Whitmer’s road funding plan could pit Michigan cities against rural areas

pothole

Related: Michigan Senate panel rejects Whitmer gas tax, as budget dance continues

To get all of its roads into good or fair shape, Ottawa County would need another $20 million per year for a decade.

That’s money the West Michigan lakeshore county doesn’t have. This year, Ottawa County’s road agency says it will take in $19.4 million for road projects from a mixture of state, county and local funding.

So Ottawa County Road Commission members were pleased by Gov. Gretchen Whitmer’s vow to increase state road funding by $2.5 billion by 2021 — even if they’re undecided about her plan to boost gas taxes by 45 cents per gallon to raise the money, said its spokesman, Alex Doty.

In-person April conferences: Tell us how YOU would fix Michigan’s roads

The tax increase isn’t the only controversy in Whitmer’s roads plan. She also wants to change how money collected from the new taxes is allocated, giving a bigger piece of the pie to urban areas and freeways than to rural and neighborhood roads.

Whitmer’s plan to give more money to the busiest roads would represent a major change to how the state shares road dollars. Public Act 51 of 1951, the law that provides counties and cities dedicated percentages of road dollars, has not seen a wholesale reform since it was adopted.

“Why do we continue to use a formula that’s 68 years old?” Whitmer asked reporters after she presented her first budget to lawmakers in March.

Her changes would only apply to revenue from the 45-cent gas tax increase. Counties and cities still would get their share of the state’s current 26.3-cent, per-gallon gas tax and vehicle registration fees through the Public Act 51 formula.

Under the new plan, Ottawa County, home to Holland and its famed Tulip Time festival, would receive roughly $4.5 million from new gas taxes. Under the current model, it would get $18.9 million, according to estimates from the County Road Association of Michigan.

“We’re not saying that the interstates and those larger roads aren’t important,” Doty said. “But when you look at it, we have hundreds of miles of local and primary roads around here that people drive on every day, from their neighborhood streets to their local county road.

“To say that those aren’t heavily traveled, I think we would disagree with that.”

Over the years, politicians, including former Republican Gov. Rick Snyder, have proposed changing road funding to steer more money to better-traveled roads, but political objections have always defeated the measures.

Whitmer, a Democrat, already faces objections over her proposed gas tax increase and is in for a tough sell to the Republican-led Legislature, with a plan the state budget office acknowledges is less generous to local road agencies and would rank rural roads last in terms of priority.

Whitmer’s goal is to get state trunklines — the freeways and highways owned by the Michigan Department of Transportation — to 90 percent in good and fair condition by 2029.

Chris Kolb, Whitmer’s state budget director, told legislators while outlining the budget the new tax money would be targeted for roads that are “the most economically important roads in our state,” regardless of whether they’re owned by the state or local communities.

“Drivers don’t care who owns the roads,” he said. “They want those roads fixed.”

That argument doesn’t wash with Republicans, including state Rep. Triston Cole, who is from Mancelona in Antrim County and opposes Whitmer’s road funding proposal.

“Main county roads up here are equally as important as the main county roads in southern Michigan to the individuals who use them,” said Cole, a past chairman of the House’s transportation committee.

More money to major roads

Today, the state collects gas taxes and vehicle registration fees paid by drivers across Michigan and recirculates them for use on state, county and city roads.

MDOT gets 39 percent of that revenue through Public Act 51. Another 39 percent is split up among the state’s 83 county road agencies. Cities and villages receive the remaining 22 percent.

Under Whitmer’s proposal, more than $2 billion in new gas tax revenue would be dispersed this way:

  • Nearly half, 47 percent, to interstate and other freeways — all of which are owned by MDOT.
  • 30 percent to “principal arterials,” major routes that aren’t freeways. Many are owned by MDOT, but some are owned by local governments, particularly in urban areas.
  • 7 percent each to “minor arterials,” or highly traveled, mostly local roads, and to “major collectors,” almost all of which are owned by local governments and generally connect to neighborhood streets. (Look up examples of principal and minor arterials and major collectors in each of Michigan’s 83 counties, per MDOT.)
  • 4 percent to local bridges.
  • 3 percent to multimodal transportation, including public transit, rail and mobility.
  • 2 percent to “rural economic corridors,” or important rural roads in 78 counties with fewer than 400,000 residents.

All told, MDOT would get 70 percent of the revenue: $1.5 billion when the gas tax increase is phased in by 2021, according to state budget estimates.

Local road agencies operated by counties and cities would receive 27 percent, including $441 million for local road projects in 2021 and $42.7 million for rural corridors.

“There is not one county road agency that comes out ahead” under Whitmer’s proposed model, said Denise Donahue, director of the County Road Association of Michigan.

