A roads solution for Michigan

Like the aftermath of a sudden spring snowstorm, the ground is blanketed with various proposals to fix Michigan’s roads. And most have something else in common with spring snow: They’re likely to have melted into the ground once the sun comes out.

Michigan Speaker of the House Kevin Cotter (R-Mt. Pleasant) has proposed a complex plan that assumes an added $700 million in state tax revenue resulting from growth in the economy, does away with the Earned Income Tax Credit for the working poor, and shifts “restricted” money to roads from the 21st Century Jobs Fund, tribal casino taxes and what remains of film production subsidies.

Democrats are screaming bloody murder, while Detroit Free Press columnist Brian Dickerson and others called the proposal a “fairy tale,” mainly because it relies on assumptions.

What is clear is that the Cotter plan is by no means the last word. Acknowledging that road funding is complicated and careful thought is required, the state Senate has scheduled 29 extra session days this summer.

Other legislative ideas floating around for finding the estimated $1.2 billion needed yearly to fix our roads include using interest income from the $18 billion Michigan Catastrophic Claims Fund, raiding the state’s Rainy Day Fund or the Natural Resources Trust Fund, and a 10 percent across-the-board cut in the state budget.

But it seems to me that a simpler and more elegant solution is suggested by looking at the way Proposal A – Michigan’s current school funding system – was adopted back in 1994.

Schools at that time were funded mainly by local property taxes, which over time became very unpopular, provoking tax revolts and citizen initiatives to limit taxation. Moreover, differences between wealthy and poorer communities produced enormous disparities in school funding from district to district.

Political leaders, school officials and ordinary citizens joined in arguing for change. But during the 25 years before Proposal A, Michigan voters rejected no less than 12 initiatives designed to reform school funding. During the summer of 1993, state Senator (now U.S. Senator) Debbie Stabenow proposed the legislature abolish local property taxes to fund schools. Gov. John Engler astonished most observers by agreeing, and the legislature went along. Faced with the threat of no funding for education in the state – lawmakers finally agreed to present to Michigan voters two options:

Proposal A, which appeared on the ballot, was a constitutional amendment to increase state sales and use taxes from 4 percent to 6 percent, limit annual increases in annual property assessments, and give all districts a minimum per pupil “foundation allowance.”

Not on the ballot but adopted by the legislature and signed by the governor in December 1993 was a Statutory Plan, which would have increased the state individual income tax by 1.4 percent to accomplish the same goal. This would have kicked in only if Proposal A had been rejected.

Only Proposal A actually was on the ballot. But voters understood taxes would rise either way – and so were, in effect, not given an option to vote “no.” Voters decided they liked the sales tax option better, and in March, 1994 adopted Proposal A, 69-31.

That model offers a simple, understandable mechanism for deciding how to pay for road improvement.
We already know that voters overwhelmingly want to fix the roads, and results from both the Center for Michigan’s community conversations and other statewide polls suggest citizens are indeed prepared to pay more in taxes to get it done.

So I believe the legislature and governor should put before Michigan voters a choice similar to what they did with Proposal A:

On the ballot, place a Sales Tax Increase increasing the state sales and use tax from 6 percent to 7 percent, with the incremental revenue allocated solely to fixing roads. The Mackinac Center estimates that would bring state government an extra $1.4 billion. Under our Constitution, raising the state sales tax requires an affirmative vote of the people.

As an alternative, not on the ballot but which would be adopted by the legislature and signed by the governor: Increased Gas Tax and Registration Fees. This would resurrect Gov. Snyder’s original proposal to replace the 19-cent-per-gallon gas tax and 15-cent-per-gallon diesel tax with a single percentage-based tax that comes out roughly to 35 cents per gallon, plus increased vehicle registration fees. The governor’s plan originally called for doing this by 60 percent for cars and light trucks and 25 percent for large trucks and trailers.

If voters were to defeat the sales tax increase, the vote would automatically trigger increases in the gas tax and registration fees. If the increase passes, the tax and fee legislation goes away.

Of course, there will be lots of debate about the details. Regardless of what any proposal looks like, the “no tax increase ever” folks will scream, although most experts I talk to say it’s simply impossible to find an extra $1.2 billion for roads out of existing state tax revenue without doing enormous damage.

This proposal is simple. It’s understandable. It’s financially doable. And it would get the roads fixed.

Sounds pretty good to me.

