State government still owes $1.2 billion for road projects that were approved as many as two decades ago and will pay an estimated $196.6 million in interest this fiscal year alone on the debt, a House Fiscal Agency (HFA) report highlighted Thursday.
Sparked in large part by Gov. John Engler’s Build Michigan II ($308.2 million) and Build Michigan III ($400 million) and former Gov. Jennifer Granholm’s “Jobs Today” program ($485.1 million), Michigan’s debt load for roads shot up from $600,000 in 2000 to $2.3 billion in Fiscal Year (FY) 2009.
Since that highwater mark, the outstanding debt on road projects has gradually dropped to $1.2 billion, but the current debt service on Michigan Department of Transportation bonds aren’t expected to be retired until FY 2037.
Since FY 2010, Michigan government has spent a little more than $200 million a year on the interest of these former road bonding projects, according to the HFA.
The interest rate on the current bonds range from 4.49 percent to 5.25 percent. Over the next eight fiscal years, the projected debt service on these old road projects will average $153.1 million, according to the HFA.
Since 1998, $2.846 billion has been bonded out for Michigan’s roads.
The report comes as legislators look at way to inject more money into Michigan’s roads. Former Senate Majority Leader Ken Sikkema and former Senate Minority Leader Bob Emerson last month suggested raising the gas tax 47 cents over a period of years to make up a funding gap.
Outside of doing nothing, they said using bonding would be their last option because future generations end up paying more for work done today.