Guest commentary: Will there ever be a good time to fund road repairs?

By Craig Thiel/Anderson Economic Group

A long-term funding fix to Michigan’s deteriorating road and bridge infrastructure system can’t seem to catch a break. For much of the last decade, Michigan’s anemic economic performance made the prospect of raising the necessary revenues to fund road and bridge investment a “non-starter” for Lansing policy-makers. Today, even as the state economy awakens from its prolonged coma, a permanent funding fix remains just as elusive.

Good economy or bad, it appears that there is no right time to craft a long-term solution to years of transportation disinvestment.

For the second year in a row, policy-makers are poised to offer another short-term solution to the state’s ailing road and bridge system. Lawmakers signaled their intention to pursue this approach after giving up hope on meeting a June 1 deadline to place a long-term funding fix on an upcoming statewide ballot. Rather than raise dedicated transportation taxes (fuel and vehicle registration taxes) or re-prioritize existing spending to provide a permanent fix, they will rely on a stop-gap measure.

Lansing’s intentions were made clear with news of better-than-expected state general fund revenue collections for the current ($397 million) and upcoming year ($182 million). The budget that begins Oct. 1 directs $350 million of the additional funds to transportation needs in the coming year. This approach only ensures that the bare minimum will be done. Michigan will use $120 million to match all available federal road dollars, leaving $230 million in one-time funds to address a fraction of the total road need.

This approach does nothing to provide a permanent fix or address a growing backlog of system needs, which will have to wait at least another year.

Before settling on this short-sighted approach, Lansing must acknowledge a few basic facts.

First, the bad news about Michigan’s road problems only gets worse with age. Currently, Michigan is in need of at least an additional $1.2 billion per year for its roads, a figure that has been confirmed by a number of independent and bipartisan study efforts. This amount will certainly increase next year with inflation and the likelihood that a good portion of current needs will go unmet.

Second, a permanent solution will have to involve some type of tax increase or dedication of existing state funds spent elsewhere in the budget. While very few residents like to pay higher taxes, especially an unpopular one that drivers are reminded of every time they stop to fill up, using budget surpluses only delays the inevitable. Surpluses can serve as down payment; however, they cannot be relied on to provide a long-term fix as they are way too unpredictable from year to year.

Finally, fixing Michigan roads through a combination of dedicated fuel and registration taxes will not harm Michigan’s economic recovery. Findings from a recent Anderson Economic Group study (commissioned by the Michigan Chamber Foundation) suggest that increasing road funding by $1.4 billion per year will be a net positive for Michigan employers, adding more than 11,000 new jobs. That said, the ultimate goal of raising road taxes is not to create jobs, but to invest in long-lived assets that improve residents’ quality of life and Michigan’s business climate.  The net employment gains accompanying a significant transportation tax increase could be considered a bonus.

The decision to avoid a tax increase during Michigan’s economic challenges of the past decade certainly could be justified from a political standpoint. For much of the 2000s, households and businesses were struggling under Michigan’s single-state recession, and increasing the tax burden was not going to help their economic condition. With Michigan’s economy improving, and road conditions worsening, the decision to continue years of transportation disinvestment makes no economic sense, either for the short or the long term.

The decision to use another short-term fix, while politically palatable, places Michigan at a competitive disadvantage for long-term growth. It sends a clear message that the state will allow its long-lived road and bridge assets to deteriorate and will not invest in its future.

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

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Comments

Duane
Sun, 06/02/2013 - 3:32pm
Is Bridge's selection process biased, it seems that each time I read a guest commentor they only talk about spending more and more of other people's money? Their answer to roads/bridges like every other problem, spend more and more money, other people's money. I never seem to hear any of the guest commentators talk about the root causes of the problem or the causes for people's resistance to the eternal demand for more and more of their money. Mr. Thiel is just the lastest example. He talks about more and more money for road repair, but he never trys to understand why people are resistant to spending that money, he never even trys to help us to gain trust that the money will be spend effectively or that those who are spending it will be held accountable. He simply has his answer, throw other people's money at it. I wonder if he has ever talk to people who actually know the technology of the roads and asked them how could we do better with the spending. I wonder is he has ever considered that there might be ways to invest early to extend the life of the roads, or that there are smarter ways to maintain roads and bridges rather than wait for their failure. I would like to 'assume' Mr. Thiel has done some investigation into road and bridge construction, but we all know what happens when you 'ass-u/me'. It appears from Mr. Thiel's commentary all he wants is to increase funding for the same old practices rather then facilitate change and get better value for Michigan taxpayers. It appears Bridge and Mr. Thiel have a similar viewpoint, every problem in Michigan has a simple answer, spend other people's money rather then change how we attack the problem. I wonder Mr. Thiel's expertise is in, road/bridge design or fund raising. Maybe that tells us more about why his answer is about funding and less about roads/bridges.
Craig Thiel
Mon, 06/03/2013 - 9:32pm
In response to Duane: A couple of key resources that I am familiar with that document the case for increased investment in state road and bridge infrastructure. These reports were authored by unbiased, bipartisan workgroups that committed significant time understanding the technology behind infrastructure investment in Michigan. While each report makes the case for spending transportation funds differently to ensure efficient and effective use of taxpayers' funds, they both come to the same conclusion: transportation investment must be increased. http://house.michigan.gov/SessionDocs/2011-2012/Testimony/Committee23-10... http://justfixtheroads.com/wp-content/uploads/2013/01/MDOT_TF2_Entire_Re...
Duane
Tue, 06/04/2013 - 9:50am
NO disagreement that the roads/bridges need repair, and even that it will cost more money. At least for me, something from past experience, is that simply because things need attention doesn't exclude efforts to ensure the thnking and effort it prevent or reducing the need for such cost can't be reduced in the future. A viable infastrcuture is critical, it is the lack of interest in how to make it better (longer life, less costly even with increasing inflation, etc.). All were hear is spend more and more never about spending smarter. Admittedly my experiece has been with highly corrosive environments in operation 24/7, but what people were able to do has reduced the cost and extended the life of those operations by attacking the cause for the maintenance, the quality of the intial installations, the type and frequency of maintenaince, the accountability for improving those things. When in all of this discussion of spending more money on roads/bridges have we heard from a politician, Mr. Thiel, and others (yourself included) any interest in changing how we do infastructure maintenance. Rather then spending more an more money, why aren't we talking about spending that money smarter, why are we talking about and to those about the 'root causes' of the need for maintenance and how to control or mitigate it. In these discussions it is way to easy to simply whine for more money than it is to talk about change (unless it is for new ways to get other people's money to spend). Have you heard anyone ask if the roads and bridges are costructed differently the farther north you go and it so why or why not? Maybe it is my simple mindedness and past experience, but it seems if people really want things to be better, roads/bridges included, that would be talking about the causes and how to address them not just about a symptom. This maybe an alien approach except it is one that is used by those who truly work at making things better while doing it with less and less money.
JRS
Sun, 06/02/2013 - 9:22pm
Politicians are afraid that taxpayers will hold any vote for a tax increase against them at election time so we end up with these stopgap measures, don't expect this to change next year either with it being an election year.