percent of Michigan's major roads are rated in poor condition, and an additional 24 percent are in mediocre condition, including interstates, state highways and key local roads. Approximately 28 percent of the state's bridges are either structurally deficient or functionally obsolete, directly impacting safety and mobility due to weight restrictions, narrow lanes and other correctable factors.

According to a report on the Drive MI website, based on 2006 projections, road and bridge money in Michigan is scheduled to drop by over 40 percent by 2008, due in part to a sluggish economy and escalating debt payments to repay transportation-related bonds.

Michigan has an annual estimated funding shortfall of $700 million for its state transportation system (Michigan Department of Transportation managed) and at least $2 billion more for its local roads (counties, cities and villages).

"With the needs of $700 million per year at the state level and at least $2 billion per year at the local level, we recognize that that would be a pretty heavy lift to get all of that out of our legislature and governor," Mike Nystrom, vice president of government and public relations for the Michigan Infrastructure & Transportation Association (MITA), said.

"So, our goal at the state level is to develop a plan that will increase revenues by a minimum of $1 billion per year. Then, as we get into these options on how we can do that, we think that there is an opportunity to increase local money beyond that $1 billion.

"We're just now starting to do our legislative outreach. MITA, the County Road Association of Michigan, the Michigan Chamber of Commerce, and our partners from organized labor have all been starting to do the legislative outreach.

"In doing that, we're starting to talk about the options. It has to be a long-term, well thought out comprehensive plan, which includes a number of different items. It can't be any single silver bullet, quick fix. In 1997 four cents on the state gas tax was not enough to sustain Michigan's system over the long haul. This time around, we need to make sure that we do enough to benefit the state and local agencies for the foreseeable future. It needs to be enough so that we can go to Washington, D.C., in 2009 and say to the federal government and our congressional delegation, we've done our part back home, now you have to do your part in Washington and make sure that Michigan gets a greater return on its investment."

Specific plans to increase funding are being discussed. "We've talked about a nine-cent state gas tax increase. That nine cents would make us equal to Ohio and still below Wisconsin and Pennsylvania. Indiana and Illinois have local gas tax options, as well as toll systems that help sustain their revenue stream to the point that they don't need as much of an increase. Without those options here in Michigan, we have to rely on traditional methods, such as fuel taxes," Nystrom said.

He said that there are discussions with the governor's office and the Michigan legislature to phase in the gas tax increase over three years so that taxpayers are not hit in the pocketbook all at once.

"However, some people have said that we should do it all at once and get it done. There's no sense in continuing to highlight the point that we're increasing taxes for three years in a row," Nystrom said.

"We're also talking about sunseting that increase to make sure that the money is spent efficiently by the agencies that receive those revenues. This gives the legislature an opportunity to go back home and say, we're keeping an eye on these agencies and we're going to make sure that they are spending the money properly, and if they aren't, we'll let the increase go away when the sunset takes effect."

The sunset creates a debate on a regular basis, similar to the transportation funding debate in Washington, D.C., where there is a regular timetable for debate on how the system is funded, Nystrom pointed out.

"The comprehensive package also includes some form of diesel parity. Diesel parity means that trucks have to pay the same amount as gasoline-powered vehicles. This is strongly supported by the general public. I'm sure that the package will include something to that effect. This would probably have to be phased in over time," Nystrom said.

"We're also looking at a significant vehicle registration fee. Currently, the registration fee is tied to the value of the vehicle. We think that the baseline multiplier that's used to come up with the registration fee should be significantly increased. In 2008, the registration fee is going to become our number one source of revenue for our transportation network in Michigan. So, any increase in the multiplier will immediately turnaround a nice increase in revenues for our network.

"We also believe that the registration fee is a good place to look because of the increased use of alternative fuel vehicles that have four tires on the road and weigh the same amount as any other vehicle out there, and yet, often times, are given a tax discount on those fuels, so they don't pay their fair share for the road network. We think that this argument needs to be considered when talking about increasing the vehicle registration fee."

Nystrom said that there is a desire to see some loopholes in the vehicle registration fee closed. "Currently, you can pay for vehicle registration on your birthday and purchase a new vehicle the next day. You get to ride the rest of the year on the lower vehicle registration rate. We'd like to fill that loophole and have that registration fee paid on the new vehicle at the time of purchase. That would create up to $25 million per year in additional revenues," Nystrom said.

"We also want to have a regular retirement process for license plates, because people scam with the old license plates.

"We also want to have a task force created that will look at the long-term funding options for the state of Michigan and take a good hard look at fast lanes being used in certain congested areas of the state. The fast lane is a concept that is being used in other states and Canada, where the current right of way is used to create an additional lane or two where people pay a premium to pass through the congested area, rather than sitting in traffic. The premium is pretty significant; anywhere from $5 to $12 just to pass through one time. It's done electronically. You have to purchase an electronic signal device that is attached to your vehicle and is tied to a credit card.

"We also want to loosen up opportunities for local units of government to collect registration fees or gas taxes on their own at the local level. We want to encourage counties to work together on this. We don't want to go below the county level, because then you'd have cities that have a fee that are next to cities that don't have a fee. But, we would like to see counties have the opportunity to collect a fee and share that money with their municipalities within the county. Right now, they are not allowed to do that." Once the state allows the local units of government to collect a fee, the local units of government would have to take the issue to voters and get it approved.

"The Metropolitan Detroit area is really looking at that local funding option," Ed Noyola, deputy director of the County Road Association of Michigan (CRAM), said. "Our transportation agencies in the Metropolitan Detroit area are looking at it from the standpoint of dealing with congestion and if there is a way to make this a multi-transportation purpose regional tax, which would maybe include transit, utility infrastructure and transportation infrastructure, that would also be a good selling point."

Nystrom said that the state legislature recognizes that something has to be done with transportation infrastructure funding. "I think that if we keep pushing, there's a very good possibility that transportation funding could be one of the top priorities of the new legislature and the governor this winter," Nystrom pointed out.

"The legislative debate is going to have to happen pretty soon. To not act on this in short order is going to be a real problem for everyone," Noyola said. "We already have situations going on at the local level. We've even notified our county boards that business as usual is not going to happen with the level of service that we provide, including projects. Our counties are delaying road projects.

"There are going to be delays in snow removal, filling potholes and routine maintenance. That's the level that this has come to. Two-thirds of our counties have laid off employees and half of our counties have delayed heavy maintenance or projects. So, business as usual is not going to be there. Two-thirds of our counties have delayed heavy equipment purchases."