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Comments

Tom
Tue, 05/19/2015 - 9:41am
How about a plan that shifts lesser priorities to higher priorities (i.e. roads). A new tax assumes we are all in favor of exiting priorities; we we are not. It would not be feasible, but interesting to put things like the film subsidy, corporate welfare, and a myriad of other institutionalized expenditures on the ballot as an either / or situation, e.g. should we spend money on roads or on film subsidies? I bet we'd get the money for roads in no time at all.
Leon L. Hulett, PE
Tue, 05/19/2015 - 11:50am
Tom, I agree with you, not Phil Power. A simple ballot like, "The Gas Tax shall be applied to Roads." Roads means roads and bridges. Voters will vote for such a measure to fund roads. Phil's suggestion is evil. It is a Devil's Gambit. Like in a grade-B movie where a killer with a drawn pistol demands of his victim that knows nothing of the use of guns; "Go for the rifle on floor, or I shoot you dead between the eyes right now!" It demonstrates no respect whatsoever for the reason we have voters in the first place. Any representative of a Michigan voter that goes for Phil's "Devil's Gambit" fully deserves what most of felt should be done to folks that did this to us back then.
E Kimball
Mon, 05/25/2015 - 10:21am
I bet it wouldn't. It's pretty clear from Cotter's maneuverings that there is no $1.2 billion per year that can be cut from the film subsidies or other places that most citizens don't care about. The only real possibility is reversing the Snyder tax cut on corporations -- and I don't see the legislator or the governor likely to support that.
Dwhyte
Tue, 05/19/2015 - 9:54am
A sensible proposal Phil. However, the increase in registration fees should be reversed! Heavy trucks, due to their much higher wheel loads than light vehicles, and the many miles they put on, do VASTLY more damage to the roads than cars and light trucks. Further, they are profiting from their use of the roads. So, their share of the costs of maintenance should also be higher, commensurate with the 10X greater damage that they do to our roads and bridges, and the fact that the roads are part of their business premises and they should bear the cost of same.
Larry
Tue, 05/19/2015 - 10:50am
Is what we have really a road funding problem? If all of the 19 cents, 15 cents, 6% sales tax on fuel and registration fees went to fixing roads, would we really have a road funding problem? Or is what we have really a problem funding education and local governments? Is the best way to fund those priorities a higher fuel tax?
Diana
Tue, 05/19/2015 - 11:15am
I agree completely! It's all about raising taxes on the things we need most and use daily. These things are taxed and not going where they were allotted to go. I work at a job I hate, only because the money is good and the benefits were good too. Now that is being taken away by the governing body of this state. Who also is getting richer off the tax dollars we pay. The working class is giving so much they can't stay afloat. I'm really tired of giving, or it just being taken from my paycheck. It's a self indulgent Government running this state. Start taking care of the people who make this state what it is and educate our children. The State of Michigan deserves that much!
Dennis Wollfe
Tue, 05/19/2015 - 12:39pm
Why is there no thought being given to make certain interstate highways that are major north-south roadways like I-75 or east-west roadways like I-94 which are used heavily by commercial trucks toll roads as has been done in Ohio, Pennsylvania, Florida etc., throughout the nation? Toll roads could assess tolls on vehicles according to their weights, and people who use our roads form other states could then pitch in and pay for using our highways and byways. By creating toll roads, the amount of tax revenue that Michigan citizens would have to generate directly would be diminished, and the large freight trucks which cause most of the road damage would be held to some level of accountability. The tourism industry incorporated this form of thinking when hotels now tack on what amounts to a "use charge" on a room rate to cover the many things that hotels offer like internet service, for free.
KG-1
Tue, 05/19/2015 - 12:48pm
"We already know that voters overwhelmingly want to fix the roads, and results from both the Center for Michigan's community conversations and other statewide polls suggest citizens are indeed prepared to pay more in taxes to get it done."I've attended several TCFM's "Conversations". Much like op-ed above, they are nothing more than push-polls designed to achieve the desired result; in this case higher taxes. The fact that nothing was even hinted at regarding road funding alternatives (i.e. Nullifying the Capitol View contract, Eliminating Michigan Film Credits, Abolishing the MEDC, REAL road warranties that MDOT cannot ignore under penalty of law, etc.) only reinforces this.
Charles Richards
Tue, 05/19/2015 - 3:22pm
Mr. Power has a pretty shrewd understanding of Michigan voters. They will make a decision when they are compelled to.
Barry Visel
Tue, 05/19/2015 - 7:17pm
We have plenty of taxes...we don't need any more...nor do we need any tax rate increases. The problem is we fail to collect an estimated $30Billion each year with the taxes we have because we have too many tax deductions, tax credits and tax exemptions. Eliminate 1/30th of those tax expenditures and you would have an extra $1Billion for roads and bridges. (note, I said 'roads and bridges', not 'transportation'.)
E Kimball
Mon, 05/25/2015 - 10:25am
Please elaborate on the $30B in tax exemptions, deductions, etc. that you think should be cut. The total state budget for $2015 was a little over $52B. Do you really think you can find nearly 60% of that in tax exemptions and deductions?
Duane
Tue, 05/19/2015 - 10:04pm