Donahue said the association included estimates from MDOT in its calculations, which also estimate how much funding county road agencies could receive if the new gas-tax revenue was funneled through the current formula instead. MDOT did not immediately respond to the group’s estimates — and hasn’t publicly revealed how much individual road agencies would receive under the proposal.

“Outstate drivers would clearly be losers, and the urban drivers would be the winners under this proposal,” said Ken Boyer, an economics professor at Michigan State University, who studies transportation funding.

“I’m not sure that (Whitmer’s formula is) going to go anywhere given the history of road-funding battles in the state, but it’s very sensible,” Boyer added.

“The problem with road funding has always been that what we pay to use the roads does not reflect the cost. This is a movement in the right direction.”

Whitmer’s plan also would shift $325 million of the new gas-tax revenue back to cities and counties to be divided under the current formula, an acknowledgement that local road agencies would not see as large of an increase.

“The Act 51 formula is more favorable to locals than the new formula, and so we wanted to hold locals harmless,” state budget spokesman Kurt Weiss told Bridge.

Ed Noyola, deputy director of the County Road Association of Michigan, said there is no reason to change the formula because the current one works. It is calculated to consider population, miles of roads and vehicle registration fees.

“There’s a fair balance within the current Act 51 formula that we feel hits all of those categories, whether you’re an urban county or a rural county,” said Noyola.

His group agrees the state needs $2.5 billion more for roads, but hasn’t taken a position on the gas-tax increase. The association said it’s up to the Legislature and the governor to determine how the money is raised.

A recent report from the nonpartisan Citizens Research Council argues the current formula doesn’t reflect the greatest road needs.

The report noted 69 percent of state roads are in rural areas, yet rural areas account for just 29.8 percent of traffic. That essentially means the current formula treats a two-lane highway in northern Michigan similarly to a six-lane interstate freeway in Wayne County.

But change is hard because tweaking the formula will create winners and losers, said Jordon Newton, a research associate with the Citizens Research Council.

“No one wants to be a loser in that situation,” Newton said.

“How do you convince someone that it’ll be better — even though it’s a little worse for them in the short term — that it’ll be better in the long term? I don’t know that we’ve seen that in the discussion yet.”

What’s the best solution?

As lawmakers weigh the issue, groups as diverse as the Citizens Research Council to the Lansing Regional Chamber of Commerce are increasing calls to change how roads are funded.

The Lansing chamber, which hosted Whitmer at a luncheon last week, isn’t ready to support a 45-cent gas tax increase but thinks it’s the “right time” to revisit Act 51, said Tim Daman, its president and CEO.

“We’re not trying to make this an urban-versus-rural issue,” he said, “although we know it’s quickly going to go there.”

State Sen. Peter Lucido, a Republican from Shelby Township in Macomb County, introduced two bills that would keep gas taxes and vehicle registration fees in the county where they originate.

Lucido, who supports revisiting the local-state funding distribution, said these road-funding decisions are best left to local governments, not the state.

“Let the counties make the disbursements where they feel the roads are the worst,” he said.

Some Democrats, including Senate Minority Leader Jim Ananich of Flint, said they’re willing to wait to talk about how the money is divided until after the state secures enough money to fix the roads.

Lansing Mayor Andy Schor, a former Democratic state representative, said Whitmer’s proposal would put more money toward the capital city’s highly traveled roads and less toward neighborhood streets.

“If this new formula is used, I will be OK with it if it means we get a lot more money to fix all our roads,” Schor told Bridge through a spokeswoman.

He told reporters at a recent news conference that the first priority is to get the $2.5 billion in new revenue adopted, and a conversation on how to split up that money can follow later.

House Speaker Lee Chatfield believes the state’s road-funding problem isn’t the formula, but the state’s policy of charging 6 percent sales tax on gas and spending that money on schools, not roads, spokesman Gideon D’Assandro said.

House Republicans are working on their own plan, but D’Assandro didn’t elaborate on what may be in it.

Chatfield took issue with Whitmer’s distribution model in a recent op-ed in The Detroit News, saying the plan would favor “a small handful of big cities” at the expense of drivers across the state.

“We should not be pitting our cities against our rural communities,” he wrote. “We are one state, and we should have a one-state solution.”

Senate Majority Leader Mike Shirkey, R-Clarklake, meanwhile, “does give the governor props for being creative in distributing funds where they are needed most,” spokeswoman Amber McCann said.

Shirkey is open to talking about changes to the road funding formula, but needs to consider the views of rural lawmakers, McCann said.

“There are going to be those communities that would possibly see a reduction in resources if we change it,” McCann said. “It’s a serious conversation because there’s serious interest in it, but there’s just as many voices who don’t want to touch it at all. It’s going to be a challenge.”

