Whitmer’s Plan Would Raise $2.5B For Roads
March 12, 2019
Gov. Gretchen Whitmer’s plan to “fix the damn roads” includes increasing the gas tax by 45 cents as part of a three-step process starting Oct. 1 and ending Oct. 1, 2020.
Whitmer is not proposing selling bonds as part of the plan. Instead, she is looking at adding to the state’s 26.3-cent-a-gallon gas tax without taking off the existing state sales tax on gasoline. Such an increase would raise roughly $2.5 billion for the roads.
The plan to bring Michigan’s gas tax to 71.2-cents-a-gallon also includes offsets for low-income individuals in difficult financial situations.
According to the Tax Foundation, Michigan currently collects 44 cents tax per gallon of gas, when the state sales tax is factored into the equation. Adding 45 cents would boost that total to 89 cents a gallon. Pennsylvania’s 58.7 cents per gallon on gasoline is the nation’s highest tax on gas. California is next at 55.22 cents.
What Whitmer has in mind is in line with what former Senate Majority Leader Ken Sikkema and former Senate Minority Leader Bob Emerson suggested Jan. 31, when they proposed ramping up a 47-cent-per-gallon gas tax by 2028.
“We’ve got to stop this wait narrative,” Sikkema said March 4. “Gov. (Rick) Snyder’s 21st Century Infrastructure Commission two years ago documented that you need $2.6 billion on top of the $1.2 billion (approved in 2015). Stop the wait narrative. It is just getting more and more expensive two years later. I think people need to accept that $2.6 (billion) number from two years ago because it was well scrubbed. It was well documented.”
Mike Nystrom of the Michigan Infrastructure and Transportation Association (MITA) called Whitmer’s plan “bold,” one that would address the state’s road-funding gap after the 2015 road funding plan has turned out to be “inadequate.”
The proposal didn’t exactly get a salute from at least one legislative leader.
“Before we ask citizens to spend more on roads, let’s prove to them we will give them real money with insurance reform,” said Senate Majority Leader Mike Shirkey (R-Clarklake).
Michigan Republican Party (MRP) Chair Laura Cox said a $2 billion tax increase will “break many Michiganders’ budgets” and comes four years after residents rejected the road funding ballot proposal.
“The people of Michigan deserve real solutions on this critical issue, not a tax-and-spend solution, which places the burden on the state’s over-taxed families,” Cox said.
While this specific proposal was not public earlier March 4 when the Business Leaders for Michigan (BLM) held its infrastructure policy panel discussion, BLM CEO Doug Rothwell did talk about lawmakers needing “air cover” and political public support as they support a gas-tax increase to fix Michigan’s worsening roads.
“We are not an organization, Business Leaders for Michigan, that likes to talk about raising taxes. We don’t take that lightly, at all. But we are on record saying that we need to make a significant increase in investment in our infrastructure and we believe user fees — which could be a gas tax — are the best and fairest way to do it,” Rothwell said.
Julie Metty Bennett, of Public Sector Consultants, said at the BLM infrastructure panel discussion that the American Society of Civil Engineers downgraded Michigan roads in 2018 from a D to a D-minus. And the Michigan Transportation Asset Management Council, which tracks the condition of Michigan’s roads, said in 2017 that 40 percent of the state’s roads were in poor condition and only 20 percent were rated as good.
“As roads age, the amount that it costs to bring them back to good increases,” Bennett said. “For every dollar that you would spend bringing the roads from fair back to good, you have to spend between $6 and $14 to bring them back, so the longer we wait and the worse our roads get, the higher the bill gets for Michigan citizens to have good roads.”
Also a part of the panel discussion were Albert Berriz, of McKinley Inc., and Paul Ajeba, director of the Michigan Department of Transportation. Berriz said he believes the figure of additional revenue needed to bring Michigan’s roads to good condition is probably closer to $4 billion.
Bennett contended that the average Michigander is spending $686 annually in road-related car repairs.
“What hasn’t been mentioned,” Ajegba said, “is the loss of productivity and the human toll this takes on people daily.” When a section of expressway had to be closed recently because potholes were damaging people’s cars, those drivers ended up spending time getting their vehicles towed, time away from work, time away from their families. “You can’t put a price on that time. You can’t get it back.”
“Our roads are an embarrassment. The problem is getting worse,” Rothwell said. “It’s getting more expensive and there aren’t that many options to fix the problem. People will say that the devil is in the details, but I think it is really important that we not make this more complicated than it really is. We’ve studied it to death.”
Sikkema and Emerson said they considered other methods of raising the needed revenue. A sales-tax hike would require a constitutional amendment and a vote at the ballot box. And a vehicle-miles-driven tax, such as the program being piloted in Oregon, would take too long to implement.
“We were looking for a source that was user-based, that reflected people’s driving habits and their use of the roads. We wanted something that was easy to administer, easy to collect, and get the money in as soon as possible. We think the gas tax is the most reliable way of doing that,” Sikkema said.