Why are people so consumed with spending other people's money that they have lost sight of the problem, why roads fail? When has simply spending money solved any of Michigan's problems? Is it so convenient to defer to Michigan road 'experts' that no one is willing to question them about the roads? Are people so concerned with showing a lack of knowledge or understanding of the problem that they avoid holding MDOT or any agency in the government accountable? When has Bridge or media outlets asked MDOT why the roads are failing and ask for data to verify their reasoning? Why does it seem that technology has changed every part of our lives except MDOT and the roads we get? Are people so unwilling to say ‘I don’t know’ when it comes to roads that they use getting other people’s money to spend as a distraction to hide their lack of knowledge? The reality is that we don't yet have the right answers because no one is willing to ask the right questions? It is about the roads, the roads, the roads before you even know what the money should be spent on. Insanity: doing the same thing over and over again and expecting different results.-Albert Einstein The roads tax and spend without accountability is Insanity, we’ve done it time and again and we keep getting the same results.
blufox
Wed, 05/20/2015 - 3:20pm
1. Follow the KISS method (Keep It Simple Stupid) 2. Make sure that there is a mechanism to capture road funding from alternative fuel vehicle.
Chris Daroczy
Thu, 05/21/2015 - 10:56am
How about we raise Corporate Taxes the $2.1billion we have given them in cuts? Love your Idea lets stick it to the citizens with another 'You going to lose no matter what proposal" you
Thu, 05/21/2015 - 11:14am
Voters blindly approved Proposal A assuming taxes were going to be shifted from property taxes to an increase in the sales tax to fund the schools. That only happened until voters approved Proposal A then property taxes were re-instated but at a lower rate. The "fix the roads" theme does not explain any details exactly how the roads would get fixed. It will be the same with over paid, nice benefits, life time health insurance, nice pension employees that make annual visits filling in some of the same pot holes from previous years
Jordan Genso
Thu, 05/21/2015 - 2:07pm
I think it's clear from the comments here that many voters live in an alternate reality and therefore make their decisions on flawed information. So putting up another proposal like Mr. Power mentioned would have little chance of passing. That would mean the legislature's alternative would kick in. The main problem then is that the Republican-controlled government is incapable of providing good governance, and so they won't be able to put that alternative into place. If they were capable of doing that, then we wouldn't even be in this situation since they would have already passed something like that prior to Proposal A. The voters next year need to refuse to re-elect any incumbent in the House majority if they don't find a solution for the roads. If they do find a solution, then the voters next year should cast their vote based on whether or not they agree with the solution.
Willaim C. Plumpe
Fri, 05/22/2015 - 2:31pm
I don't like paying additional taxes---Who does? I will do it as long as all the money raised is used for road repair and all the money raised is "new" road repair money meaning current levels of road repair funding over which the State has control are not reduced or limited. I don't trust the wheeling and dealing and back scratching going on in Lansing. I would rather have a tax that I pay and that I know where the money goes rather than more "deals" to find "savings" that seem to appear and disappear at will. Give me the tax I know and get the roads fixed not the "deal" I don't know.
David Brelin
Sun, 05/24/2015 - 11:36pm
The best governance is local but proposal A stood that theorem on its ear. It became the lesser of two evils instead of the better of two choices. What resulted was a complex formula that boils per pupil funding down to a ridiculous formula that is dependent upon the attendees of any given school upon one particular day in the middle of winter (and cold and flu season by the way). So now the state can assign blame for shrinking school funding upon decreasing enrollment instead of localities correctly assigning it to local property tax absconders. That was the dumbest damned thing I've ever heard of. Instead of fixing a local tax problem, we used social engineering to create an even bigger problem. So for the past three decades everyone who pays any property taxes in Michigan has been subsidizing the failure of Detroit Public Schools! Great, let's all toss some more money into that giant gapping hole and see if it gets fixed, right! Heavy trucks needs to be addressed. Michigan trucks are the heaviest ones on any roads anywhere in our country. It's legal to run up to 180,000 pounds without any special permits in Michigan, everywhere else it's only 80,000. Let that sink in for a minute. After we lower the allowable gross vehicle weights, we should still tax trucks registration at higher levels and Institute toll roads in the entirety of interstates 94 and 69. We are the only Midwestern state without toll roads! If the existing gasoline and diesel taxes only went to fund infrastructure repair and maintenance we wouldn't be in this predicament to start with. According to 2012 figures from the American Petroleum Institute, Michigan is already in top third of all US states in regards to how collective federal, state, and local fuel taxes that we pay at the pump. I don't know about any of you, but this middle class person is tired of paying more and receiving less in return. That's why I was the seventh voter in my district to vote on May fifth, and my express purpose in voting was to vote NO on prop one!
Scott Roelofs
Wed, 05/27/2015 - 2:18am
There is a word that describes Mr. Power's proposal: blackmail. His approach is cynical and bullying. In effect he is saying "give us (the state) more sales tax, or we'll stick you with more gas tax and registration fees." He is ignoring the overwhelming statement of the voters, which I understand to be to the state: "make do with the massive revenue you already bring in."