Task Force Recommends Funding Increase

September 28, 2010

The Michigan Transportation Funding Task Force, established by the Michigan legislature and Michigan Governor Jennifer Granholm to provide recommendations for funding Michigan's transportation needs, released its report on November 10, concluding that Michigan needs to at least double its current investment in transportation in order to prevent a loss of up to $1 billion in federal funds each year and to adequately maintain Michigan's highways, roads, bridges, passenger transportation, freight transportation, and aviation systems. The report was submitted to the governor and legislative leaders.

The current level of investment across all modes of transportation in Michigan is approximately $3.58 billion per year. The Michigan Transportation Funding Task Force has recommended a $7.17-billion investment to put all modes of transportation in good condition and a $14.4-billion investment to put all modes of transportation in better condition.

The current level of investment for highways, roads and bridges is $3.2 billion. Doing nothing will result in a decrease in funds available – down to $1.9 billion. The Michigan Transportation Task Force is recommending an approximately $6.1-billion investment in highways, roads and bridges in order to put the system in good condition and an approximately $12.7-billion investment in order to put it in better condition.

“Probably one of the most important things we learned as we went through the process is that we have a situation where doing nothing is not an option. We cannot count on a transportation bailout from the federal government, so this is a solution where the federal government needs to play a role, but it's very important for state and local government officials to step up to the challenge,” Richard K. Studley, co-chairperson of the Michigan Transportation Funding Task Force and president and chief executive officer of the Michigan Chamber of Commerce, said.

“We've taken a look at Michigan's transportation needs. We believe that over the next few years we need to more than double our investment in transportation. Not just roads and bridges, but public transit, buses, rail lines, and aeronautics as well. It's clear, I think, that the size of the problem is manageable. There is no quick fix or silver bullet. After demonstrating the need, we tried to develop a menu, or a buffet, of policy alternatives for the Legislature. I think there was a strong feeling on the task force that we ought to maintain a system based on user fees, but that it's increasingly apparent that motor fuel taxes are becoming obsolete. We're all glad to see the price of gasoline dip recently, but it could go back up tomorrow and then we'll be in the same situation that we were in earlier in the year with the cost of maintaining and improving our transportation system going up, while revenue goes down. That's why we recommend that we stay with user fees, but that we look at new and different types of user fees and switch to a greater emphasis on driver license fees and motor vehicle registration fees.

“Another innovative recommendation from the task force is to update the current motor fuel tax and switch it from pennies per gallon leveled at the retail level to a percent per gallon at the wholesale level at a minimum. This would help stabilize our funding and could lead to a broader, more comprehensive proposal to reduce or phase out motor fuel taxes entirely as we shift to a new system that better reflects changes in technology and changes in our economy.”

“For about every dollar that is spent on transportation, the spin-off work will be somewhere between $5 and $6 in benefits to the area economy. We can't stress that enough. Besides getting our roads fixed, this will also help the economy in a huge way. Additional benefits that we'll receive by getting the roads fixed will be saving the public time by relieving traffic congestion and putting the roads in good condition, thereby reducing crashes, which cost Michigan drivers every year,” Dennis Gillow, co-chairperson of the Michigan Transportation Funding Task Force and treasurer of the International Union of Operating Engineers Local 324, said.

The Michigan Transportation Funding Task Force has recommended some new initiatives to fund Michigan's transportation network. “We also have to start looking at things that haven't been used in Michigan such as toll roads and public private partnerships. The future of our network depends on thinking broader than we have in the past,” Michael A. Nystrom, a member of the Michigan Transportation Funding Task Force and vice president of Government and Public Relations for the Michigan Infrastructure & Transportation Association, said.

Other alternatives that the Michigan Transportation Funding Task Force recommended include equalizing the diesel and propane tax rates with gasoline; enacting measures to control costs that are paid for with transportation funding through inter-departmental grants; redirecting all or a portion of the Natural Resources Trust Fund to transportation; and encouraging local investment in transportation by enabling a broad spectrum of local revenue options statewide.

“The other thing that I think is important to consider about this package is that they are recommendations to help turn Michigan's economy around. We are in a situation right now where transportation investment is an economic stimulus opportunity. It will help to create jobs; it will help to put an infrastructure in place that attracts those good job providers that we so desperately need here in Michigan. It will also provide a public safety system that is lacking right now in Michigan. We have a situation across the state where there are parts of our transportation network that are on the verge of creating a public hazard, and we need to recognize that and make a change there so that families across the state of Michigan feel comfortable traveling on our network,” Nystrom said.

State Transportation Director Kirk Steudle explained what would happen to transportation funding in Michigan if nothing is done to improve the funding situation. “The biggest fact is that we will leave money in Washington, D.C. In 2010, we will start to have the inability to match the federal money that is available to us without those additional resources at the state level. We will continue to be a donor state, and this will exacerbate the problem. Where in the past, when we got to October, we had the ability to reach in and grab other states' money that had not been allocated or not spent, starting in 2010, we will be the donor of that money to other states. Our 95-percent rate of return on transportation dollars sent to Washington will go down even more,” Steudle said.