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MDOT, State Treasurer Defend Gov’s Road Bond Sale

February 12, 2020

The GOP chair of the House Transportation Committee made it clear during a Feb. 4 hearing that he was not pleased that the Governor’s $3.5 billion road fix bonding plan excluded much of northern Michigan.

That, of course, is not a new complaint by Rep. Jack O’Malley (R-Lake Ann), who shared that sentiment with the two GOP legislative leaders two weeks ago.

However, it was the first time that Michigan Department of Transportation (MDOT) Director Paul Ajegba and State Treasurer Rachael Eubanks got a direct earful of gripes from Republicans face-to-face as O’Malley called them in for some Q & As in front of his committee.

“It’s great that people’s commutes are going to be better on the highways in Southeast Michigan, but they’ve got to get off the freeway at some point and use other roads to get where they’re going and they will be relying on a quality road to get them there,” O’Malley said.

The only Rs not complaining were those from Southeast Michigan, which gets a chunk of the $2.6 billion going into their neck of the woods. Rep. Joe Bellino (R-Monroe) and Rep. Jason Sheppard (R-Lambertville) fell into that category.

MDOT officials point out that some northern Michigan projects made the Rebuilding Michigan list, including U.S. 31 in Benzie County, which is in O’Malley’s 101st House District.

MDOT can only bond against the State Trunkline Fund to rebuild state trunklines. Those funds cannot be used to back bonds for local roads, though they have their own financing options, according to MDOT.

Rep. Triston Cole (R-Mancelona) raised a point with the MDOT director on the availability of aggregates needed for the paving materials to fix the roads. He noted that if the projects in the Lower Peninsula do not have enough direct access to that product and have to ship it in from up north, the cost will increase dramatically. He expressed concerns that part of the bond money would then go into those higher transportation costs and not the fix per se.

Ajegba expressed confidence that over a five-year time frame, there would be enough product, but he advised Cole that if the Legislature wanted to address this availability question it was free to do so.

Rep. Beau LaFave (R-Iron Mountain) noted that his Upper Peninsula constituents get the short end of the road-fix bonds. He does note that some of the money is headed for one bridge, but he adds, “it did not need to be fixed in the first place.”

Eubanks told MIRS that the bonds, when they are ready for market, will be an attractive investment for buyers and she told the committee they were also a good deal for the state given the lower interest rates. Asked if she personally would get in on the deal, she deflected the question.

On securing the money to pay off the bonds, she said MDOT, not her department, would have to address the question of using the gas tax as a declining pay-off stream in light of more electric vehicles coming on line and gas tax cash falling off.

The committee and the GOP legislature cannot halt the bond sale, but that doesn’t mean the complaints will end.

During the Feb. 4 hearing, O’Malley highlighted Michigan Transportation Asset Management Council data that was shared by former Lt. Gov. Brian Calley, who now serves as president of the Small Business Association of Michigan. Pie charts displayed showed a higher percentage of local roads in poor condition than state roads, but money bonded by the Governor can only be dedicated to large, state-owned roads.

“So, while I’m in agreement with our state roads needing some work, I strongly disagree with the move to totally ignore local roads and stick the drivers using them with a massive debt bill over the next few decades,” O’Malley said.

Trunklines carry 53% of total traffic and 73% of commercial traffic. Maintaining those corridors is vital to the movement of commerce, according to MDOT.

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