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Gretchen Whitmer promises fixed roads. Can she find the money to deliver?

November 6: Gretchen Whitmer projected winner in Michigan governor race

It’s been perhaps the chief calling card for former Democratic candidate Gretchen Whitmer in her bid for governor: She will “fix the damn roads,” as part of a broader plan to boost Michigan’s economy.

But Whitmer has yet to spell out in detail where most of the plan’s $3 billion in annual revenue will come from.

Whitmer’s plan calls for $2 billion a year in new state spending for infrastructure and unlocking another $1 billion in annual federal funding. According to Whitmer and campaign spokesman Zack Pohl, her plan anticipates working with the Legislature to generate “user fees” to help pay for the $2 billion.

The campaign estimates her infrastructure building plan will create up to 72,000 “good-paying” jobs.

But even if the state hikes vehicle registration fees 20 percent would, that would raise just $200 million a year, far short of what Whitmer is promising. Whitmer’s campaign says she’d ask voters to support a bond for roads if the Legislature refused to raise fees or taxes. 

March 5, 2019: Six big proposals in Gretchen Whitmer’s first Michigan budget
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Jay Rising, a state treasurer under Gov. Jennifer Granholm, helped the Whitmer campaign develop its roads plan. Rising said part of that bond could be repaid with the money the state saves as tax credits  – doled out years ago to promote jobs – begin to expire. But expiring credits wouldn’t save enough money to pay off a bond for several years, until at least 2026, records show.

“She is keeping all options on the table to raise the revenue we need to get the job done right. The reality is we don't know what the Legislature will look like next January, so there could be different appetites for different solutions,” Pohl, the campaign spokesman, told Bridge Magazine in an email.

Whitmer anticipates her plan to raise $2 billion will trigger another $1 billion in federal funding.

But Michigan already receives the maximum amount of federal road funding and raising more locally wouldn’t increase help from Washington D.C., said Bill Anderson, an analyst for Southeast Michigan Council of Governments, a regional planning authority for Metro Detroit communities.

Historic and brownfield credits

Whitmer also vows to restore historic and brownfield redevelopment tax credits that Gov. Rick Snyder killed in 2011. The state awarded more than $1 billion in brownfield credits between 2000 and 2011, according to a spokesman for the Michigan Economic Development Corporation at the time.

The end of new brownfield and historic credits was called “devastating” then by Art Papanos, vice president at the Detroit Economic Growth Corp.

Snyder called the credits a bad way to boost development. “Let's stop the tax credits and realize, in many cases, that the only reason they're in the tax code is because someone had more political power," he said at the time.

Under 2011 legislation Snyder signed, historic and brownfield credits featured under the scrapped Michigan Business Tax were partially replaced by credits available under the Michigan Business Development and Michigan Community Revitalization Programs.

Brownfield development got another boost from the state when Snyder signed legislation last year that paved the way for tax incentives to “transformational” development projects. The Michigan Strategic Fund in May approved about $618 million in brownfield incentives for $2.14 billion in downtown Detroit projects pushed by Quicken Loans founder Dan Gilbert.

Asked for details about Whitmer’s plan, campaign spokesperson Zack Pohl said Whitmer is “looking forward to working with the legislature to find the best solution possible and find consensus on appropriate caps, the value of the credit, and balancing the economic impact versus the cost to the state.”

Minimum wage hike

Whitmer favors establishing a $15 an hour minimum wage, phased in over three years. Michigan’s minimum wage, now at $9.25 an hour, is set to rise with inflation in 2019. If it were raised to $15 an hour, that would give Michigan’s the highest state minimum wage in the nation.

“We need to do more to raise wages for working people,” Whitmer says.

Proponents of a higher minimum wage contend it will help lift thousands of households out of poverty. The Michigan League for Public Policy calculated in 2017 that a single parent with two children would need to earn $22.75 an hour to meet basic needs such as housing, food, clothing, transportation and child care.

But  many in the business community oppose a $15-an-hour minimum wage, contending it would cut profits and curtail job growth.

The head of the Michigan Restaurant Association, which has endorsed Whitmer’s Republican rival Bill Schuette for governor, said raising the minimum wage to $15 an hour "will only serve to limit the opportunities of those that need the opportunity the most."

A study released in September by the Institute for Research on Labor and Employment at the University of California at Berkeley showed no employment loss in six cities that had raised wages above $10 by 2016 — Seattle, San Francisco, Chicago, Washington D.C., Oakland and San Jose. It found that average weekly earnings for workers in the food service industry went up between 1.3 percent and 2.5 percent for every 10 percent rise in the minimum wage.

Michigan State University economist Charles Ballard told the Detroit Free Press in 2017 a jump from $8.90 an hour – the minimum wage at that time – to $15 an hour could be too steep.

"If a proposal for a $15 minimum wage were on the ballot, I would vote no," Ballard said. "On the other hand, I would vote in favor of $11, and maybe a little more than that."

Broadband internet to rural Michigan

Whitmer would Put Michigan “on the cutting edge of next generation agriculture” by expanding high-speed broadband Internet across rural Michigan.

Rural broadband is “a necessity” to modern agriculture,” according to the American Farm Bureau.

According to the Federal Communications Commission, 37 percent of those in rural Michigan have no access to its fixed broadband download standard of 25 megabytes per second. That compares to just 3 percent without access in urban areas. In some Michigan counties, 100 percent of rural residents can’t get broadband.

The Michigan 21st Century Infrastructure Commission estimates it would cost $500 million over 10 years to provide universal broadband  access. It costs about $40,000 a mile to lay high-speed fiber optic cable - an expense that keeps for-profit cable companies from doing so in sparsely settled remote areas.

Whitmer spokesperson Pohl said Whitmer backs pilot plans to tap unused UHF TV bandwidth to provide Internet access and expand the Merit Network, a technology nonprofit founded in 1966 and governed by the state’s public universities, as well “exploring municipal service” options to expand broadband.

It’s unclear, however, if even this combination of proposals would come anywhere near to establishing universal broadband in rural Michigan.

Free 2 years of community college or training

Whitmer would offer high school graduates two years of post -secondary, debt-free education at a Michigan community college or vocational school. “Everyone deserves a path to a high-wage skill,” she says on her campaign website.

The program would cost $100 million a year. Whitmer says funding could come from anticipated increases in state revenues, including new sales tax revenues from online sales in the wake of a recent U.S. Supreme Court decision.

It’s unclear how this would be funded should state tax revenues decline.

Promote autonomous vehicles

Whitmer would establish a Department of Mobility, to pave the way for development of the autonomous vehicles industry.

“We will partner with automakers and ridesharing companies in a state-sponsored, joint venture pilot for the operation of a fleet of autonomous vehicles, made available for use by the general public in urban areas,” the campaign states.

Spokesperson Pohl said Whitmer will “introduce a fleet of Michigan-made autonomous vehicles” available for use in an unspecified pilot city.

“The cost of this program will depend on the size and scope of the pilot program, which we would finalize with the legislature and our automaker partners,” he said.

Related: 2018 Bridge Michigan Voter Guide: Links to our relevant election coverage

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