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Comments

Kevin Grand
Tue, 04/02/2019 - 5:30am

PA 51 is the least of her troubles.

Since Gov. Whitmer will shift 40% of her gas tax to fund other pet projects of hers, her tax is DOA.

John Q
Tue, 04/02/2019 - 9:12am

Is this the false narrative being peddled around Lansing? Show us how 40% of the gas tax dollars are being used for anything but roads .

Kevin Grand
Tue, 04/02/2019 - 6:17pm

Sure thing, John!

Here you go.

https://www.michigancapitolconfidential.com/40-percent-of-whitmers-2020-...

Tom Gantert did a piece a few weeks ago where he went over Gov. Whitmer's numbers after she finally produced something for people to actually look at.

Much like what the republicans did back around '17, when the gas tax hike and vehicle registration hike they jammed through (and no one wanted then, either) finally kicked into effect, without much fanfare they quietly pulled some $400-million out of transportation and snuck it back into the GF, hoping that no one would be the wiser.

Gov. Whitmer's plan does essentially the same thing. She wants to take money out of the transportation budget after her tax plan is implemented and quietly shift it into the GF.

This was after she told people with a straight face not even one year ago this whopper of a lie.

https://www.youtube.com/watch?v=Jvjp6LN63ZQ&feature=youtu.be&t=49

Bottom line: the $2.5 billion constantly bandied about WILL NOT be going towards roads as she keeps telling people.

And if you want to attack those links because of its source, The Bridge essentially reported the very same thing back on March 5th.

"The gas tax hike would raise $2.5 billion more per year to spend on fixing Michigan’s crumbling roads, addressing a central Whitmer campaign promise. Getting a win on the gas tax sets in motion a cascade of money by freeing up $600 million in income tax dollars that would otherwise be used for roads. "

https://www.bridgemi.com/public-sector/analysis-gretchen-whitmers-budget...

Gov. Whitmer is trying to fool the rubes into believing that won't happen.

https://twitter.com/GovWhitmer/status/1111332691281174529

The reason why her gas tax is not getting very much traction is because not everyone is naive & gullible as she and her handlers think.

John Q
Tue, 04/02/2019 - 9:15am

Only in Lansing do road agencies get more money and we call them "losers". Michigan has too large of a road network to support with the current funding model. New dollars need to be prioritized and the idea that a road that gets a few thousand trips a day is equal to a road that gets tens or hundred of thousands of trips per day is absurd.

R.L.
Tue, 04/02/2019 - 9:18am

So what's new? Just keep raising taxes so Trumps great tax plan will make everyone better off. Remember when he said what do you have to loose? I love Mi. but it isn't cheap to live here. Peace R.L.

George Czarnik
Tue, 04/02/2019 - 9:41am

Why haven't we heard anything from the trucking industry in the State of Michigan? Does this fuel tax increase include "diesel fuel" and is it taxed at the same rate? Also, lets not forget the outrageous "load limits" Michigan allows for its trucks. This load limit issue needs to be addressed. Why replace a road then the next day allow trucks to tear them up with the excive weight we allow them to carry. We can't rely on the head of our transportation department because he has been with the department for over thirty years and he is in the truckers back pocket. And last but not lease are we using "best practices" when we are replacing the roads.

BILL
Tue, 04/02/2019 - 9:51am

WHEN ALL THOSE PEOPLE FROM S.E. MI COME UP NORTH EVERY WEEKEND AND TO VACATION MAYBE THEY SHOULD PAY A TOLL TO DRIVE ON NORTHERN ROADS. MAYBE WE NEED TOLL BOOTHS ON US 31, I 75, US 131 AND US 127 NORTH OF A LINE
FROM GRAND RAPIDS TO SAGINAW.

Bernadette
Fri, 04/19/2019 - 2:21pm

Great idea. We should have had toll roads a long time ago.

64Wing
Wed, 06/05/2019 - 2:27pm

Does that mean you and I would have to pay to head downstate then? I understand where your suggestion is coming from, what with their big trucks and trailers hauling four-wheelers and side-by-sides that they then unload and...drive on the roads. It is comical and also frustrating, but I don't think a toll system would be good for any of us. To be fair, they're still paying tax on the fuel they run in those toys whether they're off-road or not and they do bring some spending power to the region. Would we crumble without them up here? Probably not. Do I think more than half of them can't drive worth a darn? You bet.

Lennie
Tue, 04/02/2019 - 11:01am

Want to rebuild the roads and solve another problem along the way? Simple, raise fuel taxes at the national level and redistribute the revenue proportionally with regard to where it is collected. And get rid of that worthless CAFE legislation along the way.

