Eric Lupher is president of the Citizens Research Council of Michigan
Another Groundhog Day has come and gone.
Which is apt, because Michigan finds itself in a situation reminiscent of the movie of the same name. In the movie, Bill Murray relives the same day over and over, everything resetting when his alarm clock goes off. In Michigan, we have been cursed to relive discussions about the inadequacies of our current highway maintenance efforts year after year.
Every few years, we hear the same stories about truck weights and funding formulas. The new funding solutions are always the same: fuel tax increases and changes to the sales tax levy and distribution. In the movie, Bill Murray eventually learns from the experience, using it to improve the lives of everyone around him. But with term limits, we get a new cast of characters every two years, so many of the same ideas that have been dismissed in the past resurface.
- Michigan roads are a big mess. Here are eight big ideas to fix them.
- Michigan OKs $3.5B in roads spending. Much of it is going to Metro Detroit.
- Michigan may study whether tolls are solution to state’s awful roads
Unfortunately, our Groundhog Day scenario has once again landed on the use of bond financing to improve Michigan’s roads. This would cause a number of issues for taxpayers and local governments. Let me make clear why this policy idea is bad for local governments and taxpayers.
There is a legitimate role for bond financing in road construction and maintenance, but that is to accelerate construction, not as a source of funding. Without a new revenue stream to finance the debt, the state would only be borrowing against future revenue.
This is exactly what happened 20 years ago with the Build Michigan financing. Money was borrowed to build shiny, smooth roads and sturdy bridges. Without any new funding to pay them off, the already inadequate revenue stream was stretched even thinner to make the notes. Because there was not enough money for maintenance, those smooth roads are now pothole-filled and those sturdy bridges are now suspect.
Let me state it bluntly: Bond financing without new revenue is insufficient to solve the problem on its own, and steals from future generations. So, new funding would be needed to finance the debt. If we are going to develop new revenue streams, let’s just do that. We could use the money to fix our road system and not finance bonds, which requires sending a portion of our tax dollars to Wall Street.
For a service rated among the highest needs by voters, further delaying an influx of dollars does not make sense. The governor’s plan will have the State Highway Commission issue revenue bonds without the need for legislative approval or a referendum. Because the amount that can be borrowed is dependent upon the prior year’s transportation tax receipts, we are already hamstrung. The amounts contemplated will address a limited number of roads, leaving much of the system untouched.
Additionally, all bond funding would be for MDOT roads; nothing for county roads or municipal streets. The County Road Association estimates unmet county road needs nearly comparable to the estimated funding needs for state roads. The municipal road funding needs have not been estimated. Yes, we might enjoy better drives on the interstates and state roads, but eventually we have to exit those roads and drive on county and municipal streets to get to our homes, work places, stores, etc. Still, we’ll be asking Lansing to fix the damn roads.
MDOT roads constitute only 8 percent of the state’s road miles, but are a much bigger proportion of the system when accounting for lane miles. They are a key part of the system for moving people and products between population centers. Nevertheless, when vehicles exit the interstates and other major highways, they need county and municipal roads to get them to their homes, places of business, and commercial centers.
County road agencies and municipal governments may issue their own debt for road projects. Like the state, these agencies must have funding to finance the borrowing. Again, without a new revenue stream, they would only be straining future revenues and leaving fewer resources for ongoing maintenance. Local governments do not have the authority to unilaterally create those new revenue streams. There must be an authorizing state law.
Many of our state policymakers understand the importance of the county and municipal road systems, but some may need to be reminded.
Bill Murray had to learn how to really love another person to make it to Feb. 3. Michigan must find a sustainable long-term solution to road funding. That does not diminish the opportunities to make better use of existing resources. Like “Groundhog Day,” we revisit our revenue possibilities over and over without accomplishing any real change. It took Murray’s cynical weatherman many replays to find his way out. We have a chance to edit our scenario. Maybe then we, too, can wake up to a new day, and smoother travel.