We've got some of the most spineless and partisan representation going. They can't do a thing without consulting "the party" and if one party or a member of it outrages the idiots in the press, then spend all their and our time bitching about it. We have next to zero policies on energy that might anger the public. We are the laughing stock of the world on that issue. We have CAFE which is only a method to penalize manufacturers and provide meaningless statistics for some idiot running for office. So face the facts, kill it and do something right for a change.

Gary Lea
Tue, 04/02/2019 - 11:59am

The following quotation came from an online Detroit Free Press news article: "Whitmer's proposal would hike taxes for both regular and diesel fuel." Previously, Governor Snyder's per gallon fuel tax increase (beginning in 2017) had raised gasoline by 7.3 cents and diesel by 11.3 cents, then making each identical at 26.3 cents. To me that means that gasoline-fueled vehicles had for a long time been subsidizing the wear and tear of our roadways by heavier trucks than allowed in other states. I believe that heavily-travelled roadways are of necessity built for increased traffic use and density, making them more expensive to construct and repair than lesser-travelled rural roadways. I appreciated reading that the new taxes would be targeted (first, I assume) for roads that are the most economically important for our state. I hope that Michigan auto insurance premiums can be decreased as compensation for increased fossil fuel taxation.

Genesee
Tue, 04/02/2019 - 12:30pm

Urbanized roads may get more traffic, but this is already accounted for in the ACT 51 formula with a distribution based on city/village census population at 60% and miles of roads (40%). Consequently, a more densely populated, or urban, city/village already receives more money per mile of road than a less densely populated, rural, city/village to account for the added traffic and lanes. (see page 3 of House Fiscal Agency Memorandum of May 1, 2018, “MTF Distribution Formula to Local Road Agencies).

Bob
Wed, 04/03/2019 - 9:12am

As my Daddy said many years ago. If it's from a democrat? Get ready to pay more and get less. Every time they'll screw you and not even give you a kiss. With this governor it's already proving old dad the prophet he was.

Jamie
Wed, 04/03/2019 - 4:11pm

Your dad sounds dumb.

64Wing
Wed, 06/05/2019 - 2:29pm

Also sounds like he's gone now. Have an ounce of respect, you tool

tom
Wed, 04/03/2019 - 7:27pm

Is this why the city of Detroit has MDOT fixing city streets?

JLJW
Thu, 04/04/2019 - 2:56am

In the Ann Arbor area, there are many residential roads that are designated as private roads. The costs of surfacing and maintenance are borne by the "Road Association" for that private road. I like this model. It reserves public funds for the public roads. It creates smaller decision-making groups that have a personal stake in the choices that they make for the funding needed to maintain their road, in the manner that they decide to obtain. It diverts man and machinery needs from the local or state transportation departments into the private business sector. Perhaps institute a 'major roadway fee', payable to the DOT, to be paid by businesses and residences along the public roads, based on property/road frontage, similar to dust control application fees. Major urban roads that would receive a lower percentage of state funding could be additionally funded by a similar 'major urban roadway fee' along the major roads and at at attraction/lodging/eatery businesses. Tourists would pay into the user funding in those ways. Or... Increase the state income tax! My mind prefers funding that is more closely matched to the user.

Aaron
Thu, 04/04/2019 - 11:49am

No way would i support this been saying they would fix the roads seance I became a resident in 1980 raise tax road are still the same they use tax increase for other things other than road repairs of road hope the Michigan senate and house stop this or will move to another state

Michigan Observer
Thu, 04/04/2019 - 10:42pm

I fail to see why everybody is tying themselves in knots over the distribution of road funds. A road, within broad limits, is a binary proposition. It either provides safe, efficient service or it does not. Assuring that all roads do so would automatically distribute the funds to where they were needed most. Heavily traveled, high capacity roads in the metro Detroit area would receive the funds necessary to keep them in good shape, as would lightly traveled rural roads that provide essential service to the people who need them. Admittedly, my proposal would require a higher level of investment in road assessment in order to direct funds where they were needed. Money would flow to whatever agency was responsible for a given road.

64Wing
Wed, 06/05/2019 - 2:19pm

Been saying this since Whitmer proposed the increase. Rural roads suffer longer winters, more plow degradation, and receive less funding as it is. So those who drive more miles individually out in the sticks will be footing the bill for the urban roads. It's all about traffic density. There are more vehicles covering a single mile of road in urban areas than there are in rural areas. That simple fact makes individual mileage an inappropriate driver of tax revenue as would be the case with a gas tax. It's very alarming that Senate Minority Leader Jim Ananich (D-Flint) would prefer that the tax revenue be collected before legislators even decide how to apportion it. To me, that just might as well read: "shut up, give us the money, and don't piss us off or you won't get any." A terrible approach to promoting government accountability.